The significance of solving the capital situation

20 July 2018

Since 1 December 2016, companies shall meet the requirement of publishing and deposit the financial statements using the so called „Online Beszámoló és űrlapkitöltő Rendszer” known as „OBR”, which system also monitors the capital situation of the companies. 

Companies were obliged to manage their capital situation in previous years as well, but the court of registration was unable to monitor the capital situation efficiently so there was less legal consequence of default. With the innovation of OBR the court of registration received an instant view on the capital situation and if the company does not manage it, it may even go under forced strike off.

What requirements shall the companies comply with?

•    the limited liability company’s equity cannot be dropped to half of the initial capital due to losses (the private limited company’s equity cannot be dropped to two-thirds of the share capital)
•    the company’s equity cannot be dropped below the amount limit defined by law over two consecutive financial years

What to do when the company does not comply with the requirements above?

In case of significant capital loss the manager is obliged to convene the Members’ Meeting and the owners should provide equity by ordering additional payment, or with any other ways they must ensure that the equity reaches the share capital. In case the “two-year rule” above is broken the deadline for managing the capital situation is three month after the adoption of the financial statement, otherwise decision should be made about the transformation, the merger, the division or the abolition without a legal successor of the company.

If the company does not comply with the requirements, the court of registry may initiate a judicial oversight proceeding within thirty days of gaining knowledge. Following the opening of judicial oversight proceedings the court of registry shall notify the company affected - indicating the potential legal consequences and the illegal action based on which the proceedings are conducted:
a) to declare in writing whether or not the company disputes what is contained in the request or in the ruling; or
b) to remedy the unlawful state of affairs, if the company does not dispute what is contained in the request or in the ruling,

We would like to draw your kind attention, that if the company’s equity is still not meet the requirements defined by law, the court of registry can even start a releasing process from the company register.

In order to avoid the above mentioned consequences, please take the necessary steps with the help of your legal representative or consultant.

Please do not hesitate to contact our consultants with trust about the possible solutions for the capital situation and handling individual cases.

Katalin Garics |