Business forms in Hungary

Options:

• Establishing or acquiring a business
• Creating a branch
• Incorporating a joint venture

Establishing or acquiring a business

Since foreign natural or legal entities can establish or acquire Hungarian companies, doing so is commonplace in the jurisdiction. The most common business vehicle used for this purpose is Kft (Ltd).

Creating a branch

As per Hungarian law the branch office is an organizational part of a foreign company. The office doesn’t have legal personality but possesses legal capacity to acquire rights and undertake obligations under its name and represent the foreign parent company (acquire properties, execute contracts, sue and be sued).

Establishing a branch is suitable for foreign investors who are interested in establishing a Hungarian business presence. Despite its popularity, there are ongoing legal disputes about the extent of legal capacity these branch offices have.

Incorporating a joint venture

Foreign investors can establish joint ventures with local entities by incorporating a corporation in Hungary (Kkt, Bt, Kft, Zrt, Nyrt). The members of a joint venture sign a shareholders’ agreement regulating their rights and obligations (e.g., with regard to ownership, possible exit strategies, etc).