General features of COMPANIES

When people form an organization for business purposes, they use the word ‘company’ or ’firm’ in a general meaning, e.g. I work for a company / for a law firm. A business (vállalkozás) is an organization involved in the trade of goods, services, or both to customers (megrendelő, ügyfél, vevő), often including consumers (fogyasztó), and is rather a business-related expression as opposed to a legal concept.

 A company, in a legal sense, is a separate legal entity that has been incorporated through a registration (bejegyzés, nyilvántartásba vétel) procedure.  Incorporated entities (bejegyzett jogi személy) have legal rights and liabilities that are distinct from those of their members/shareholders (tagok, részvényesek) and employees, have perpetual succession (’jogfolytonosság’: a társaság léte független a tagjai változásától) and are not affected by the death or the insolvency (fizetésképtelenség) of an individual member/shareholder. Companies are owned by their members/shareholders (who can transfer (átruház) their shares (üzletrész, részvény) to others) and are controlled by a board of directors (testületi ügyvezető szerv, pl. igazgatóság vagy igazgatótanács), the members of which are normally elected or appointed by the members/shareholders.

 Companies have the right to sue and to be sued, to own property, to hire employees or to grant and to borrow loans. The primary advantage of a company structure is that it provides the members/shareholders with a right to receive a dividend (osztalék).

 Companies are established by the memorandum of association and the articles of association (Kft. vagy Rt. létesítő okirata – társasági szerződés, alapító okirat, alapszabály). The memorandum of association (UK) / articles of incorporation (US) contain(s) the most important information with regard to the company and is of interest mainly to outsiders who may wish to have dealings with the company. The articles of association (UK) / bylaws (US) set out the regulations which apply to the internal governance (belső irányítás) of the company and are of interest mainly to the members/shareholders and to the directors.