IX.

Act CXLIV of 1997

on Business Associations

 

PART 5:

PART THREE
ASSOCIATED ENTERPRISES

Chapter XIII.
Professional Associations

Section 272.
(1) A professional association is a co-operative business association with legal personality founded by members in order to facilitate the success of their business activities and to coordinate such business activities, as well as to represent their professional interests. A professional association does not aim for profit; its members bear unlimited, joint and several liability for debts in excess of the association"s assets.
(2) A professional association may also pursue other service and joint economic activities (hereinafter referred to as "supplementary economic activity") in support of its coordination duties.
(3) The designation "professional association" (egyesülés) shall be indicated in the company name of the business association.
(4) The provisions of Part One of this Act shall be applied correspondingly to professional associations.
Title 1.
Foundation and Operation of Professional Associations
Section 273.
(1) In addition to the items listed under Subsection (1) of Section 11, the following shall be defined in the articles of association:
a) within the scope of activities, the responsibilities for facilitating and coordinating the business activities of members, and the associated interest representation activities;
b) in accordance with the activities, the amount and the order of provision of necessary assets, the division of operating costs among members, the amount and method of settlement of the payments of individual members;
c) in the event of the withdrawal of a member, the conditions for disbursing the share of assets due to that member;
d) the order of distributing assets remaining following termination of the professional association.
(2) If so required, the articles of association shall define the following:
a) the supplementary economic activities;
b) the amount of assets of the professional association necessary for conducting the supplementary economic activities;
c) within the framework of the supplementary economic activities, the extent of voting rights of individual members, and the method of exercising such rights;
d) the rules of appropriating after-tax profits from supplementary economic activities;
e) other services representing pecuniary value (ancillary services) due from members, the conditions thereof, as well as the amount of penalty payable in the event of the non-performance or insufficient performance of ancillary services.
Section 274.
(1) The members shall bear the costs of the operation of the professional association, and shall provide the assets required for supplementary economic activities.
(2) Members of a professional association may undertake to perform other services representing pecuniary value (ancillary services). Members may be entitled to separate remuneration for such ancillary services.
Section 275.
(1) Unless otherwise provided by the articles of association, members are entitled to utilize the services provided by the professional association without compensation; and are entitled to a share of after-tax profits from service and economic activities provided to third parties.
(2) Unless otherwise provided by the articles of association, after-tax profits arising from economic activities shall be distributed among members in proportion to their contributions. Otherwise, profits shall be distributed among members in equal proportions.
Title 2.
Organizations of Professional Associations
Section 276.
(1) The supreme body of a professional association is the council of directors consisting of the members. Members may be represented through representatives. The director, the supervisory board members or the auditor may not be representatives. Authorization shall be drawn up in a notarial document or private document representing conclusive evidence.
(2) The following shall fall within the competence of the council of directors:
a) development of the internal organization, and the order of management and supervision of the professional association;
b) development of the coordination and interest representation strategies, and the supplementary economic activities;
c) approval of the professional association"s report prepared pursuant to the Accounting Act;
d) decision on the appropriation of after-tax profits from supplementary economic activities;
e) passing of resolutions which define tasks to be implemented in the business administration of members;
f) decision on termination without legal successor or transformation of the professional association;
g) approval of admission to the professional association, and approval of the restriction of liability of new members;
h) election and removal of the director, as well as exercise of employer"s rights related to the director;
i) if a supervisory board operates at the professional association, the election thereof, the removal of its members, and the establishment of their remuneration;
j) if an auditor operates at the professional association, the appointment thereof, the withdrawal of his mandate, and the establishment of the remuneration;
k) alterations to the articles of association;
l) initiative to exclude a member;
m) decision to conclude or amend a contract, the value of which exceeds the value limit set forth in the articles of association, or which is concluded by the professional association outside its ordinary activity with one of its members;
n) decision on all issues which are assigned to the competence of the council of directors by this Act or the articles of association.
Section 277.
(1) The council of directors shall hold its meetings as necessary, but at least once every year.
(2) Meetings of the council of directors, indicating the agenda thereof, shall be called by the director. The director shall provide for the organization and completion of the meeting, the keeping of the minutes and the distribution of the resolutions.
(3) The following shall be entered in the minutes: the place and time of the meeting, the persons present and the extent of voting rights represented by such persons, significant events, statements and resolutions taking place during the meeting, the number of votes cast for and against such resolutions, and the persons abstaining from or not taking part in the vote.
Section 278.
The council of directors has quorum if members representing three-quarters or more of the votes are present at the meeting.
Section 279.
(1) Within the scope of coordination and interest representation activities, all members shall have one vote. The articles of association may, however, establish multiple voting rights for the benefit of certain members, whereby no single member may exclusively have a majority of the votes.
(2) Within the scope of the supplementary economic activities, as well as on the issues listed under Paragraphs f), g), l) and m) of Subsection (2) of Section 276, the extent of voting rights shall be established in proportion to the contributions, or failing this, equivalent votes shall be established.
Section 280.
(1) Members shall pass a unanimous resolution on the following issues:
a) change in the subject of the professional association,
b) change in the number of votes of the individual members,
c) change in the conditions for passing resolutions.
(2) A majority of three-quarters or more of the votes shall be required to resolve termination of the professional association without legal successor or transformation, to approve the admission of new members and to initiate the exclusion of members, as well as to alter the articles of association for any other reason, if such alteration does not fall under the effect of Subsection (1).
Section 281.
A majority of three-quarters or more of the votes shall be required in order for a resolution aiming to establish obligations to be implemented within the business administration of members to be valid. Such resolution may be passed only with the consent of the member concerned.
Section 282.
(1) The council of directors may pass resolutions without holding a meeting.
(2) The draft of the resolution proposed outside a meeting shall be communicated to the members of the council of directors in writing, setting a deadline of fifteen days, who shall cast their votes in writing. The director shall inform the members of the result of the vote within eight days of the receipt of the last vote.
(3) Upon the request of any of the members of the council of directors, a meeting shall be convened to discuss the draft resolution.
Section 283.
(1) Management and representation of professional associations shall be carried out by the director within the framework of the articles of association and the resolutions of the council of directors.
(2) The council of directors may stipulate that the exercise of certain employer"s rights related to the managerial employees of the professional association be subject to its consent.
Title 3.
Admission of Members; Termination of Membership
Section 284.
(1) According to the conditions contained in the articles of association, any party may join the professional association (admission).
(2) The council of directors shall pass a resolution on the approval of admission, and shall decide simultaneously on the due date of the obligations attached thereto, and the extent of the voting rights of the new member within the scope of the supplementary economic activities.
(3) New members shall be liable for the obligations of the professional association originating prior to their admission, unless the resolution approving admission exempts new members from such liability in advance.
(4) The fact and date of the admission, as well as the exemption from liability pursuant to Subsection (3) shall be entered in the register of companies. Exemptions are valid against third parties as of the date of such entry.
Section 285.
(1) Membership shall terminate
a) if the member has not provided his contribution defined in the articles of association despite an order to this effect;
b) upon withdrawal of the member;
c) upon exclusion of the member;
d) upon death or termination of the member without legal successor;
e) if the existence of such is in violation of the law.
(2) Members may withdraw from the professional association at the end of the year. Intention to withdraw shall be reported to the council of directors at least three months in advance.
Section 286.
(1) Accounts shall be rendered with withdrawing members according to the situation existing at the time of such withdrawal. The council of directors shall decide when and in what installments the share of assets due to the withdrawing member is to be disbursed.
(2) The date of disbursement shall be established on the basis of the professional association"s report prepared pursuant to the Accounting Act in such a manner that disbursement does not endanger the continued operation of the professional association, and the period thereof is one year or less.
(3) If disbursement does not take place upon withdrawal of the member, a proportionate share of after-tax profits shall be due to the withdrawing member according to proportion of his assets yet to be disbursed.
(4) Termination without legal successor or the death of a member shall terminate the membership of such. The provisions of Subsections (1)-(3) shall be applied correspondingly to rendering accounts with the member"s legal successor (heir). If, however, the legal successor (heir) intends to continue the activity of the member, he may become a member of the professional association with the consent of the council of directors. In this case, liability for obligations arising prior to the termination of the membership of the legal predecessor shall be borne by the new member assuming the membership rights.
Section 287.
In the event of termination of an enterprise without legal successor, the assets remaining after settlement of all debts shall be distributed among the members in equal proportions, or, if contributions were provided by the members, unless otherwise provided by the articles of association, such shall be distributed in proportion to the contributions of such members.

Chapter XIV.
Acquisition of an Influencing Interest in Business Associations

Section 288.
(1) The provisions of this Chapter shall be applied in the event that the legal entities as defined in Subsection (1) of Section 3 acquire a significant interest, a majority interest or controlling interest in the operation of a company limited by shares or a limited liability company (hereinafter referred to jointly as "controlled companies"). Other Acts may stipulate further conditions to the acquisition of influencing interests.
(2) For the purposes of this Chapter, acquiring an influencing interest through a single-member business association shall be considered an acquisition of influencing interest by the legal entities defined in Subsection (1) of Section 3.
(3) The obligations and legal consequences contained in this Chapter shall not be authoritative if the degree of interest pursuant to Sections 289-291 is established in such a manner that the entitlements are decreased to the same or to a higher degree as compared to the contents of said Sections.
Section 289.
Members (shareholders) hold a significant interest if they control more than twenty-five per cent of the votes of the controlled company.
Section 290.
Members or shareholders hold a majority interest control (hereinafter referred to as "dominant member") if they control more than fifty per cent of the votes of the controlled company.
Section 291.
Dominant members hold a controlling interest if they control more than three-quarters of the votes of the controlled company.
Section 292.
(1) The existence of a significant interest, a majority interest or a controlling interest, together with an indication of the method and the degree of such influencing interest, shall be reported to the court of registration competent for the registered office of the controlled company by the party holding such interest within a period of thirty days after establishment thereof. Simultaneously upon such report, the same party shall provide for the publication of the fact and the degree of the acquisition of influencing interest in the Company Gazette.
(2) Prior to reporting a significant interest, a majority interest or a controlling interest to the court of registration, the party holding such interest may exercise his voting rights only to that degree up to which his participation is not subject to the disclosure obligation.
(3) In the event of delayed performance or non-performance of the disclosure obligation, pursuant to Subsection (1), in respect of a majority interest or a controlling interest, upon the liquidation of a controlled company, if the assets of the controlled company do not cover satisfaction of creditors, dominant members shall bear unlimited and full liability for debts of the company incurred up until performance of the disclosure obligation.
Section 293.
(1) In respect of a mutual significant interest of companies limited by shares or limited liability companies, the business association, the influencing interest of which was first published in the Company Gazette, may retain its full participation, whereas the other business association shall be obliged to alienate that portion of its participation which is in excess of twenty-five per cent of the votes.
(2) If the existance of a significant interest is published in the same issue of the Company Gazette, the obligation to alienate shall apply to the business association, which has fulfilled the disclosure obligation at a later point in time.
(3) Up until the performance of the obligation to alienate pursuant to Subsection (1), the business association may exercise its membership rights only to that degree up to which its participation is not affected by the obligation to alienate.
Section 294.
(1) In respect of a majority interest, the controlled company may not acquire participation in the dominant member, and shall alienate any existing participation therein within a period of one-hundred and eighty days after the establishment of majority interest. Up until such alienation, the shares owned by the controlled company shall also be considered when conducting the calculation required under Subsection (2) of Section 189. Up until the alienation, the controlled company may not exercise its voting rights at the meeting of the supreme body of the dominant member.
(2) The same person may not be an executive officer or a supervisory board member of the dominant member and the controlled company at the same time.
Section 295.
(1) If the controlled company is a company limited by shares, any of its shareholders may request that his shares be purchased by the dominant member at market value within a period of sixty days after publication following the entry of a majority interest or controlling interest into the register of companies.
(2) The provisions of Subsection (1) may not be applied if the controlled company in question is a public company, provided that the majority interest or controlling interest has been acquired in accordance with the rules of the statutory provisions on securities related to the acquisition of companies limited by shares.
(3) Subsequent to the publication following the entry of a majority interest or controlling interest into the register of companies, the minority rights set forth in Section 51, Section 230 and Section 231, unless the articles of association (statutes) provides for a lower rate, may be exercised upon the initiative of members (shareholders) representing five per cent or more of the eligible votes.
Section 296.
(1) If, as a result of the dominant member"s influencing interest amounting to at least majority control, a controlled company pursues a permanently detrimental business policy, and as a consequence of this, the assets of the controlled company do not cover satisfaction of creditors upon the liquidation of the controlled company, the court may, upon the claim of a creditor lodged in the course of liquidation proceedings, establish the unlimited and full liability of the dominant member for the debts of the controlled company.
(2) If a dominant member holds a controlling interest in the controlled company, those creditors, whose unexpired claims against the controlled company originated prior to the publication of the influencing interest, may demand security up to the amount of their claims from the dominant member within a ninety day non-appealable deadline following such publication.
(3) In respect of a controlling interest, if the dominant member pursues a permanently detrimental business policy as a result of its controlling interest, and this seriously endangers discharge of the controlled company"s obligations, the court may, upon a claim by any member (shareholders) or creditor of the controlled company, establish the unlimited and full liability of the dominant member for the debts of the controlled company.
Section 297.
The provisions contained in Section 294 and Subsections (1) and (3) of Section 296 shall be applied correspondingly, even if a shareholder or member of a company limited by shares or limited liability company holds one-half or three-quarters or more of the votes upon the foundation of the business association.

PART FOUR

Chapter XV.
Implementing and Transitional Provisions

Section 298.
(1) With the exception of Subsection (3) of Section 306, this Act shall enter into force on the one-hundred and eightieth day following its promulgation. The provision contained in Subsection (3) of Section 306 shall enter into force on the forty-fifth day following the promulgation of this Act. The provision contained in Subsection (3) of Section 306 shall be repealed upon Chapter VII of this Act entering into force.
(2) Wherever legal regulations refer to Act VI of 1988 on Business Associations, the provisions of Act CXLIV of 1997 on Business Associations shall be understood.
Section 299.
(1) Business associations, whose registration is in progress upon this Act entering into force, shall fulfill the requirements of Act VI of 1988 on Business Associations in the course of such registration. Following their registration, however, such business associations shall, with the exceptions set forth in Subsections (3)-(8), alter their articles of association (deed of foundation, statutes) according to the provisions of this Act upon the first change in their data kept in the register of companies. These provisions shall also be applied correspondingly to professional associations and non-profit companies, whose registration is in progress upon this Act entering into force.
(2) Business associations which have already been entered into the register of companies prior to this Act entering into force shall, with the exceptions set forth in Subsections (3)-(8), alter their articles of association (deed of foundation, statutes) according to the provisions of this Act upon the first change in their data kept in the register of companies. These provisions shall also be applied correspondingly to professional associations and non-profit companies.
(3) Business associations operating in the form of a limited liability company or company limited by shares shall supplement their initial capital (share capital) to the minimum amount set forth in this Act, in the case set forth in Subsection (1), within a period of two years after registration of the company, whereas in the case set forth in Subsection (2), within a period of two years after this Act entering into force. In the course thereof, the new regulations on the proportion of contributions in cash and contributions in kind need not be applied.
(4) The provisions set forth in Subsection (3) of Section 173 and Subsection (3) of Section 271 related to the liability of founding members (shareholders), as well as the provision set forth in Subsection (4) of Section 4 may be applied to a single-member business association only if the single-member business association was founded after this Act entered into force, or the business association became a single-member business association after this Act entered into force.
(5) The rules of liability existing in the case of a majority interest or controlling interest may be applied only if the majority interest or controlling interest in the controlled company was acquired after this Act entered into force.
(6) The prohibitive rule set forth in Subsection (3) of Section 23 may be applied only if the liquidation proceedings commenced after this Act entered into force.
(7) Business associations shall comply with the provisions related to the authorization of auditors before the approval of the report prepared pursuant to the Accounting Act for the year 1999.
(8) Persons acting as executive officers in more than three business associations upon this Act entering into force shall continue to be entitled to attend to their duties as executive officers in all such business associations until the expiration of their mandate.
Section 300.
(1) The deadline of thirty days specified for court review of resolutions of business associations shall be calculated according to the provisions of this Act if thirty days have not yet elapsed from the time the resolution in question was passed up to time at which this Act enters into force.
(2) Business associations, which have already decided to transform into another business association upon this Act entering into force, shall complete their transformation according to the provisions of Act VI of 1988.
(3) Economic work teams, as well as economic work teams operating under the liability of a legal person may continue to operate as an unlimited partnership by virtue of alteration of their articles of association within a period of two years after this Act entering into force, or else such economic work teams shall transform into some other form of business association. Failing this, the court of registration shall declare such business associations terminated.
(4) Wherever this Act refers to acquisition from the assets in excess of initial capital or share capital, an acquisition secured by the cover of the assets in excess of initial capital or share capital shall be understood from the perspective of the Accounting Act.
Section 301.
(1) If this Act changes the basis of the calculation of an entitlement due to shareholders, or the conditions for utilizing such, the provisions of this Act may only be applied following the first full calendar year after this Act enters into force.
(2) The provisions of Subsection (2) of Section 299 shall not apply to a limited liability company or company limited by shares which is already operating with partial or full foreign interest and which is based on international treaties or which was founded prior to 1 January 1950.
(3) The provision of Subsection (1) of Section 185 on the degree of multiple voting rights shall be applied only if such multiple voting rights have been established following this Act entering into force.
Section 302.
Within the framework of Section 3 of Act 1 of 1994 promulgating the Europe Agreement establishing an association between the Republic of Hungary and the European Communities and their Member States, signed on 16 December 1991 in Brussels, this Act contains regulations which may be approximated with the following legal regulations of the European Communities:
a) Council Directive 68/151/EEC on co-ordination of safeguards which, for the protection of the interests of members and others, are required by Member States of companies within the meaning of the second paragraph of Article 58 of the Treaty; with a view to making such safeguards equivalent throughout the Community;
b) Council Directive 77/91/EEC on co-ordination of safeguards which, for the protection of the interests of members and others, are required by Member States of companies within the meaning of the second paragraph of Article 58 of the Treaty; in respect of the formation of public limited liability companies and the maintenance and alteration of their capital, with a view to making such safeguards equivalent;
c) Council Directive 78/855/EEC based on Article 54 (3) (g) of the Treaty concerning mergers of public limited liability companies;
d) Council Directive 82/891/EEC based on Article 54 (3) (g) of the Treaty concerning the division of public limited liability companies;
e) Council Directive 89/667/EEC on single-member private limited-liability companies;
f) Council Directive 92/101/EEC on the amendment of Council Directive 77/91/EEC.