Who Can Be an Executive Officer in a Hungarian Kft. or Zrt.?

Every company needs someone to make the day-to-day decisions and represent it: in a Kft. this is the managing director (ügyvezető), in a Zrt. it is a member of the board of directors or the CEO (vezérigazgató). But who is actually eligible for the role? Do you have to be a member or shareholder? Can a foreigner hold the position – or even another company? In this article we walk through the requirements, the disqualifying grounds and the conflict-of-interest rules, based exclusively on the Hungarian Civil Code (Act V of 2013, "Ptk.").

1. Who counts as an executive officer?

Under Section 3:21 of the Civil Code, the executive officer (vezető tisztségviselő) is the person who takes the decisions relating to the management of the legal entity that do not fall within the members' competence. In a Kft. this is the managing director – there may be one or several (Section 3:196). In a company limited by shares, management is, as a general rule, carried out by a board of directors of at least three natural persons (Section 3:282); however, the statutes of a Zrt. may provide that the powers of the board are exercised by a single executive officer, the CEO (vezérigazgató) (Section 3:283).

It is worth distinguishing the company manager (cégvezető): under Section 3:113, the cégvezető is an employee who directs the company's day-to-day operations under the instructions of the executive officer – so they are not an executive officer, but an employee assisting the executives' work.

2. The positive requirements: who is eligible?

Section 3:22 of the Civil Code contains a surprisingly short list. An executive officer may be anyone who:

• is of legal age (an adult), and
• whose legal capacity has not been restricted in the scope necessary for performing the role.

That is all. The Civil Code does not require the executive officer to be a member or shareholder of the company: the managing director of a Kft. and a board member of a Zrt. may equally be an outsider. (For comparison: in a general partnership, Section 3:144 expressly declares void any clause that appoints a non-member as manager – no such restriction exists for the Kft. or the Zrt.) Nor does the Civil Code impose any citizenship or residence requirement, so the position may be held by a foreign national. This is one of the reasons Hungary is attractive for foreign founders: you can own the company and manage it yourself, from abroad.

Under Section 3:22(2), an executive officer may even be a legal entity: in that case it must designate the natural person who performs the executive duties on its behalf, and the rules applicable to executive officers also apply to the designated person. There is an important exception for companies limited by shares: under Section 3:282, the board of directors may consist only of natural persons – any provision of the statutes to the contrary is void.

A key rule is that executive officers must perform their management duties in person (Section 3:22(3)) – the office cannot be outsourced or delegated onwards.

3. Disqualifying grounds: who cannot be an executive officer?

Section 3:22(4)–(6) of the Civil Code sets out three disqualifying grounds. The following persons cannot be executive officers:

• anyone sentenced to imprisonment by a final court judgment for committing a criminal offence, until relieved of the detrimental legal consequences attached to a criminal record;
• anyone banned from this profession by a final judgment; in addition, anyone banned from a particular occupation cannot, while the ban is in force, be an executive officer of a legal entity pursuing the activity specified in the judgment;
• anyone banned from acting as an executive officer, for the period set in the decision imposing the ban.

The disqualifying grounds do not only matter at the moment of accepting the office: if a ground arises during the mandate, the executive appointment terminates under Section 3:25(1)(g) of the Civil Code.

4. Conflict of interest: the non-compete rule

Section 3:115 of the Civil Code imposes limits on the executive once appointed. An executive officer – with the exception of shares in a public company limited by shares – may not acquire an interest in, and may not be an executive officer of, another business association whose main activity is the same economic activity as that of their own company. If they accept a new executive appointment, they must notify the companies where they already serve as an executive officer or supervisory board member within fifteen days of accepting the office.

In addition, the executive officer and their close relatives may not – apart from the ordinary transactions of everyday life – conclude contracts in their own name or for their own benefit that fall within the company's main line of business (Section 3:115(2)).

5. How does the mandate arise and how long does it last?

The first executive officers must be designated in the founding document; later they are elected by the members, and the appointment comes into existence upon acceptance of the office (Section 3:21(3)). Under Section 3:114, the mandate runs for five years – or, if the company was founded for a shorter period, for that period.

The executive officer may perform the role – depending on their agreement with the company – under a mandate (civil-law) relationship or an employment relationship (Section 3:112(1)). They manage the company independently, giving primacy to the company's interests: the members may not instruct them, and the supreme body may not take over their powers. An important exception is the single-member company, where the sole member may give instructions to the management, which the executive officer is obliged to carry out (Section 3:112(3)).

The mandate terminates, among other things, upon expiry of the fixed term, by recall, by resignation, upon the executive officer's death or upon the occurrence of a disqualifying ground; the members may recall the executive officer at any time, without giving reasons, and the executive officer may likewise resign at any time (Section 3:25).

6. Kft. vs Zrt.: the differences at a glance

In summary

The Civil Code sets a low bar for becoming an executive officer: legal age and legal capacity are required – membership, citizenship or residence are not. The real filters are the disqualifying grounds (criminal record, bans) and the conflict-of-interest rules that apply once you are appointed. Between the Kft. and the Zrt., the main difference is not who may serve but how: managing directors act independently, the board of directors operates as a body – and in a company limited by shares, board members must be natural persons.

This article is for general information purposes only and does not constitute legal advice. It is based exclusively on the provisions in force of Act V of 2013 on the Civil Code (Ptk.). The legal environment may change – please seek professional advice in specific matters. Last updated: July 2026.