If somebody dies unexpectedly, it’s not only a terrible loss for the grieving family and friends, but can also be a tragedy for the company of which the deceased was a member. At such times, the company can find itself unable to make decisions, even if the deceased only held a small share in the business. However, solutions do exist to enable the testator not only to make provisions for family members in the event of his or her death, but also to make sure that the company can continue to make decisions.
Venture capital funds financed partly or entirely with government money have been all the rage in the equity markets these past few years. Initially the Jeremie funds pumped capital into the market in four successive rounds, but as the placement period for this scheme ended, the first solely state-owned venture capital investor also entered the market. And from this year on, new venture capital funds with EU money at their disposal are coming on stream, as well as a state-financed equity fund is set up to assist ventures with potential for future stock exchange listing.
The new Civil Code that came into force a couple of years ago broadened the autonomy of companies, which are now free to shape their internal organisation and operation to their own needs. Nevertheless, there are still several lesser-known, rigid company-law rules that, if ignored, can entail severe legal and financial consequences.
The “new” Civil Code, which entered into force more than two years ago, has made it possible for businesses to shape, in their own image, the regulations governing their organisation and operation. This opportunity has certainly captured the imagination of legal practitioners. All sorts of extreme ideas were mooted. For example it was suggested that a limited liability company (Kft.) could issue shares or other securities embodying members’ rights. The company courts soon put a dampener on things, however, creating the category of “status rules”: no matter how flexible the law, it still isn’t possible to depart from the rules that constitute the defining features of a particular form of business entity.
The issue of governing law often arises in cross-border M&A deals or contractual relationships. At such times – either due to the UK domicile of a contracting party, or to the widespread use of the Anglo-Saxon templates – it is often the English law that is chosen. It may turn out to be important to understand the difference it can mean to the parties’ positions if instead of Hungarian law they were to opt for English law – for example, when drawing up the documents for a company acquisition.
The law is constantly in flux. While many people may find this intimidating, for us it’s precisely what makes it so exciting. We’d like to share this attitude with businesspeople and managers, and with those who just have an interest in business law, in the form of a regularly updated blog that discusses the latest tax law and commercial law issues in an accessible style. Feel free to send your questions and suggestions for topics you’d like us to cover to firstname.lastname@example.org.