Addressing Irregular Operations and Financial Discrepancies in Companies
Compulsory winding-up proceedings are initiated if the commercial court, acting in its supervisory capacity, finds that the company is operating in an irregular manner.
Abnormal operation is also deemed to exist if the company does not have the company law the amount of equity capital corresponding to the subscribed capital required for its form (negative equity capital), so that the management must remedy the situation.
(Resolution is possible within three months of the adoption of the accounts for the second financial year. If no satisfactory solution is found, the company must decide within 60 days of the expiry of the deadline to dissolve it without a legal successor, or to transform it into another company.)
The Court of Registration publishes the final decision to open proceedings in the Official Gazette of Companies.
After the transitional rules relating to the termination of the emergency situation, the following rules shall apply to compulsory winding-up proceedings the following topics have been amended:
a) Supervisory fee is payable for the conduct of compulsory liquidation proceedings;
The State will no longer remove inoperative companies from the economy free of charge, thus relieving the companies concerned (or their members) of the costs of the proceedings for dissolution without legal succession (liquidation, winding-up). A supervision fee of HUF 250,000 is payable for the compulsory winding-up proceedings conducted by the Companies Court. The supervisory fee is payable jointly and severally by the member(s) and the managing director(s) entered in the commercial register on the day the compulsory liquidation proceedings begin. However, the Amendment states that if the compulsory winding-up proceedings are terminated by the Court of Registration on the application of the company, the company will be liable to pay a lower supervision fee of HUF 50,000 for the compulsory winding-up proceedings, which will be payable at the same time as the application for termination of the proceedings.
b) The law provides for the possibility for the company to re-establish its lawful operation in the compulsory winding-up proceedings
The company may request the court to declare that the conditions for its continued operation are met and to terminate the compulsory liquidation proceedings against it for a period of 90 days from the date of commencement of the compulsory liquidation proceedings. However, this is subject to the condition that the company (representative) declares that it will apply for the winding-up proceedings to be terminated by restoring its lawful operation and by fulfilling other conditions. In other cases, the firm will not be allowed to carry out commercial, economic activities from the date of commencement of the compulsory liquidation proceedings.
c) A new liability regime has been introduced for (former) directors and (former) members of the company for unpaid debts of the company;
If the compulsory winding-up proceedings are not terminated, the company court will examine whether the director or member is guilty of misconduct in the course of the illegal operation. The company court must therefore decide, in addition to the dissolution of the company, whether the officer or member is liable for the illegal operation and whether the person concerned has breached his or her duty to cooperate and inform in the proceedings. A disqualified person shall be liable without limit for uncontested creditors’ claims that have been filed and not satisfied with the compulsory winding-up proceedings. Several persons shall be jointly and severally liable. The burden of proof is on the person enjoined to prove that he is not guilty of any wrongdoing and that he acted in a manner which could reasonably be expected of him.
d) The rules on disqualifications have been tightened;
e) Clarification of the amount of assets or claims required for winding-up proceedings to follow compulsory winding-up proceedings;
For legal information on insolvency and debt collection we also collaborate with the professionals of the LLF & Partners law firm.
Last update: March 2024
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