Introducing The Managing Director Without Representation Rights

Hungarian law has always permitted shareholders of a company to limit the power of the company's managing director(s). Thus, it has also been allowed to appoint a managing director without any right to represent the company.

However, so far, the limitation on the representation rights of a managing director could not be registered in the Companies Register (other than individual or joint signing authority), and therefore, it could not be regarded as publicly available information. Consequently, the limitation was not valid in respect of third parties.

Based on the most recent amendment to the relevant law, which became effective on 1 July 2018, a new section was added to the Companies Register for the registration of managing directors without representation rights. According to this change, three kinds of representation rights may appear in the Companies Register: