Hungary: Company Managers On The Blacklist

Last Updated: 29 August 2017
Article by Agnes Bejo

Many people could be in for a nasty surprise when trying to set up a company: the company court refuses to register the majority owner or managing director on grounds that the person is subject to a ban. While the banned persons sometimes know that they have "been up to no good", in other cases they are baffled as to the reasons for the ban. A lot is at stake: a person who is banned could end up on the "black list" for up to 7-8 years.

Anyone who is irresponsible, acts in bad faith or is negligent should not be a manager or majority shareholder of a company – this sums up the message of the laws on creating and maintaining blacklists. These rules, however, are somewhat multifarious, and it seems that they are sometimes stricter than is desirable. This can lead to some very unpleasant situations.

Bans can be imposed in various circumstances:

1. Tax debts

The managing director or majority owner of a company will be blacklisted by the tax authority (NAV) if the company has a tax debt in excess of HUF 5 million for more than 180 days, or if the company goes into liquidation and, at the end of the procedure, leaves behind a tax debt of more than HUF 5 million. In the former case the ban lasts for as long as the tax debt is outstanding, but in the latter case it remains in effect for 5 years from the closure of the liquidation procedure.

It is by no means unusual for NAV to declare tax arrears in the case of companies that act prudently, and it is also not uncommon for a company to go into liquidation due to these tax arrears. Besides potentially losing the results of maybe several decades of work, in such cases the owner or managing director can also expect to be blacklisted for up to another 7-8 years. What is more, there is no opportunity to request leniency, for example, on the grounds that the director acted with the appropriate degree of diligence and care.

Even more dangerous is the fact that the ban also applies to those who were managing directors or majority owners during the one-year period preceding the event giving grounds for the ban. Accordingly, if somebody sells its company in September 2016, entirely in good faith, and the company is liquidated one year later due to a tax debt, the unsuspecting seller could also end up on the blacklist.

2. Deletion procedures

The company court conducts a forced deletion procedure if it detects a serious breach of the law relating to the company's operation (for example, if the company's managing director has resigned and a request for the situation to be remedied can not be delivered at the company's registered office). Similarly, NAV may also exercise its right to delete a company's tax number in the event of certain deficiencies (for example if there is no company sign outside the firm's registered office, and the entity does not remedy this shortage).

To deter entrepreneurs from abandoning their companies, in these cases both NAV and the company court put, or may put, the managing director or majority owner of the deleted company on the blacklist. If the ban is imposed by the company court, such sanction will not only apply to future managing director positions, but the person concerned will also be deleted from the records of all registered companies where it holds the post of managing director.

The rule carries a number of risks that even companies whose operations are totally above-board need to take into consideration. The threat of deletion of the tax number, and with it a ban, can arise even as the result of a relatively minor irregularity. Also, the one-year retroactive effect applies in these procedures as well: if the deletion of a company, sold in September 2016, starts in August 2017, the seller of the company will also be blacklisted regardless of whether or not he knew of the buyer's dishonest intentions.

3. Liquidation

A ban can also be a possibility in the event of a liquidation procedure. If the executive officer of a company under liquidation is held to account for a breach of the rules on the protection of creditors, then – in addition to liability for indemnification – he also faces a ban: for 5 years following the liquidation procedure he may not be an executive officer or majority owner of a company. The ban, similarly to the sanction applied in the event of a forced deletion, may also affect existing management positions, as the company court will also delete the banned person's status as executive officer at other companies.

In order to impose the ban, in this case, it is also necessary to establish the manager's personal liability, arguing that it did not take the best interests of the creditors into account. But how the executive officer of a company under threat of insolvency can act correctly and take the best interests of creditors into account, while being squeezed from several sides at once by a number of creditors, is another question altogether.

What should we do to avoid a ban?

The simple answer to this question is, obviously, to avoid allowing the company to accumulate a tax debt or to come under a forced deletion or a liquidation procedure. Life, however, is never that simple, and the tax authority may penalise even the most careful company, while even a relatively minor act of carelessness can be sufficient to result in the deletion of a company's tax number.

The situation is even more difficult if the individual sells its company: it has no control over what the new owner will do with it. In such cases, even a contractual commitment by the buyer with sanctions for non-compliance, is not enough because it is difficult to quantify the damages that may result from an inability to manage or own a company for several years. In cases of this type, it is especially important to choose a buyer who can be relied on to continue running the sold company as before.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.