Increased minimum capital for KFTs from 2016
In accordance with the new Civil Code 2013 of Hungary the mandatory minimum initial capital requirement was lifted for the KFTs (limited liability company) to 3 million HUF. The new Civil Code 2013 is effective from 15 March 2014, the fromerly registered KFTs have to satisfy the new capital requirement until 15th of March 2016.
The provision in the formerly effective Companies Act 2006 stipulating that the capital contribution of each member must be divisible by ten thousand currently makes it difficult to determine the share members own in multi-member companies. This provision is not included in the new Civil Code 2013. The lowest amount of each contribution, however, remains HUF one hundred thousand.
The New Civil Code will offer members the option to replenish the share capital from the distributable profit. In this case, members shall specify the amount of the initial capital and the members’ initial contributions in the articles while these amounts will not be paid up. Instead, the share capital will be topped up from the profit generated subsequently through the company’s activity.
In general the reserved capital of the companies can be used to satisfy the capital requirements and the deadline for the payment of the additional capital can be longer than 12 month.
Until the profit covers the full amount of the share capital, the company may not distribute dividend to its members and the members will be personally liable for any debt owed by the company to the extent not paid up. According to the New Civil Code the supplementary capital contribution may also be provided in the form of in-kind contribution in line with the rules applying to in-kind contribution.