Blog articles

To ensure a uniformly high level of cybersecurity across the European Union, the Cybersecurity Certification and Supervision Act (Cybersecurity Act) 2022/2555 (NIS2) aims to secure the EU's digital infrastructure and enhance the ability to defend against cyber threats.

The Act imposes a number of requirements on companies whose activities or organisations fall within its scope. Each company should check whether the provisions of this legislation apply to its business.

If the Cybersecurity Act applies to the company, it must submit an application for NIS2 registration to the Regulated Activities Supervisory Authority (RPAA) by 30 June 2024. In addition, the company must classify its activities into a security class and define specific security measures in accordance with the Cybersecurity Act, Decree No. 7/2024 (VI. 24.) MK. Furthermore, it is mandatory to choose a cybersecurity auditor, to conclude a contract with it and to carry out the cybersecurity audit.

These obligations apply mainly to medium and large enterprises, as defined in Act XXXIV of 2004 on Small and Medium Enterprises. Companies with at least 50 employees or an annual turnover of at least €10 million should take into account these obligations.

It is also important to consider the activity of the SME in question. The Cybersecurity Act. Annexes I and II of the KiP Directive set out in detail which firms fall into the critical and highly critical sectors.

Exceptions to the main rules include electronic communications trust service providers, DNS providers, top level domain name registrars and domain name registrars, as they are subject to the provisions of the Act even if they are not medium-sized and large companies.

If a company is not directly covered by the Act but subcontracts to one of these companies, they must agree in their contract to comply with the Act.

Companies that fail to comply can face substantial fines and even be banned from doing business if their managers fail to comply.

Dr. György Zalavári, lawyer and partner at Ecovis Zalavári Legal Hungary, stresses that it is important to note that only a person who is authorised to use the company's company gate can apply for registration.

Dr. György Zalavári LL.M.
Ecovis Zalavári Legal Hungary
Lawyer | Mediator | Corporate Law and Data Protection Specialist
gyorgy.zalavari@ecovis.hu

The recently adopted Act XC of 2023 on the General Rules for the Entry and Residence of Third-Country Nationals creates new opportunities for foreign nationals seeking to reside in Hungary while investing. The new legislation allows for residence in Hungary by means of a visiting investor visa and residence permit. A visitor investor visa entitles the holder to enter the country more than 90 days and more than once within 180 days, while a visitor investor residence permit entitles the holder to apply for a residence permit.

A number of conditions must be met before a visitor investor visa can be issued. The conditions are that a third-country national who:

-has a national economic interest in entering and staying in Hungary in view of his/her investment in Hungary,

-hold a valid travel document,

-holds the necessary permit for return or onward travel,

-provides proof of the purpose of his/her entry and stay,

-has sufficient means of subsistence to cover his/her subsistence and subsistence costs and the costs of departure for the entire duration of his/her stay,

-is insured for the full cost of health care or is able to cover the cost of health care,

-is not subject to expulsion or a ban on entry and residence, or if his/her entry or residence does not endanger public policy, public security, national security or public health interests in Hungary,

-is not subject to a Schengen Information System (SIS) alert,

-holds or intends to hold at least one of the appropriate investments,

-certifies that he/she holds an amount corresponding to at least one of the required investments, of lawful origin, which must be available or transferable within the territory of Hungary,

-submit a written commitment to make at least one of the required investments of a specified amount and type within three months of entering Hungary on the basis of a visitor investor visa.

For the purposes of the legislation, the following investments shall be considered to be of national economic interest:

-the acquisition of units of at least EUR 250 000 issued by a real estate fund registered by the Magyar Nemzeti Bank,

-ownership of a residential property with a value of at least EUR 500 000, situated in the geographical territory of Hungary and registered in the Land Register under its parcel number, free of legal title, encumbrances and claims, or

-a monetary donation of at least EUR 1 000 000 to a higher education institution maintained by a public trust with a public-service mission, for the purpose of supporting educational, scientific research or artistic creation.

At the time of acquisition of the real estate investment by a third-country national, a prohibition on alienation and encumbrance of the residential property shall be registered in the Land Register for a period of 5 years from the date of conclusion of the sale and purchase contract. For a period of 5 years, the property may be owned exclusively by the third-country national or jointly by the third-country national and a member of his/her family who holds the residence permit for the purpose of the host investor.

The maximum validity period of the visitor investor visa is 2 years.

The Visitor Investor Visa expires once the Visitor Investor Residence Permit has been issued.

Dr. György Zalavári summarises the conditions of the new residence permit for visiting investors in a separate article on a related topic.

Dr. György Zalavári LL.M.
Ecovis Zalavári Legal Hungary
Lawyer | Mediator | Corporate Law and Data Protection Specialist
gyorgy.zalavari@ecovis.hu

The provisions of Act XXXIX of 2023 amending Act CLXXVI of 2013 on the transformation, merger and division of certain legal entities, and amending Act XXXIX of 2023 on the amendments to the law in order to increase the competitiveness of the economy have created a new legal possibility in company law in relation to the transformation of companies.

 The provisions of the Civil Code (Civil Code), the Companies Act (Companies Act) and the Accounting Act (Accounting Act) have also been amended accordingly in connection with the rules of this new legal institution of transformation.

 A spin-off is effected by the survival of the original legal entity and the creation of a successor company with certain assets, of which the original legal entity becomes the sole member. The original company thus becomes the parent company of the new company. 

In the case of a demerger, the court will not remove the original going concern from which the company being demerged is being removed from the register when the demerger is registered.

 In the case of a demerger, only the original, predecessor company can change ownership, so only a preliminary assessment is required to determine whether a new member will join or whether a former member will cease to be a member of the company.

 In the case of a separation, all members of the original legal entity remain members of the predecessor company, unless they cease to be members at the time of the separation.

In determining the subscribed capital of the remaining legal person, the shareholding of the legal person created by the divorce shall not be taken into account.

It is important to note that a demerger cannot be interpreted as a transformation of a beneficiary, and therefore a liability to pay duty may arise in relation to tangible assets that are transferred in return for consideration in the process.

It is interesting to note that a demerger is an exception to the prohibition of division in the case of public limited companies.

Dr. György Zalavári LL.M.
Ecovis Zalavári Legal Hungary
Lawyer | Mediator | Corporate Law and Data Protection Specialist
gyorgy.zalavari@ecovis.hu

Arbitration is a legal process used to settle disputes whereby two or more parties agree in a contract in advance or in writing at the outset of a dispute to try to resolve their dispute not through the traditional court system, but before an adjudicative body independent of the state, an arbitral tribunal. These arbitration procedures are usually based on predetermined rules set by the industry, chambers, professional or other organisations.

What can be the advantages of arbitration? Speed and efficiency: traditional court proceedings can often be lengthy and take a long time to conclude a case. Arbitration is often much quicker, as the procedural rules are simpler and more flexible, and there are typically no legal remedies, with only exceptional and narrowly tailored cases for review of arbitral awards through the traditional court system.This single-stage, faster procedure can also have the advantage of reducing the time that businesses have to endure financial and business uncertainty in a dispute

Specialised expertise: parties often choose an arbitral tribunal whose members are experts in a particular field or industry, this ensures that the case is heard by people who are familiar with the field and the specific legal and professional issues involved.

Exclusion of the public:Arbitration proceedings usually arise in specialised business cases, where the information that can be obtained is often confidential and constitutes a trade secret. Businesses often prefer this procedure, as traditional court proceedings are essentially open to the public, with a closed hearing only being ordered by the presiding judge on specific request.

Cost-effectiveness: although in some cases the costs of arbitration are high, in general the lack of legal remedies means that in the longer term it may ultimately cost less time and money than traditional court proceedings.

Flexibility and customisation: arbitration gives the parties the possibility to design their own procedural rules and systems. This allows the procedure to be flexible and offer a solution tailored to the needs of the parties. International legal and business agreements: international legal matters and international business transactions often involve parties from different countries. Arbitration allows them to agree to settle the dispute in a third country or internationally, thus avoiding possible legal conflicts.

Enforceability: when an arbitral tribunal makes a decision on a case, that decision usually has the same legal force and enforceability as a traditional court decision. Dr. György Zalavári points out that the Bar Association also provides the possibility for the parties to hire lawyers instead of the court to conduct an ad hoc arbitration in disputes, and even provides appropriate procedural model rules for this purpose.

Dr. György Zalavári points out that the Bar Association also provides the possibility for the parties to hire lawyers instead of the court to conduct an ad hoc arbitration in disputes, and even provides appropriate procedural model rules for this purpose.

Accordingly, in case of dispute, the parties concerned can obtain an enforceable judgment by not using the court but by asking the lawyers acting as arbitrators. Arbitration is therefore a flexible and effective legal instrument that offers many advantages to the parties. However, it is important to understand that arbitration procedures have their own limitations and risks and that all circumstances must be taken into account according to the particular case and the parties' own needs.

Dr. György Zalavári LL.M.
Ecovis Zalavári Legal Hungary
Lawyer | Mediator | Corporate Law and Data Protection Specialist
gyorgy.zalavari@ecovis.hu

Act XXV of 2023 on complaints, whistleblowing and whistleblowing rules and the European Parliament and Council (EU) Abuse Reporting Directive 2019/1937 requires that businesses with more than 50 employees and a number of specified activities, including accountants, auditors, tax advisers, tax consultants, lawyers, law firms and head office providers, must have an abuse reporting protection system in place.

The system and other means of reporting should be made available to those who are entitled to complain through it.

For a number of professions, the professional chambers have undertaken to operate a central whistleblowing protection system for their members. This has also been the case for the lawyers' and accountants' advocacy organisations.

Dr. György Zalavári, attorney at law, also points out that a complaint under the Complaints Act can typically be filed orally, by telephone or in person, in writing, by postal letter or e-mail, and even through a special online filing interface.

The channels for reporting can be made known to the affected parties through online, electronic and offline paper-based solutions. A good solution is to publish it on the company's website or send it by e-mail. It is essential that some form of acknowledgement of the obligation is provided to the obliged company by the data subject. For those with whom the company has personal relations, the simplest form of accountability is to hand over the paper and sign a receipt. But an electronically signed reply message is now easily obtainable.

Who can make an anonymous or named declaration? Who should be notified?

We have tried to bring together the stakeholders entitled to lodge a complaint below:

(a) employees employed by the undertaking or persons employed under a contract of agency or a contract for work on behalf of the undertaking,

(b) an employee whose employment relationship with the undertaking has been terminated, 

(c) a person wishing to enter into an employment relationship with the undertaking in respect of whom the procedure for the establishment of such a relationship has been started, 

(d) a self-employed person, a sole proprietorship or a sole proprietorship if it has a contractual relationship with the undertaking, 

(e) a person who holds a participation in the undertaking and a member of its administrative, management or supervisory body, including a non-executive member,

(f) a contractor, subcontractor, supplier or person under the supervision and control of a trustee who has entered into a contractual relationship with the undertaking, or who is or has been in a contractual relationship with the undertaking, 

(g) trainees and volunteers working with the undertaking, 

(h) a person who wishes to enter into a legal relationship or contractual connection with the undertaking within the meaning of points (d), (e) or (f) and in respect of whom the procedure for the establishment of such a legal relationship or contractual connection has been initiated, and 

(i) a person who has ceased to have a legal or contractual relationship with the undertaking within the meaning of points (d), (e) or (f).

It is important to note that the company's customers do not belong to the above group, they have other procedures and channels for reporting their comments and complaints.

Dr. György Zalavári LL.M.
Ecovis Zalavári Legal Hungary
Lawyer | Mediator | Corporate Law and Data Protection Specialist
gyorgy.zalavari@ecovis.hu

In everyone's life, you may find an object of great or small value. In the following article we explain the rights and obligations of the finder.

Within eight days, the finder has to hand over the property to the person who lost it (the owner) or to the notary in the place where it was found. In the latter case, he must also state whether he claims ownership of the property and, in addition to proving his identity, give his name, the name, date and place of birth, the name of his mother, the address of his place of residence (registered office) and the place and date of the find, or that of his representative, if any. The notary shall issue a certificate of the declaration.

If the identity of the person entitled to the found object can be established, the notary shall hand it over to him or her; if no such person can be established, the notary shall keep the object for three months from the date of handing it over. If the person entitled to the thing has not come forward within three months of the delivery and the finder has not claimed ownership of the thing at the time of delivery, the notary shall sell the thing found and the proceeds shall be paid to the State. Any object which cannot be kept or preserved shall be sold immediately.

If no claimant comes forward within the above period, but the finder claimed ownership of the thing at the time of delivery, the finder shall be released. The finder may use the object delivered to him without prejudice to its condition, but may not alienate it, encumber it or transfer its use to another person. The finder shall acquire ownership after one year from the date of discovery, if the right-holder has not made himself known within that period.

However, if the beneficiary does apply, the item must be released to him/her, whereas if the beneficiary applies after the sale, the amount received must be paid to him/her. In the case of a find of greater value, the finder is entitled to a reasonable finder's fee, provided that he has made every effort to recover the item. The finder's acquisition of the object is considered to be an original acquisition, so that the third party's rights to the object cease when the finder acquires it.

A special rule applies in the case of objects found in a place open to the public: objects found in such a building or premises, or on the means of transport of a public transport company, must be handed over by the finder to the employee of the operator without delay and the finder cannot claim ownership of the object.

The ownership of found objects that are protected cultural property belongs to the State. Objects hidden by unknown persons or property the ownership of which has been forgotten but which does not belong to the category of cultural property shall be offered to the State by the finder for an appropriate remuneration.

Dr. György Zalavári LL.M.
Ecovis Zalavári Legal Hungary
Lawyer | Mediator | Corporate Law and Data Protection Specialist
gyorgy.zalavari@ecovis.hu

The Competition and Markets Authority has updated its November 2017 #GVH #Compliance #Opinion Leaders briefing ,which is summarised below. It is important to note in advance that the Competition Authority's recommendation is based solely on the provisions of Act XLVII of 2008 on the Prohibition of Unfair Commercial Practices against Consumers, but other legislation may also apply to influencer marketing (Civil Code, Civil Code, Children's Act, tax legislation, etc.).

According to the Fttv., individuals who promote third party products on their own social networking sites for a fee are considered opinion leaders (influencers). In addition to a monetary benefit, the remuneration may include, for example, the provision of a discount, a free product or service to the influencer, an invitation to a trip, etc.

If the influencer displays content for consideration, any form of business relationship or cooperation with the advertiser must be clearly and precisely identifiable and, where possible, ensure that consumers are presented with the same indication of the business relationship within a platform.

Any reference to an advertisement in a language other than Hungarian will only be accepted if it is made in the language of the content published by the advertiser.

In the absence of an advertising label to indicate the content, it is recommended that, in the case of content that only displays text, the reference to the consideration should be displayed in a way that is appropriate to the length of the text, clearly visible, separate from the text, and before any further clicking or scrolling requiring consumer intervention.In the case of stories, it is recommended to indicate the fact of consideration by direct textual indication on the image or video and by a narrative attention-grabber. It is important that the textual indication is at least as prominent as other textual elements in the image or video.

It is expected that the opinion leader has actually experienced and tried the product or service being promoted, and that his or her statements reflect his or her personal experience of the product, thus presenting a true picture to his or her followers.

The GVH has recommended that advertisers and the agencies that assist them develop contractual terms and conditions and processes or compliance programmes to ensure that they are aware of the legal requirements. The Competition Authority also included in the Recommendation the establishment of an appropriate monitoring system and reporting process, the setting of industry standards and the establishment of control points.

Dr. György Zalavári LL.M.
Ecovis Zalavári Legal Hungary
Lawyer | Mediator | Corporate Law and Data Protection Specialist
gyorgy.zalavari@ecovis.hu

Pursuant to the relevant Act, in business advertising published in a press product, radio or television programme in Hungarian, or in an outdoor advertising medium, the text of the advertisement, including the slogan, must appear in Hungarian, with the exception of the name of the business, its designation or the trade mark, regardless of the method of publication.

Dr. György Zalavári, lawyer, explains that this requirement may be fulfilled by displaying both the foreign language texts and their Hungarian equivalents in the same advertisement. The Hungarian and the foreign language text must be equally noticeable and must be displayed in the same size.

This provision does not apply to advertising published in foreign language sections, supplements or special editions of press products published in Hungarian, or in, immediately before or after, radio or television programmes in foreign languages.

The name of the shop, with the exception of the name of the business, the motto and the indication of the goods sold in the shop, as well as the notices in the shop or in the shop window intended to inform consumers, must always appear in Hungarian on the shop signs. This may also be accepted if, in addition to the foreign language text, the Hungarian equivalent of the same sign is displayed in the same prominent position and in the same size.

Signs in Hungarian must be displayed in public places, public buildings, private places and buildings open to the public, which are intended to inform citizens, and on public transport vehicles, which contain notices intended to inform passengers about road safety or the use of public transport, which are not economic advertising.

In the case of original signs on areas, buildings and structures protected by legislation on the protection of cultural heritage, the display of the text in Hungarian is not compulsory.

Established foreign language expressions are not considered as foreign language text. If there is doubt as to the rootedness of a foreign language term or as to the linguistic accuracy of the Hungarian translation, the competent authority shall take as a basis the opinion of the advisory body appointed by the President of the Hungarian Academy of Sciences.

These requirements do not affect the rights of national minorities with regard to economic advertisements and signs in the national language in municipalities where the national minorities concerned have a national minority self-government. These provisions will be monitored by the consumer protection authority.

Dr. György Zalavári LL.M.
Ecovis Zalavári Legal Hungary
Lawyer | Mediator | Corporate Law and Data Protection Specialist
gyorgy.zalavari@ecovis.hu

In essence, the limitation period is when a claim ceases to be enforceable after a certain period of time. This limitation period starts to run when the claim becomes due, i.e. when it should have been paid.

Normally, claims are time-barred after 5 years. The applicable legislation itself sets a different period from the general five-year limitation period in certain situations.

For example, the right to claim tax is subject to a limitation period of five years from the last day of the calendar year in which it is due, i.e. in practice six years. It is also worth noting that claims arising from the supply of electricity or gas are subject to a limitation period of 3 years, while claims relating to the supply of telephone or television services are subject to a limitation period of 1 year.

But is it possible to agree in a contract between the parties to apply a shorter or longer term than the law in a specific, individual legal relationship? 

The question arises because the Civil Code also contains the principle of freedom of contract, which means that in the vast majority of cases, where the law does not prohibit derogation, we are free to decide whether to conclude a contract, with whom to conclude it and with what content.

Dr. György Zalavári, lawyer, points out that this is possible; the principle of freedom of contract can also be applied in relation tolimitation periods, and the contracting parties may derogate from the original rules of the Civil Code. Such an agreement changing the limitation period must be in writing.
A limitation is that an agreement that completely excludes the statute of limitations is void, but the claim may be time-barred after a very short period of time, even a few weeks, if the agreement says so.It is important to note that in general, a time-barred claim cannot be enforced even in court proceedings. However, the fact that the statute of limitations cannot be taken into account ex officio by the judge or the administrator in judicial or administrative proceedings must be expressly invoked by the party concerned. The court or administrative authority is not entitled to draw attention to this as a guarantee of impartial judgment or administration.

It should also be noted that during the limitation period, certain measures interrupt the running of the limitation period, in which case the limitation period starts to run afresh, and that the limitation period is suspended in certain circumstances, in which case the time limitation period does not run.

Dr. György Zalavári LL.M.
Ecovis Zalavári Legal Hungary
Lawyer | Mediator | Corporate Law and Data Protection Specialist
gyorgy.zalavari@ecovis.hu

Once a company has been set up, there are many situations in the life of a business where it may be necessary to register changes to company details. These changes can be, for example, a change in the name, address or principal activity of the company, or an increase or decrease in the subscribed capital or even the cancellation of the company.

The business register contains the date of the change in the company data. The change of data may differ in terms of when it takes effect (from when it is effective) and when it is actually registered by the court. In the absence of an indication of the date of the change or in the case of contradictory information, the date of the change in the business register is normally the date of the underlying decision.However, there is one exception: the company cannot determine the date of the reduction of the share capital in advance, the date of the change being the date of registration with the court. 

The company may, with certain exceptions, specify the date of the change in advance in the application for registration of the change. However, this may not be earlier than the date of the decision giving rise to the change. In a typical case, this would be the planned date of registration of the transformation.

A frequent source of uncertainty for company directors is whether the new data (e.g. new company name, registered office) can be used in the company's affairs after the decision on the change of company data has been taken, but before it is registered. At that time, the new information is not yet included in the business register as part of the registered data, but can be found in the business database only by means of the remark "under registration".

In connection with the data registered retroactively to the date of the amending, company ownership resolution, Dr. György Zalavári, lawyer, recommends that both the old and the new data be entered in the official documents during this transitional period.

If you have any legal questions regarding company law, please contact the author of this article, Dr. György Zalavári, lawyer.

Dr. György Zalavári LL.M.
Ecovis Zalavári Legal Hungary
Lawyer | Mediator | Corporate Law and Data Protection Specialist
gyorgy.zalavari@ecovis.hu

Whether a company or other organisation is being established, an application for the organisation's tax number must be submitted to the state tax and customs authority at the same time as the application for registration is submitted to the registration authority.

If the VAT liability of the organisation being established is not excluded, given that it does not carry out any economic activity within the meaning of the VAT Act or carries out only activities of public authority, it must declare how the VAT liability is to be determined. The VAT liability can be established on the basis of the general rules, but under the VAT Act there are also a number of other options available.

It is often the case that the optimum form of taxation for the business is not fully developed when the business is set up, or that new activities are added to the business, which justify a different form of taxation. However, it is not usually possible to change the way in which VAT is calculated until the first day of the year following the year in question.

The possibility to amend the declaration made at the time of filing is provided for by Section 257/F of the VAT Act to eliminate the failure to file a declaration at the time of establishment or even the failure to file a declaration at the time of establishment: 'The taxpayer may initiate the amendment of the declaration made at the time of filing by means of a correction request submitted to the state tax and customs authority prior to the commencement of the subsequent tax audit of the returns, within the limitation period for the right to tax assessment, in accordance with Section 20 (5), Section 30 (4), Section 45/A. § 80(2)(b), § 80/A(1), § 88(1), § 192(1), § 196/G(1), § 197(1), § 212/A(1), § 218(1), § 220(1), § 224. § (1), provided that the amendment does not affect the amount of the taxable amount, the tax payable and the input tax deductible which he has determined and declared."

The request for rectification may be made to amend declarations relating to intra-Community acquisitions of goods, the place of supply of services, the assessment of the taxable amount in forints, the taxable amount of supplies and leases of immovable property, the exemption from taxable persons and the choice of cash accounting, and the taxable person and reseller status of agricultural activity.

The possibility to submit a request for correction is therefore not unlimited in time: it is possible to do so within the limitation period for the right to assess tax, provided that the amendment does not affect the amount of the tax base established and declared by the taxpayer, the amount of tax due and the amount of input tax deductible.

The request for correction may be submitted on form 20T201T, provided that proof of either ad hoc or permanent right of representation (EGYKE) is provided to the NAV prior to submission; otherwise the request submitted will be considered invalid by the NAV.

Dr. György Zalavári LL.M.
Ecovis Zalavári Legal Hungary
Lawyer | Mediator | Corporate Law and Data Protection Specialist
gyorgy.zalavari@ecovis.hu