HUNGARY Law and Practice Contributed by: Attila Ungár and Júlia Várkonyi, Lakatos, Köves & Partners
participation in the supervisory board. In certain cases (depending on the number of employees and net sales of the company), a statutory auditor responsible for carrying out the audits of accounting documents must be appointed. Public and Private Limited Company The supreme body of a limited company is the general meeting. Different rules apply to public and private limited companies regarding the convening of and participation in the general meeting. Public limited companies are managed by the board of directors, which comprises at least three natural persons. The board of directors acts as an independent body and prepares a report on the management, the financial situation and the business policy of the company at least once every year for the general meeting and at least once every three months for the supervisory board (if any). Public limited companies are required to set up audit committees, and all limited companies must employ an auditor. Investment Funds The collective portfolio management activity of invest - ment fund managers is subject to prior authorisation from the Hungarian National Bank. Investment fund managers must have a head office in Hungary and be managed by at least two natural persons under an employment contract. At least two of the persons in senior positions must qualify as domestic residents under the foreign exchange regulations and must have had a permanent domestic address for at least one year. 5.6 Annual Entity Maintenance and Accounting Compliance Annual entity maintenance and accounting compli - ance costs are different for each company. Compa - nies are obliged to prepare financial statements for every accounting period, which must be approved by the general meeting and filed with the Registrar of Companies. Public limited companies and companies keeping double-entry bookkeeping are obliged to elect an auditor. However, in the case of private limited com - panies, the shareholders shall elect an auditor if:
• the average annual net sales of the company exceed HUF600 million; and • the number of employees is more than 50 on average in the two business years preceding the subject business year. 6. Commercial Leases 6.1 Types of Arrangements Allowing the Use of Real Estate for a Limited Period of Time The most common form of use of real estate for a limited period is a lease. Further arrangements include right of use, right of use of a land, right of use for pub - lic purposes and usufruct. 6.2 Types of Commercial Leases There are specific rules for the leasing of residential buildings and premises (with specific rules on prop - erties owned by municipalities). However, the same legislation generally applies to the leasing of differ - ent types of premises – for example, office spaces, commercial premises, residential buildings or logistics parks. As of August 2023, if the Hungarian State has a major - ity stake in a company, the company will require prior approval from the Minister of Public Administration and Development to enter into a lease for any property located in Hungary if the annual gross rent exceeds HUF20 million. 6.3 Regulation of Rents or Lease Terms The general rules for leases are contained in the Hun - garian Civil Code. However, these are not mandatory rules and may be deviated from in the lease, including rent and term. 6.4 Typical Terms of a Lease A lease may be concluded for a definite or an indefinite period. Commercial leases are typically concluded for a definite period, with a term of between five and 15 years. Extension rights are also common – usually for an additional five years. In some cases, a break option is provided, allowing the tenant to unilaterally exit the lease by paying a certain agreed termination fee.
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