Attila Pintér - Evelin K. Kovács: Establishing membership during an increase of registered capital (JK, 2022/5, pp. 191–199)
In the study, we examine the legal question of when membership rights and obligations connected to a capital increase arise in the case of a limited liability company. The examination of two court decisions helps us find the answer. The decisions raise several possible points in time regarding the creation of membership rights and obligations: the day on which the capital contribution is provided, the day on which the company court adopts its decision, and the day on which the new members make their declaration acknowledging the company’s articles of association as binding upon themselves. In our view, both decisions contain acceptable findings; however, both the interpretation of the legal provisions and the economic interests of companies support the solution that the date of creation of the membership rights and obligations changed as a result of the capital increase should be considered to be the date on which a valid members’ meeting resolution on the capital increase is adopted in accordance with the conditions set out in the Civil Code, the exercise of pre-emption rights was duly made possible, and the incoming member accepts the provisions of the company’s founding document as binding upon themselves.
Keywords: capital increase, business quota, membership rights, creation, transfer of business quota
I. The time horizon of membership rights and obligations connected to a capital increase arising during the increase of registered capital
The legal literature does not sufficiently clarify the issue of the point in time at which the membership relationship of persons newly joining a company arises during an increase of registered capital. As a result, numerous cases may occur in legal practice where the parties disagree on when membership rights arise in certain capital increase scenarios. In order to clarify this, we examine the legal literature on the subject, seeking to answer the question of which point in time the creation of membership rights can be linked to.
A frequently arising practical question is whether, in the case of a limited liability company (hereinafter: kft.), if an existing member or an external person increases the registered capital of the kft. pursuant to Section 3:198 of Act V of 2013 on the Civil Code (hereinafter: Civil Code), when resolving to increase the registered capital by providing new capital contributions, from what point the member participating in the capital increase may exercise the membership rights connected to the capital increase and arising as a consequence of the capital increase, and from what point they are subject to the related membership obligations.
Two related individual court decisions have recently been published which, although seemingly applying the same reasoning technique and leading to a similar position, in fact take a position on entirely different legal questions. In decision BDT2018.3888 (hereinafter: BDT), the court examined when a business quota is created during a capital increase and from what earliest point the business quota thus created may be transferred. The decision of the Budapest-Capital Regional Court of Appeal No. Gf.40199/2019/8 (hereinafter: FÍ Decision) examined from what earliest point the members participating in the capital increase may exercise their membership rights and obligations.
From a practical perspective, the above legal questions are far from insignificant. It is easy to see that it is of particular importance for a member participating in a capital increase, who has even provided the capital contribution related to the capital increase, whether their membership rights and obligations arise at the time of signing the corporate law documents relating to the capital increase, at the time of providing the capital contribution, or at the time of the company court’s order registering the change relating to the capital increase. If the member participating in the capital increase was not previously a member of the kft., can they exercise their membership rights and obligations relating to the company, including, among others, voting rights or dividend rights, immediately from the moment of signing the corporate law documents required by the Civil Code, or is there a “transitional period” during which they are a member of the company but must wait until the capital contribution is actually made available, or until company court registration, before exercising any membership right?
In the following, we first present the facts and legal reasoning of the BDT and the FÍ Decision, and then attempt to prove the correctness of the BDT and that the part of the FÍ Decision concerning the legal question at issue contains an incorrect finding.
The full text of the study is available here.