COVID-19 corporate measures introduced in Hungary

Having regard to the emergency situation in Hungary due to COVID-19, the Government introduced temporary changes in the legal requirements concerning the operation of the companies’ general meetings.

Government Decree No. 102/2020. (IV. 10.) („Decree”) provides that the general meetings could not hold sessions requiring personal attendance of the members. Thus, the general meetings of the companies may adopt resolutions exclusively by means of e-communication tools or without holding a meeting. In case the articles of association do not allow the use of e-communication tools, the management shall establish the rules.

The Decree further provides that if the company has more than 5 but less than 10 members, and the members having the majority of the votes did not vote for adopting resolutions by either ways, or the company has more than 10 members and the management does not initiate adopting resolutions out of session or by applying means of e-communications, instead of the general meeting, the management shall have the power to

• adopt the annual report;
• adopt resolution on the use of profit; and
• decide upon any matter that would normally fall under the competence of the general meeting if it concerns the lawful operation of the company or the management of the current extraordinary situation, or if the matter is urgent and falls under the scope of rational and responsible management.

The management may exercise its power to adopt such resolutions only if

• the members having more than 25% of the votes do not oppose to the proposed resolution in an amount exceeding 51% of the votes, and/or
• the member having controlling interest or qualified majority does not oppose the proposed resolution.

The management may modify the instrument of incorporation only due to compliance with regulations introduced as a result of the emergency situation. The management is not allowed to adopt resolution on transformation, merger, division or the termination of the company without succession.

The management of a limited liability company or a company limited by shares is not allowed to decide upon the decrease of the initial capital or capital injection unless the latter does not change the ownership ratio of the members in the company and the members provided prior consent.

The general meeting shall discuss the resolutions adopted by the management on a session held on the 90th day following the termination of the emergency situation at the latest. The subsequent modification or repeal of the resolution of the management shall not affect the rights and obligations arisen from the resolution adopted prior to the decision of the general meeting.

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