Wrongful trading: the asset of the directors could be in danger
Dr Boglárka Zsófia Joó and Dr Zoltán Csernus // origo.hu // 2 December 2015
Experts at VJT & Partners highlight that if the company becomes insolvent, and the creditor wins the case, the director may be liable with his/her personal asset.
Recently you may have frequently met with the expression ”wrongful trading” — and not just in legal, but also in the business circles. This clearly shows the tendency of increase of lawsuits aiming to determine the liability of directors.
Are the personal assets of directors really in danger? The answer is yes according to Zsófia Joó Boglárka. If the company becomes insolvent, then any creditor may file a lawsuit to determine the personal liability of the director, where the creditor shall prove that after the occurrence of threatening insolvency the director’s duties have not — based on the priority of the creditors’ interest in the company — been fulfilled. If the creditors win the case, the director will be liable for his/her personal asset.
Hungarian Permanent Residency is Attractive for Investors
Tamás Wiedemann // appeared in the Hungarian daily newspaper "Magyar Nemzet" // 13th November 2012 // english translation by Barbara Szabó.
However, the new regulation has not yet been adopted, the opportunity to obtain a Hungarian permanent residence permit by purchasing Hungarian government bonds has certainly attracted the attention of foreign investors. Such method of attracting investors is also known in other countries, although such opportunities are usually much more expensive in other places.
According to experts, the proposed Hungarian regulation encouraging capital inflows from third countries (i.e. countries outside the European Union) to Hungary, is considered quite favourable in international comparison. In accordance with a bill submitted to Parliament a foreign national, who have purchased Hungarian government bonds worth at least EUR 250,000 (approximately HUF 70 million) with a minimum 5-year maturity will be granted permanent residence permit in Hungary in a preferential procedure within six months instead of three years being applicable in non-preferential procedures.
"Although the final version of the bill is not yet adopted, there is an increasing number of enquiries from foreign nationals in relation to investment-based permanent residence permits, in particular from China, the Middle East and Russia", said János Tamás Varga, Managing Partner of VJT & Partners law firm. According to Varga there has been a competition amongst the Member States of the European Union for third country investors, which the Hungarian government has just joined.
"It was a general opinion amongst foreign nationals that due to the strict requirements, it was rather difficult to obtain permanent residence permit in Hungary for business purposes. There is an undoubted demand for the preferential treatment policy of the government" added János Tamás Varga. Further to the expert’s professional experience the proposed regulation is attractive for investors, because it would provide Hungarian permanent residency for significantly lower costs compared to other European countries and without requiring prior continuous physical residence in Hungary.
"In accordance with the original bill, the applicant could have the opportunity to arrange his/her application from outside Hungary, if a Hungarian legal representative was retained, however, a later submitted amendment to the bill aims to change this scheme. In accordance with this amendment, the applicant would be obliged to appear in person before the Office of Immigration and Nationality three times", emphasized Varga. According to the available information, the original proposal submitted by a few representatives of the ruling party generated heated disputes in the cabinet. The Ministry of Interior suggested that foreign nationals should not be granted permanent residence permit automatically, but a temporary residence permit for a period of one year. A compromise has been finally reached to the effect that foreign nationals could be able to obtain the final permanent residence permit half year after the commencement of the procedure. "Since in accordance with current regulations, three years of prior continuous physical residence in Hungary is required with the condition that during this three-year period, foreign nationals are allowed to leave the country for a maximum period of 270 days altogether, it is an important aspect for enquiring foreign nationals that there is no need to previously reside in Hungary continuously, almost without any interruption", said Varga. However, according to the proposed new regulation, the applicants will be obliged to appear in person before the Hungarian consulate located in their residence country. In the subsequent stages of the procedure, the applicants will also be obliged to appear personally before the Hungarian Office of Immigration and Nationality to receive their temporary residence permit and then six months later to file for their permanent residence permit and receive it upon its approval.
"The wording of the submitted amendment to the bill leads us to such conclusion", emphasized the attorney-at-law, but at the same time highlighted that it is important to wait for the decree to be issued by the Minister for National Economy, which will specify certain conditions of purchasing government bonds.
According to our government-related sources, the final version of the regulation is rather uncertain. As far as we know applicants remain subject to national security control, although this procedure will be preferential. It is also an outstanding issue what type of government bonds shall be purchased by foreign investors, who intend to reside in Hungary. It is planned to issue foreign exchange bonds denominated in Euro with lower interest rates compared to the market yields. Further to our sources, it is an important question what will happen five years after the purchase of the bonds, when the bonds expire. It is also debated in the government whether foreign nationals should be obliged to either purchase government bonds again or invest their capital into the Hungarian economy. It may also be an alternative scenario, if no further obligation is imposed on foreign nationals. In the latter case it may be envisaged that the Hungarian state will purchase back the expired bonds on their nominal value, consequently the bonds would not bear any interest and the Hungarian state would use them free of charge. Financial experts argue that this specific form of attracting investors may convey a negative message to ordinary investors and lead them to presume that the Hungarian budget is actually in trouble.
Experts said that the proposed Hungarian regulation provided attractive opportunities for foreign nationals. In Austria, citizenship may be obtained by investing millions of Euros, although such investments are not expected to directly finance the government budget. In Bulgaria, a permanent residence permit, similar to the proposed Hungarian one, may be obtained for EUR 500,000, which is twice as much as the amount payable in Hungary. Hungarian permanent residence permit does not either ensure foreign nationals an unlimited mobility in other Member States of the EU since such Hungarian "green cards" entitle foreign nationals to a maximum stay of up to 90 days within every 6 months in any other Member State of the EU. However, it is easier to succeed within the EU with a Hungarian permanent residence permit, Hungarian permanent residency may accordingly serve as a springboard.
Hungarian Watch Autumn 2014 is now available
VJT & Partners is pleased to announce that Hungarian Watch Autumn 2014 is now available online. Hungarian Watch is a quarterly issued brochure published by VJT & Partners.
Hungarian Watch aims to track the most current and profitable cross-border investment opportunities in Hungary. The investment perspective running through this newsletter aims to lead the reader through the actual Hungarian business climate. Additionally, our brochure provides you with comprehensive and up-to-date information about Hungary, focusing on breaking news in the fields of law, economics and other developing areas, which is currently making a significant impact on the Hungarian business life.
Autumn 2014 edition highlights the recent core business issues from the major railway construction projects through the construction of South Stream to the latest developments in various Hungarian industries including banking, energy and the automotive sector.
“Hungarian Watch is a pioneer concept which helps our foreign clients and partners get a line on Hungarian business life. We are proud to take the lead in presenting this new brand in our Hungarian legal market.” notes, Endre Várady, the quarterly’s editor.
„Hungarian Watch is well recognized by our partners in different countries all over the world. The popularity of earlier issues proved their necessity and the existence of a demand of our clients to such a newsletter”, commented János Tamás Varga, Managing Partner of VJT & Partners.
Hungarian Watch Autumn 2014 is available here.
Focus Europe Analyses the Main Trend in CEE with the Help of János Tamás Varga
„After years in the economic doldrums, it seems that the potential is there for the Central and Eastern Europe (CEE) region to lead Europe’s economic growth once again.” Focus Europe, a leading law magazine in the USA (published by American Lawyer Media) analyses the main trend in the region with the help of VJT & Partners Managing Partner János Tamás Varga.
The article „Cautious Optimism” draws attention to the recent economic processes in CEE countries. „According to the Regional Economic Issues report the economies of Central Eastern and Southeastern region are forecast to expand by 2.3 percent in 2014.” A big part of this positive indicator is due to the Hungarian economy, which „has a favorable geographic location which allows investors to reach Europe and the Middle East directly,” says János Tamás Varga. The managing partner points out that “In terms of labor and real estate costs, Hungary compares very favorably to Western Europe and North America and while in Hungary the average gross wage is much lower, the productivity of the labor force is one of the highest within the CEE region.”
Mr. Varga also spoke about the recent political steps: „It is noteworthy that the Hungarian Government is ready to grant reduced tax or tax exemptions for definite periods to foreign investors in the case that they decide to achieve their business goals by investing in Hungary.”
The author of the article highlights the importance of Chinese investments as the main boost to the region and recalls the meeting between the Chinese Premier Li Keqiang and the leaders of CEE countries in Romania in November, 2013.
In summary, we can say that the second half of the year 2014 will be challenging for those doing business in the region and in Hungary, but we can declare that the „CEE region is looking more robust than it has for some time.”
“Best Immigration Law Firm – Hungary” Award to VJT & Partners
VJT & Partners is pleased to announce that it has been distinguished as the “Best Immigration Law Firm – Hungary 2014” by the independent legal magazine, the Acquisition International Magazine.
Acquisition International Magazine is issued in the UK and deals with global legal, financial and investment affairs. It has been awarding the greatest law firms in different sectors all around the world since 2010. The process of electing the awarded firm is based upon the votes of their readers who are clients of the law firms at the same time and on the opinion of experts.
VJT & Partners has been dealing with immigration law for years and became an expert on immigration, which is also proven by the winning of this award. The law firm has a great amount of experience in the Hungarian Residency Bond Program, which offers permanent residency under preferential conditions for non-EU nationals willing to invest in government residency bonds.
VJT & Partners has also developed expertise in Hungarian Business Entrepreneur Program that offers non-EU nationals the possibility to set up business in Hungary, and to obtain Hungarian temporary residence permit.
“This award is a great honour for us, because it is the recognition of the efforts we made to meet all the requirements of our clients. We are really pleased to see that our value-based work has bore fruit and we get a lot of positive feedbacks from our clients.” says Gábor Hacsi Head of Immigration Team at VJT & Partners. “At the same time, this award is an incentive to proceed with what we have commenced on and to continue striving for perfection to grant the best service to our partners” the Head of the Immigration Team adds.
BEST Hungarian Legal WEBSITE INTERNATIONAL AWARD TO VJT & PARTNERS
„Undeniably competent, elegant and polished” said CEE Legal Matters in its review on VJT & Partners’ website.
VJT & Partners is pleased to announce that its website has been recognised as the Best Hungarian Legal website by the independent legal publication, CEE Legal Matters in its June 2014 edition.
CEE Legal Matters provides Top Sites review in every edition and the award goes to the best website of a law firm of the reviewed country. In its June edition CEE Legal Matters reviewed Russian and Hungarian sites of law firms providing outstanding legal services to their clients, but besides the perfection of legal products the winner firms should be able to “demonstrate that there’s more than one way for a law firm to effectively communicate its mission and capabilities online”.
The article indicates that VJT & Partners’ website is “restrained and sober” and moreover, it is “undeniably competent, elegant and polished”.
The publicist of CEE Legal Matters also welcomes the manner of using photos on our website as opposed to many other legal websites who take photos of their day to day operation, as they negotiate with clients or hang on the phone, and then upload these to their website VJT & Partners “provides whimsical photos of penguins, a feather, and other metaphors of the firm’s focus and capabilities” and also “a focused and easily negotiable recitation of the firm’s capabilities and the profiles and competencies of its lawyers, along with the requisite thought leadership articles”.
The review published by CEE Legal Matters strengthens our confidence that in today’s world it is not enough to deliver excellent work products to our clients, but the appearance of our work and our website should also be of a high standard and perfectly designed. It is also recognised that the presentation of our values and our professionals’ capabilities is an essential part of our website, so as the legal news and publications section which is transparent, clear, practical, and useful and it has an added value.
János Tamás Varga, Managing Partner of VJT & Partners says: “This award is a great honour for us. It recognises our efforts to express our values in every tiny detail. We are not satisfied until every sentence, every image, every colour and the layout of the website are in accordance with our values. This is the very simple way in which we made our website and how we work in our day to day legal practice.”
The full article of CEE Legal can be read here.
The Lawyer Interviewed János Tamás Varga about Hungarian Legislation and M&A
VJT & Partners’ Managing Partner János Tamás Varga is interviewed in the latest issue of The Lawyer, one of the leading international weekly legal publications, published in the UK by Centaur.
The article, titled ‘Hungary: autoboost’, analyses Hungary’s current situation, especially in relation to legislation and investment trends. Reporter Jonathan Ames heads up his article ‘The government’s appetite for legislation is proving a headache for lawyers but a new civil code and an accelerating automotive industry are a great pick-me-up’.
As an internationally recognised leading M&A lawyer, János Tamás Varga is extensively quoted in relation to legislation and Hungarian M&A trends. He concludes that the special economic tools used by the Hungarian government over the last few years have resulted in many foreign investors staying away from Hungary; and that many foreign investors have wound up their Hungarian operations.
However, he claims that in recent months, investors’ appetite for Hungarian companies has, in general, been growing thanks in part to the improvement in global and European economies and also owing to the changing attitudes of foreign investors who appear to have adapted to the legislative tendencies of the Hungarian government. VJT & Partners has acted on a number of deals in recent months, which underpin this.
Dr. Varga also spoke about the new Civil Code coming into force, which, by removing many restrictive rules, leaves much more room for flexibility and bespoke solutions when establishing and operating a company in Hungary. In his view it remains a big question as to whether the courts will fully adapt to this paradigm shift and actually allow companies to fully take advantage of the opportunities provided in theory by the new civil code.
“There is a general interest on the part of foreign investors to buy Hungarian companies after years of silence,” János Tamás Varga says.
The full article can be read here.
VJT & Partners Highly Ranked Again in Chambers Europe Legal Directory
The internationally recognised law firm VJT & Partners proudly announces that it has been highly ranked in its core practices in the leading international independent legal directory, Chambers Europe 2014.
Within the Hungarian section, Chambers Europe 2014 ranks VJT & Partners for employment in Band 2 and for private equity and TMT in Band 3.
Additionally, VJT & Partners was mentioned as a recognised practitioner for its corporate/M&A and restructuring/insolvency practice.
Clients commented for employment that: “All of the lawyers in the firm are very accurate, and always provide very precise and detailed answers." Managing partner János Tamás Varga is described as a "talented lawyer," and noted for his extensive knowledge of the market. "Responsive and flexible adviser " Zoltán Csernus is praised for his attention to clients' needs and his work ethic.
Clients noted of VJT & Partners with respect to private equity that “The lawyers give detailed advice that shows their attention to detail." What is more, managing partner Varga János Tamás is highlighted by clients for his “organisational skills and solid legal expertise”.
In addition, VJT & Partners’ TMT practice was acknowledged as follows: "The firm can really accommodate the business needs of the client. The lawyers are easy to work with and are always thoroughly prepared for negotiations." In relation to this practice area János Tamás Varga is acknowledged by clients for his "knowledge and understanding of the processes and policies of multinational companies," and his "insight into IT."
János Tamás Varga commented: “Our rankings are a great feedback of the team’s excellent quality work provided over the last year. We are glad that VJT & Partners could keep its prominent position in the field of employment, private equity and TMT.”
Hungarian Watch Spring 2014 is now available
VJT & Partners is delighted to announce that Hungarian Watch Spring 2014 is now available online. Hungarian Watch is a quarter yearly issued brochure published by VJT & Partners.
Hungarian Watch aims to track down the most recent cross-border investment opportunities in Hungary. The investment perspective running through this newsletter aims to lead the reader through the actual Hungarian business climate. Additionally, our brochure provides you comprehensive and up-to date information about Hungary, focusing on the breaking news in the fields of law, economics and other developing areas, which is currently making significant impact on Hungarian business life.
Spring 2014 edition highlights the recent core business issues from the Hungarian parliamentary election through the new Civil Code to the most updated developments in various Hungarian industries including banking, energy and telecommunications.
“Hungarian Watch is a completely new brand. Regularly reporting about potential Hungarian investments is a pioneer concept in our Hungarian legal market. We are proud to make the breakthrough step,” notes, Endre Várady, the quarterly’s editor.
„Hungarian Watch is well recognized by our partners in different countries all over the world. We are pleased to serve our clients and business partners by publishing relevant information about the Hungarian business opportunities.” commented János Tamás Varga, Managing Partner of VJT & Partners.
VJT & Partners lawyers peer-selected for Best Lawyers in Hungary 2014
The leading Hungarian law firm VJT & Partners is pleased to report that two of their lawyers, Managing Partner János Tamás Varga and partner Zoltán Csernus have been recognised as “Best Lawyers in Hungary” for Labour and Employment law. The two lawyers were selected by their peers for inclusion in The Best Lawyers in Hungary© 2014 (Copyright 2013 by Woodward/White, Inc., of Aiken, SC).
Best Lawyers is the oldest and most respected peer-review publication in the legal profession. A listing in Best Lawyers is widely regarded by both clients and legal professionals as a significant honour, conferred on a lawyer by his or her peers.
The fourth edition of Best Lawyers in Hungary is currently available on BestLawyers.com.
Zoltán Csernus, partner at VJT & Partners, commented, “I am privileged to be named in such a well respected and old peer-review publication. This recognition further supports our growing reputation as a leader in labour and employment law in Hungary.”
VJT & Partners is ranked as a Top-Tier Firm by EMEA Legal 500
The prestigious legal directory has placed VJT & Partners as a top-tier firm for Employment and highly recommends it in four other practice areas
VJT & Partners has been recommended as a top-tier law firm for Employment for the fourth year running in the Legal 500 Europe, Middle East & Africa 2014. The guide comments: "The ‘very knowledgeable’ and ‘very responsive’ team at VJT & Partners counts HP, Montivíz and ING Financial Advisory among its clients, and advises on employment contracts, policies, termination and mass dismissals. Zoltán Csernus and Dóra Bocskov-Szabó are recommended."
Managing Partner János Tamás Varga is included in the list of elite "Leading lawyers" in this guide to outstanding lawyers.
Having climbed the rankings consistently in recent years, VJT & Partners' M&A and Dispute resolution practices are both recommended in the second tier, while the firm remained in the second tier for TMT and the fourth tier for Real estate and construction. The guide comments: "VJT & Partners’ three-partner corporate and M&A team, which includes the ‘proactive’ and ‘reliable’ János Tamás Varga, provides a service which is ‘excellent in all respects’. Varga and the ‘exceptionally detailed’ Zoltán Csernus worked alongside a leading US law firm to advise ARC Group Worldwide on a cross-border acquisition."
Four lawyers at VJT & Partners are recommended in The Legal 500 Europe, Middle East & Africa 2014 editorial:
- Corporate and M&A - János Tamás Varga and Zoltán Csernus
- Dispute resolution - János Tamás Varga, Zoltán Csernus, Gábor Hacsi and Dóra Bocskov-Szabó
- Employment - Zoltán Csernus and Dóra Bocskov-Szabó
- Real estate and construction - János Tamás Varga and Gábor Hacsi.
The Legal 500 series of legal directories provides an in-depth assessment of law firms based on intensive independent research of firms and their clients.
János Tamás Varga, Managing Partner of VJT & Partners, commented: “Legal 500 is regarded as providing accurate analysis of law firm capabilities; as such, we are delighted to receive such high rankings in the guide which we take as an endorsement by our clients of our capabilities and practices.”
VJT & Partners Publishes Hungarian Watch Winter 2014
VJT & Partners is pleased to announce that the second issue of Hungarian Watch, Winter 2014, has been published. Hungarian Watch is a quarter yearly issued brochure. Hungarian Watch Autumn 2013 was well recognized by our partners in different countries.
The quarterly contains comprehensive, up-to-date information about Hungary, focusing on breaking news in the fields of law, economics, business and other circumstances, which could have a major impact on the course of Hungarian events.
Hungarian Watch is primarily prepared for those who are thinking about Hungary from an investment point of view. The investment perspective runs through this newsletter by leading the reader through the actual Hungarian business climate including current business and investment opportunities.
"I hope that Hungarian Watch Winter 2014 is at least as informative and inspiring as the first issue was," said Endre Varady, editor of the quarterly.
János Tamás Varga, Managing Partner of VJT & Partners, commented “We have received a lot of positive feedback about the first issue. I am convinced that new business opportunities are the most valued developments for dealmakers.” Read more...