When establishing a company in Hungary, the selection of the appropriate business name is crucial because it shall comply with both business aspects and legal regulations as well. You can find detailed information about the legal regulations in the followings.
A business entitiy’s name is a business name, which is appropriate to distinguish one legal entity from another. The Hungarian law contains numerous regulations regarding the business name of a legal entity for the purpose to fulfil this function, moreover, the Hungarian Civil Code protects the existing business names by regulating the right to a name among the moral rights. You can read about the legal protection of business name in Hungarian language by clicking the https://drkrlegal.hu/domain-nev-es-cegnev-jogosulatlan-hasznalata/ link.
The ‘exclusivity’, ‘precision’ and ‘reality’ of a company’s business name
The basic requirements towards business names can be described by three principals according to Hungarian law, which are the ‘exclusivity’, the ‘precision’ and the ‘reality’ of a company’s business name, which principals shall be considered when choosing the business name of a company.
According to the ‘exclusivity’ of the company, the business name shall have a distinctive character and can not be fallacious. Therefore a legal entity’s name shall be distinguishable from another legal entity’s name which has already been registered. The business name (short business name) shall clearly differ from every other company’s business name which have already been registered or booked in Hungary – beyond the chosen form of the company – and cannot suggest – considering in particular the business activity and the chosen form of the company – false impressions. The business name shall be also distinguishable from the official and unofficial name of public authorities and public administrations.
According to the ‘reality’ of the company, the legal entity’s name cannot suggest the opposite of reality.
According to the ’precision’ of a company, besides the ‘leading-phrase’ the name can only contain Hungarian words complying with the Hungarian grammar. The followings must be represented in the name of a legal entity: the type of the legal entity, if the business name of the legal entity containes the business activity of the legal entity, than the business activity shall be represented as well (in Hungarian language, complying with the Hungarian grammar). The ‘leading-phrase’ can be written in foreign language or can be an abbreviation or an acronym as well, which should be written in Latin characters. In a business name, an abbreviation can only appear in the ‘leading-phrase’ or in the form of the company.
The parts of the business name and the short business name
The business name has two mandatory parts: the ‘leading-phrase’ and the chosen form of the company. The ‘leading-phrase’ serves the identification and the distinction of the company from other companies. The ‘leading-phrase’ is in the first place in the business name.
Companies have the opportunity to choose and register a short business name as well, which contains the ‘leading-phrase’ and the chosen form of the company.
Other legal regulations
The business name can also contain the name of the founders or the members of the company, but in these cases the principle of the ‘exclusivity’ of a company shall be taken into consideration.
In case of non-profit companies, the business name (before the chosen form) shall contain the non-profit nature of the company. In case of public benefit purpose entities, the public benefit purpose character may be represented.
In the business names of Hungarian branch offices of foreign companies, Hungarian agencies of foreign companies or places of business of European business mergers the business name of the foreign company shall be represented.
The limits of choosing the business name
The business name may not contain
- the name of any person who had a leading part in the establishment, development or maintenance of a totalitarianism political regime of the 20th century, or
- any phrase or name of an organisation, which can be directly connected to a totalitarianism political regime of the 20th century.
The phrases ‘state’ or ‘national’ can only appear in a business name, if the state of Hungary has directly or indirectly (through its organisations) a majority influence, or the company is part of the permanent state property by law.
The names of outstanding historical personalities can be represented in the business name with the permission of the Hungarian Academy of Sciences, while appellations in which someone is legally interested can only be represented in a business name with the consent of the entitled.
Booking of the chosen business name
Among two or more companies the right to bear the chosen business name entitles the company which submitted its application for registration in the company registry firstly, or booked the business name.
Hungarian law provides the opportunity for companies to submit an application for booking the business name for a 60-days period before submitting the application for registration or the application for the amendment of the registration of the company. The Company Registry Court examines within a working day (following the arrival of the application for booking the chosen business name) whether the chosen business name is already registered or is under registration or is already booked by another company. If the chosen business name can be registered into the Company Registry, the Company Court books the chosen business name by issuing a warrant for the company for a 60-day period and represents this fact in the company registry. During this period other legal entity can not be registered with this business name and the business name can not be booked by other companies. The booking of the business name ends if the application for the registration of the company or the application for the amendment of the registration of the company is not registered during this 60-day period. In case of submitting an application for booking the business name, legal representation is obligatory.
The duty of booking of the chosen business name is 15,000 HUF.
If you have any questions, please do not hesitate to contact me.