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Hungary: new rules for judicial review of company decisions

Hungary
20/03/2014
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From 15 March 2014, new rules came into force governing the judicial oversight of corporate decision-making.

The rules, which form part of the new Civil Code, are likely to lead to more court proceedings and thus, in the longer term, to provide a settled legal basis for preparing documents and giving legal advice relating to corporate decisions.

The key changes are:

  • The new Civil Code grants the right to commence court proceedings to the members/shareholders, directors and the members of the supervisory board for the judicial overview of any decision of companies. This extends the scope of decisions against which the directors and the members of the supervisory board may commence such proceedings.
  • The objective deadline for commencing proceedings will increase from 90 days to one year (the subjective deadline remains 30 days)
  • Courts will have the power not only to invalidate unlawful decisions but also to order the company to take a new decision
  • Courts may declare a decision to be invalid but impose no further consequences where it holds that the violation of the law or the company’s constitution is insignificant and does not jeopardise the company’s lawful operation

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