Using electronic signatures according to Hungarian corporate law

Hungary

During these difficult times, it is important to clarify certain questions on the use and applicability of certain types of electronic signatures.

In order to support social distancing in business matters, on 10 April 2020 the Hungarian government adopted Decree no. 102 of 2020, effective until the end of the state of emergency, which establishes special rules for electronically issued documents.

As a result of these rules, bodies of a company may issue written statements using a Qualified Electronic Signature (QES) or Advanced Electronic Signature (AES) based on a qualified certificate or the equivalent electronic seals. (More on the QES and AES later in this article).

In the absence of such signatures or seals, an online verifying service (AVDH) may be used, which ensures the tracing and verification of the personal identity of the signatory (https://niszavdh.gov.hu/index) by using their ’client gate’ (ügyfelkapu) login name and password, which all private persons have access to.

Natural person members of a company may also issue written statements via e-mails containing their identifying personal data. For them, the use of electronic signatures is not necessary even if the use of electronic communication is not permitted in the constitutional document of the company.

As another response to the COVID-19 crisis, Governmental Decree no. 132 of 2020 enables security service providers to certify their clients via videoconference, avoiding personal contacts. This means that obtaining electronic signature-related services should now be easier. Previously one had to personally attend the offices of service providers for identification purposes while now this can be done via videoconference.

E-signatures in Hungarian corporate law documents

Currently, it is possible in Hungary to sign on behalf of a company using electronic means. In order to ensure that a person’s electronic signature is verifiable and easily accessible in an authentic public database, an electronic signature samples may also be submitted to the Court of Registration and recorded in the companies’.

Regarding a company’s internal affairs, such as company resolutions, statements addressed to or made by members (e.g. shareholders) or managing directors, business quotas or share sales and purchase agreement (SPA), the Hungarian Civil Code requires that they be made in writing. The established judicial practice is that an electronic document only qualifies as a written form statement if it is executed by AES or QES. For a legal statement to be issued as a matter of law in written form (including the aforementioned corporate documents), a standard electronic signature (SES) is not sufficient.

In addition, each document submitted by a company to the Court of Registration (e.g. powers of attorney, delivery agent appointments, shareholder resolutions) must be incorporated in private document with full probative force, which requires additional formalities. For example, this applies to a handwritten document signed by the author, a pre-typed document signed in front of two witnesses and a document signed by the company’s authorised representative. In these cases, the company name must be pre-typed, pre-written or stamped under or above the signature or it must be an electronic document signed with QES or AES and based on a qualified certificate. A time stamp may also be required.

And if this is not complex enough, additional requirements (e.g. notarisation, apostille, superlegalisation) may apply to specific documents to be issued or applied in Hungary if signed abroad or if the document requires it.

Using an e-signature raises complex questions

Prior to using electronic signatures, several factors must be considered: in which country the corporate document will be executed and used, for what purpose, to what authority it will be submitted (e.g. Court of Registration, trade registry), and the profile of the signatory (e.g. a private person acting on their own behalf or acting as an authorised representative of a legal entity).

The most widely accepted and secure option for e-signing is the qualified electronic signature or QES. The applicable EU eIDAS Regulation (Regulation on electronic identification and trust services for electronic transactions in the internal market) specifically states that "a QES shall have the equivalent legal effect of a handwritten signature".

Furthermore, the eIDAS Regulation establishes that a QES based on a qualified certificate issued in one EU member state "shall be recognised as a qualified electronic signature in all other member states". However, whether company documents signed with advanced electronic signatures or AES are considered legally binding as written form statements varies from country to country and authority to authority.  Hence, parties should investigate prior to signing whether the document in question will be submitted to an authority or court that accepts electronically signed documents.

A QES and AES service is provided by qualified QES or AES trust-service providers registered by a supervising authority of one of the EU member states. The official list of qualified trust service providers in Hungary and the EU is available hereBefore contracting for any e-signature services, it is advisable to check the service provider in this list.

For more information on the use of electronic signatures in Hungary, contact your regular CMS advisor or local CMS experts.

Article co-authored by Istvan Rigo.