The Flexibility of Company Law: The Lessons of the Hungarian Law Reform

Abstract

Until 2013, the substantive rules of Hungarian company law were regulated by various company acts. When Hungary adopted a new Civil Code in 2013, it included, for the first time in Hungarian legal history, the substantive rules of company law. One of the most controversial novelties of the new company law rules was the provision that gave unprecedented freedom to company members to deviate from the company law rules of the Civil Code, as long as the Civil Code does not expressly prohibit the deviation or it does not manifestly prejudice to the rights of creditors, employees or a minority of the members of the legal person or hider the supervision of the lawful operation of the legal person. This article analyses this provision from a comparative perspective. The analysis compares the English, American, German and Hungarian solutions and finds that there are significant differences regarding the right of the parties to determine the company’s articles of association. Building on the findings of this comparison, the article argues that a more enabling regulatory approach could facilitate the pursuit of interests beyond the narrow interests of company members, using the example of corporate purpose and employee participation.