Section 7(1) of Act V of 2006 on Companies Registration, Court Proceedings and Winding-up (Companies Act) requires a company to indicate its registered office by means of a signboard, but the Act does not provide any further details. The details of this have been worked out in court practice. If the company fails to pay attention to these, it could result in compulsory liquidation or cancellation of the tax account," points out Dr. Roland Zsidi, chief lawyer at ICT LEGAL, Termel & Zsidi Law Office.
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According to a case decision of the Metropolitan Court of Appeal, "it does not meet the legal requirement of a registered office marked with a signboard if the registered office is marked with a piece of paper attached to a fence that is vulnerable and easily removable by anyone, and that is quickly damaged by natural forces". In any case, the sign must be placed in a clearly visible place.
However, in a judgment, the Court of First Instance relied on the requirement of good faith and the cited Companies Act. 7(1) of the referenced law, in addition to the compulsory display of a signboard, it also held that companies may be expected to operate a working schedule and work organisation which allows them to receive ordinary business postal items at their registered office as quickly as possible. It is therefore also necessary to ensure that postal items are received at the registered office.
Although Section 7(1) of the Companies Act only specifies the registered office, it is recommended that the signboard is also displayed at the company's premises or branch office, as other legislation also imposes serious legal consequences for failure to do so - warns Dr. Roland Zsidi, chief lawyer at ICT LEGAL, Termel & Zsidi Law Office.
What are these legal consequences?
The Companies Act also regulates the procedure for the dissolution of a company with an unknown registered office, which is initiated ex officio by the Commercial Court if it becomes aware that the company has no registered office or place of business or branch office, and the domicile of the persons authorised to represent the company is unknown or its agent for service of process cannot be located (hereinafter: company with an unknown registered office). It can be seen that the identifiability of the place of business or branch office is of particular importance in this procedure.
However, in addition to the provisions of the Companies Act, the Act CL of 2017 on the Rules of Taxation (Art.) also provides for serious penalties for unknown seat.
The tax authority will cancel the tax number of the company if:
- it obtains credible information, based on an on-the-spot investigation at the taxpayer's place of establishment, that the taxpayer is not located at its place of establishment.
- a tax authority document served by post to the taxpayer as an official document has been returned to the sender on two consecutive occasions because the addressee is unknown or because the addressee cannot be deemed to be served due to the lack of a suitable letter box,
- the taxpayer's registered office, as declared by the taxpayer in accordance with the rules applicable to it, is not a valid address.
If the tax number is cancelled with final effect, the tax authority notifies the Companies Court, which declares the company to be dissolved ex officio.
In the case of a registered office provider, both the receipt and the display of the sign must be ensured by the provider, but it is advisable for the company to verify this first hand, even by taking a photograph of the display to facilitate subsequent proof.
We have also seen cases where the failure of the registered office provider to display the signboard caused the cancellation of the company's tax number, which resulted in compulsory liquidation proceedings and the immediate prospect of the company's dissolution without legal succession - summarises Dr. Roland Zsidi, chief lawyer at ICT LEGAL Termel & Zsidi Law Office.
