BUSINESS LAW 4, 5, 6 - Company law

Question 1

What are the subjects of law?

Answer 1

State, natural persons (humans), legal persons (organizations)

In business life, entrepreneurs (natural persons) and companies (legal persons) play an important role, along with cooperatives.

Question 2

What are the two main reasons for choosing a company form over entrepreneurship?

Answer 2

• Limited liability
• Easier to collect capital

Question 3

What is one of the most important aspects to consider when deciding the form of business activity?

Answer 3

Taxation

Question 4

What does company regulation typically include?

Answer 4

• Commercial codes
• Separate company laws

Question 5

In Hungary, where are companies regulated?

Answer 5

In the Civil Code

Question 6

What is the definition of a company?

Answer 6

Legal persons established by the monetary or in-kind contributions of their members for the pursuit of their common businesslike economic activities

Question 7

List the forms a company may be established in.

Answer 7

• General partnership
• Limited partnership
• Limited liability company
• Company limited by shares (stock corporation)

Question 8

What are the minimal capital requirements for an LLC in Hungary?

Answer 8

3.0 M HUF

Question 9

What forms of contribution can be made to a company?

Answer 9

• Monetary
• In-kind (not monetary)
• Tangible asset
• Intellectual property
• Property right
• Claim

Question 10

What does legal personality mean in the context of companies?

Answer 10

Legal personality separate from its members

Question 11

What is the main rule for profit and loss sharing in companies?

Answer 11

In proportion to the financial contribution

Question 12

What is required for a company name?

Answer 12

It should differ from other companies’ names registered in Hungary

Question 13

What is the main activity of a company?

Answer 13

You may do everything that is not prohibited or restricted by law

Question 14

What is the purpose of the company registry?

Answer 14

Publicity and authenticity

Question 15

What are the stages of company formation?

Answer 15

• Conclusion of the articles of association
• Signature of the articles by a lawyer
• Registration of the company with the company court

Question 16

Who is the highest organ of a company?

Answer 16

Members’ meeting

Question 17

What is the role of the supervisory board?

Answer 17

Controlling body of the members with insight to each document

Question 18

What is the definition of a general partnership?

Answer 18

Members undertake to make contributions and bear unlimited, joint and several liability for obligations not covered by partnership assets

Question 19

What happens to a member’s liability after they leave a general partnership?

Answer 19

The former member is liable for the debts of the partnership incurred prior to termination for up to five years

Question 20

What differentiates a limited partnership from a general partnership?

Answer 20

At least one general partner has joint and several liability, while limited partners are not liable unless otherwise provided by law

Question 21

What is a limited liability company?

Answer 21

A company formed through the provision of an initial capital where the liability of members is limited to their contributions

Question 22

What is the minimum required initial capital for a limited liability company in Hungary?

Answer 22

3 million HUF

Question 23

What is a core deposit in the context of a limited liability company?

Answer 23

The capital contribution of members provided in the form of core deposits

Question 24

What is the supreme body of a limited liability company?

Answer 24

Members’ meeting

Question 25

True or False: A single-member company can be formed without other members.

Answer 25

True

Question 26

What is the supreme body of a limited liability company called?

Answer 26

Members’ meeting ## Footnote It appoints management and has exclusive competence for certain approvals

Question 27

What is required for the transfer of business shares in a limited liability company?

Answer 27

Executed in writing; memorandum of association need not be amended ## Footnote This outlines the formalities for share transfers

Question 28

Who manages a limited liability company?

Answer 28

One or more managing directors ## Footnote Management structure can vary based on company size and needs

Question 29

True or False: Shareholders of a company limited by shares are liable for the company's obligations.

Answer 29

False ## Footnote Their obligation is limited to the nominal value or issue price of the shares

Question 30

What are the two types of companies limited by shares in Hungary?

Answer 30

Public company limited by shares, Private company limited by shares ## Footnote Public companies have higher minimum capital requirements

Question 31

What is the minimum capital requirement for a public company limited by shares in Hungary?

Answer 31

20 million HUF ## Footnote This is the threshold for companies whose shares are listed on a stock exchange

Question 32

What must be attached to the articles of association when in-kind contributions are provided?

Answer 32

A report by an auditor or expert ## Footnote This ensures proper valuation of the asset being contributed

Question 33

What are stocks (shares) in a company?

Answer 33

Equity securities representing membership rights ## Footnote They are registered, have a nominal value, and are tradable

Question 34

What is a dividend in the context of a limited company?

Answer 34

A share from the taxed profit ordered for distribution ## Footnote Dividends are distributed based on the nominal value of shares

Question 35

Who manages companies limited by shares?

Answer 35

Boards of directors ## Footnote This management structure is typical in larger corporations

Question 36

How many members are typically on a board of directors for companies limited by shares?

Answer 36

Three natural persons ## Footnote This is a standard requirement for governance

Question 37

What must public companies limited by shares establish in addition to common rules?

Answer 37

A supervisory board ## Footnote This board oversees company management beyond regulatory requirements

Question 38

What is the role of the audit committee in public companies limited by shares?

Answer 38

Assist the supervisory board or management in financial reporting and auditor selection ## Footnote This committee enhances oversight of financial practices

Question 39

What is the difference between insolvency and bankruptcy?

Answer 39

Insolvency is a payment failure situation; bankruptcy is a legal proceeding for debtors ## Footnote These terms describe different stages of financial distress

Question 40

What is liquidation?

Answer 40

The proceedings aimed to satisfy creditors of an insolvent debtor upon winding-up ## Footnote This process concludes the business affairs of the company

Question 41

Fill in the blank: The proceedings where the company is wound up without succession, if it is not insolvent, is called _______.

Answer 41

Dissolution ## Footnote This process formally ends the company's existence

Question 42

What is a payment failure situation in the context of company finance?

Answer 42

Insolvency ## Footnote This indicates the company cannot meet its financial obligations