New civil code!

19 June 2014

With the commencement of the new Civil Code from 15th March 2014,  and meanwhile the old act on business associations not being in force any more, the general rules about business associations will be from now on mainly described in the New Civil Code.

Although the change is essentially a legal issue, indirectly – especially because of the capital increase, it affects accounting as well, therefore we would like to draw your kind attention to the main regulations that can affect the business associations the most.




One of the most significant change in the Civil Code is the increasing of the minimum registered capital for different business association types, as followings:

limited liability company - Ltd (Kft.).                              3 million HUF

private limited company  (Zrt.):                                5 million HUF

public limited company (Nyrt.).                              20 million HUF


In case of other forms of associations, where the responsibility is not restricted (for example Bt. or Kkt.) the rules remain the same, there will not be obligatory minimum of registered capital.

That means that from the above date a new company can be founded only with the listed minimum registered capitals. But also the older companies are affected by the change. The companies that were already registered, or within the registration process when the New Civil Code turned into force have to make a decision about continuing the activity in line with the new Civil Code – together with their first modification of deed of foundation/memorandum of association after 15.03.2014., change the legal documents accordingly, and file the decision to the court of registry. If the deed of foundation changes only due to this, the modification can be carried out without paying duty and publishing fee.


The final deadline to change the deed of foundation is:

in case of Kkt. and Bt.                                   15.03.2015.

in case of Kft. Zrt., Nyrt.                       15. March 2016.


Companies that will not take care of the capital increase to meet the new rules- or will  not transform into another type of business association, that does not have minimum capital requirement- shall face legal supervision process, penalties or final cancellation of the firm!


Increasing the capital can happen in different forms, and there are also more option to schedule the payments (payment even after a year, or in more instalments), about that the company shall dispone in the decision.

The most beneficial way, and options to increase capital can be different in individual cases, so about the details and process of the capital increase it is advisable to ask for a lawyer’s help.


2.  Responsibility of the directors

The new Civil Code states it clearly that the managing directors of a legal person shall be responsible jointly either the company for the damages caused to another party in this manner.

This joint responsibility means that the person, who suffered damage, can ask either from the company, or directly from the managing director to pay off the damage, so the managing director might cover it with his own assets. (Even in case of owners order the management cannot be excused from the responsibility.)

That means that about the damages, that the company caused to a third party, not only the company can be sued for, but also the managing director. If it is proven, that the damage was caused by the management, the damaged third parties can start a distrainment against the personal property of the management as well.  


3. Old and new Civil Code – which is applicable? – Shall contracts be modified?


The rules of the new Civil Code generally apply for the contracts made after 15. March 2014. But the question comes up, whether the old or new paragraphs shall be applicable for the ongoing legal relationships.  

The additional act about the Civil Code entering to force prescribes, that in case of ongoing contracts, agreements the new Civil Code is applicable for the new results after 15.03.2014.  In case of more dynamic, typically shorter relationships (liabilities, loan contracts) the events that occur after 15th March also the old Civil Code remains applicable.  Due to the freedom of contracts, parties are also allowed to agree to apply for their contracts totally only the new Civil Code.

Regarding the fact, that the new Civil Code includes a total new standpoint about the rights and liabilities of the parties , and with the new act getting into forces there are some controversial legal interpretations already, for that only the practice can answer in the future, we would kindly advise to review and supervise the contracts, agreements with the partners, if necessary- even with a lawyers help, modify or extend them (for example to handle the questions of responsibilities). 


Rita Kormos

accounting team leader