Assessment of contributions in kind

When a Company is incorporated – or later, in the event of a capital increase required due to capital loss – the Members may decide to make a non-cash contribution to the Company instead of a cash contribution. In this case, the Member does not transfer cash to the Company, but provides a contribution in kind; in practice this is referred to as an apport.

An apport is a non-cash contribution – any asset with an economic value, an intellectual property right, or any other right of pecuniary value that can be expressed in monetary terms. The existence of such value is the fundamental condition for an item to qualify as an apport.

Valuation of contributions in kind

A basic condition for determining the value of an apport is that the asset to be contributed must be marketable, i.e. it must be freely transferable. Its value must reflect its real market value, as overvaluation of an apport is prohibited. This prohibition safeguards the interests of both the Members and the creditors. It is also essential that only such assets may be contributed which serve the Company’s business activity and are necessary for its economic operations.

Rules on valuation of contributions in kind in a Kft. (limited liability company)

In the case of a limited liability company (Kft.), the value of a non-cash contribution is determined and approved by the Members. For registration purposes, it is necessary to attach, among the required documents, a managing director’s statement on the contribution being made available, as well as an auditor’s report or an expert’s opinion on the value of the apport, both of which must be submitted as part of the corporate filings.

We would like to emphasize that the contributed assets may not be recognized at a higher value than the amount determined by the auditor.

Act V of 2013 on the Civil Code (the Civil Code) does not prescribe a mandatory minimum value for an apport as such. However, if a Member provides their entire capital contribution in the form of a non-cash contribution, its minimum value may not be lower than the statutory minimum amount of a Member’s capital contribution, i.e. one hundred thousand forints.

Rules on valuation of contributions in kind in an Rt. (company limited by shares)

In the case of a company limited by shares (Rt.), the Articles of Association must be accompanied by an auditor’s report or a document containing an expert opinion and statement, which must describe the non-cash contribution, indicate its value and valuation, and set out the valuation method applied.

For the purposes of Section 3:251 (1) of the Civil Code, it is immaterial in the case of companies limited by shares whether we refer to this document as a “report” or a “statement”, although in our view the term “report” is used more prominently in the Civil Code.

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