Parliament clears establishment of foundation form to manage assets

Parliament on Tuesday approved legislation allowing the establishment of a form of foundation to manage assets.

The law was approved with a vote of 124 for, 50 against and 4 abstentions.

Until now, Hungary’s Civil Code has limited foundations’ economic activities only to those directly related to the implementation of their goals.

The law allows the establishment of foundations for the purpose of managing assets. Returns on these assets may then be used to implement tasks and reach goals stated in the foundation’s charter. The foundation form also serves to allocate assets to the beneficiary or beneficiaries named in its charter. The foundations may be either private or established for the public good.

The law stipulates a minimum capital requirement of 600 million forints (EUR 1.9m) for the establishment of the foundation form.

Asset managing foundations may be set up to finance primary and secondary education, higher education, research, healthcare, charity work, social work, culture, sport and activities related to the protection of family, children and youth.

The foundation form is “more flexible” than a trust, according to the authors of the legislation, and is not limited to operating for a period of a 50 years, as are trusts.

Source: MTI