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A Single Register of Legal Entities Is to Be Created in 2023

A Single Register of Legal Entities Is to Be Created in 2023

Hungary
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Currently, legal persons and organizational entities are registered by various courts and authorities: companies are registered by the court of registrations, civil organizations by the courts of law, while investment funds, for example, are registered by the Hungarian National Bank. The data content and operation of these registers also differ.

In June 2021, a bill proposing the establishment of a single unified register, was accepted by the Parliament. The Act on the Registration of Legal Persons and the Registration Procedure will enter into force on 1 July 2023.

Unified register

The essence of the unified register is that, regardless of whether the registration procedure is carried out by a court or another registration authority, the registration resulting from the procedure will be recorded in the same unified register which will be kept by the Regional Courts. The bill introduces the concept of “registration procedure”, which includes all non-litigious cases and actions that the registering authority conducts in relation to a registered legal person.

Electronic archives

The concept of electronic archives is also introduced, which will henceforth cover all the documents of all registration procedures. This will allow rightholders to view documents electronically, for example in the case of documents relating to the review procedure.

Authenticity

A substantial change is, that after the entry into force, public authenticity will be linked to the registration, and the publication of the registration in the Company Gazette will in future only serve information purposes.

Automatic decisions

The possibility of automatic decision-making in the vast majority of registration cases is another important novelty. With such registrations, data from another court or authority will be transferred to the register of legal entities, whereby the registration mechanism of the registering court is automated. In the case of automatic registration, the content of the registration is not subject to prior verification of legality by the court of registration, which only checks the conformity of the information contained in the notification and the register. One of the pillars guaranteeing automatic decision-making is that the examination of the legality of the application is shared between the court and the legal representative acting on the application. It is for the legal representative to assess whether the application can be lawfully submitted to the court on the basis of the available documents. These documents will thus include those which are not directly examined by the court but are kept by the legal representative and declared on the application as being adequate.

Change in deadlines

After 1 July 2023, the court must take action within five working days of the day following (i) the receipt of the petition in the court's IT system, (ii) the expiry of the time limit for filing the petition or (iii) the occurrence of other circumstances giving rise to the action (general procedural time limit). In addition, the time limit for filing an application for registration of a change is reduced to 15 days for companies, except for public companies limited by shares and religious communities with legal personality. The act provides 15 days for the resubmission of a complete application for registration, instead of the current 8 days.

Examples of a single register for companies and NGOs can currently be found in several EU countries (e.g. Austria, Belgium, Denmark, Poland), by creating the unified register Hungary can take a step towards the European norm, as the single register will bring a number of benefits, including uniform procedural rules, speedy procedures, standardization of enforcement practices and increased accuracy of the data in the register, as well as further administrative burden reduction for customers.

By Eszter Kamocsay-Berta, Managing Partner, KCG Partners Law Firm

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