When someone is considering establishing an LLC and learns that the 3 million HUF share capital does not have to be paid immediately, they are often relieved. This is indeed a very advantageous option that gives flexibility to start-up businesses. At the same time, it is important to be aware that this flexibility also has its limitations and consequences, különösen akkor, ha a törzstőke befizetése elmarad.
In this article, we explain what happens if the share capital is not provided on time and what liability this may impose on the company’s members later on.
Deferring the payment of the share capital does not mean that you can avoid paying it in full.
Let’s start with the most important point: the share capital must be fully provided, no later than within two years from the date of company registration. This statutory deadline is not a matter of opinion, nor can it simply be “avoided” as it is set out in the Civil Code. The company’s Deed of Foundation may provide otherwise, but only if it sets an earlier deadline.
If the share capital is not paid in full or provided as an in-kind contribution within the prescribed period, this will have legal and financial consequences, and they may not necessarily be pleasant.
What happens if the deadline expires but the full share capital has not been provided?
In this case, the company’s members remain liable up to the amount of the unpaid share capital.. This means that if the company incurs a debt and is unable to pay it, the members may be required to provide the share capital contribution they committed to but have not yet provided.
This can be particularly risky if the business becomes loss-making in the meantime or incurs obligations towards external creditors. In such cases, the creditor may turn directly to the member and demand payment of the unpaid share capital contribution.
There is also no entitlement to dividends until the full share capital has been paid up.
Many people do not know that providing the full share capital is one of the conditions for receiving a share of the company’s profits.. As long as a member has not paid their committed share of the share capital, they are not entitled to dividends, even if the company generates a profit. This means that the company may operate profitably for years, but a member who has not fulfilled their obligation is not entitled to withdraw any of the profits.
This is a logical rule, as dividends are paid from the company’s assets, and the company’s assets are based on the share capital provided by its members. A member who does not contribute to the company to the extent they have committed to cannot share in the profits either.
Liability for the company’s debts: not always limited!
One of the most attractive features of an LLC is that the members’ liability is, in principle, limited: they are liable only up to the amount of their capital contribution to the company. However, as long as this contribution has not been fully provided, their liability remains open.
This can be particularly problematic if the company becomes insolvent and is unable to settle its debts. In such cases, creditors may legally demand payment of the unpaid share capital, even through legal proceedings.
In other words, “limited liability” is only truly limited once the member has fulfilled their commitment.. Until then, it is more of a theoretical protection.
What happens if a member ultimately fails to provide their share of the share capital?
If a member fails to provide the committed amount for an extended period of time, either by payment or through an in-kind contribution, the company may, through the appropriate legal procedures, exclude the member.. With the member’s departure, their business share may also cease to exist or may be transferred.
This is a less common but existing legal measure that allows the company to protect its operations against members who fail to fulfil their obligations.
Deferring the payment of the share capital is a great opportunity to make it easier to start our business. But this is not a “waiver”, only flexibility in terms of timing. The 3 million HUF share capital must still be fully provided, just not immediately.
Those who are aware of this and use this opportunity consciously can benefit from it. But those who think that this is merely an unnecessary accounting entry that never needs to be taken seriously may face unpleasant surprises, whether in the form of liability, dividends, or creditors’ claims.
If you establish an LLC, plan ahead: when, from what source, and how you will provide your share of the share capital. This provides not only legal, but also financial security for your business.