On 21 April 2020, the Hungarian government adopted Decree no. 140 of 2020 on the introduction of the “economy saving package”, which extends the deadline for Hungarian companies to prepare, approve, deposit and publish their annual reports.
This extension is until 30 September 2020 if the deadline would otherwise expire between 21 April and 30 September 2020.
According to Hungarian general accounting rules, companies are obliged to prepare, deposit and publish their annual accounts on the website of the Company Information Service by the end of the fifth month following the balance sheet date of these accounts. For example, if the financial year corresponds to the calendar year (i.e. the balance sheet date of the annual accounts is 31 December), the deadline provided for the preparation, depositing and publication of the annual accounts is 31 May of the following year.
Since the current internal crisis may make it difficult for numerous companies to meet the above deadline, the Hungarian government decided to prolong this deadline until 30 September 2020, if the deadline would otherwise expire between 21 April and 30 September 2020.
Under Hungarian law, prior to depositing and publishing annual accounts, each company must hold a general meeting to pass a resolution on the adoption of the accounts and the appropriation of after-tax profits. As mentioned in our previous article on the amendments of holding general meetings, to facilitate the approval process, the Hungarian Government had already introduced some specific rules pursuant to which Hungarian companies are now able to hold their general meetings electronically or pass resolutions in writing even if these procedures are not permitted by their constitutional document.
In addition, if the general meeting cannot be held electronically or written resolutions cannot be passed and the decision is urgent, necessary for the maintenance of the lawful operation of the company and for the management of the current crisis situation, the management is entitled to pass a resolution on the adoption of the annual report and the appropriation of the after-tax profit instead of the general meeting. If the management exercises such exceptional power, the decision must be supported by a majority of the shareholders as set out in the respective Hungarian government decree.
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Article co-authored by Szabina Marsi.