Modifications in the daily operation of legal entities

The Government issued the Decree No. 102/2020 (IV.10.) (Decree) on 10 April, 2020, which declares the different rules of operation of the companies and any other legal entities (foundations, associations, etc.).

The Decree has modified such corporate law obligations, stipulated by the deed of foundation and the legal regulations, which may result personal meetings, complying with the “Stay-at-home” order, i.e. the decree on the restrictions of going outside. Thereby, the continuous and lawful operation of the companies has been created in the current pandemic situation.

If the decision-making body is not obstructed in the normal operation due to the restrictions of going outside (e.g. family company if members live together), thus, of course, the Decree is not applicable.

The wording of the Decree – having regard to the arising challenges in the operation of legal persons as well as the necessity of the continuous business – introduces significant facilitations for the daily operation of the legal persons. We highlight below – with a non-exhaustive nature – the details facilitating the operation of the companies and therefore, aiming to help the decision-making procedure.

The special way of decision-making procedure

In case of decision-making bodies, the decision-making via electronic devices (e.g. Skype) and written voting procedures, i.e. without holding a meeting, are allowed as main rule by the Decree for all types of legal entities. In this context, we refer to that – according to the Hungarian Civil Code – only in case of the expressis verbis provisions of the deed of foundation would be possible to apply the mentioned decision-making procedure.

We emphasize that the special rules aiming at initiating the convocation of a decision-making body, included among others the members’ meeting in case of limited liability companies, and of a written voting procedure have been determined on the basis of the member number of the legal entities.

Other bodies in a legal entity may hold their meetings or internal consultations via electronic devices, however, in the lack of an accepted process, the head of the given body shall determine the rules and inform the members thereon.

Increasing powers of the management

Under the Decree’s special rules, the management is entitled to decide on the annual account, the use of net income, and in urgent cases arising from reasonable and responsible management, if (i) a specified percentage of members; and/or (ii) the majority or qualified majority member do not protest against the proposal before the decision. 

Of course, the provision, referred in the paragraph above, may be applied, if there is no possibility to apply the decision-making via electronic way or written voting procedure.

Provisions requiring e-signature

According to the Decree, the companies’ bodies (e.g. decision-making body, management, supervisory board) may send their decisions to the members’ email addresses, if the declaration attached to it possesses an adequate e-signature. We kindly draw our Clients’ attention to the requirements of an electronic signature, therefore we refer to our previous newsletter in connection therewith.

Legal entity members are also entitled to send their declarations with adequate e-signature via email. In case of declarations of natural person members, the email shall only include such personal data which are necessary to the identification, i.e. in such case, no special e-signature obligation is stipulated by the Decree.

In summary, we state that the newly introduced provisions are able to facilitate the daily operation of the legal entities, thus may result a solution to comply with the rules of decision-making procedure.

Of course, our Firm is readily at your kind disposal during the decision-making procedure in accordance with the law, ensuring the compliance with the simplified and – at the same time – special procedure as described above.

The information above possesses exclusively informative nature, for further details we kindly ask you to contact our Firm. 

Dr. Balogh Judit



More posts in this category

Contact us