Introductory provisions

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Act IV of 1959

On the Civil Code of the Republic of Hungary



Purpose of this Act

Section 1

(1) This Act governs the financial and certain personal relations of the citizenry, the state, local governments, economic and social organizations, and other persons. Other statutes pertaining to the aforementioned relations shall, unless otherwise stipulated, be construed in concert with this Act and in consideration of its provisions.

(2) The provisions of this Act shall be construed in concert with the economic and social order of the Republic of Hungary.

Section 2

(1) This Act shall protect the property rights, inherent rights, and lawful interests of all persons.

(2) This Act shall ensure the freedom of all persons to exercise the rights to which they are entitled in accordance with the social intent of these rights.

Section 3

(1) This Act shall protect all of the forms of property acknowledged in the Constitution.


Exercising Rights and Fulfilling Obligations

Section 4

(1) In the course of exercising civil rights and fulfilling obligations, all parties shall act in the manner required by good faith and fairness, and they shall be obliged to cooperate with one another.


(4) Unless this Act prescribes stricter requirements, it shall be necessary to proceed in civil relations in a manner that can generally be expected in the particular situation. No person shall be entitled to refer to his own actionable conduct in order to obtain advantages. Whosoever has not proceeded in a manner that can generally be expected in the particular situation shall be entitled to refer to the other party's actionable conduct.

Section 5

(1) This Act shall prohibit the abuse of rights.

(2) Exercising any right directed toward a goal that is incompatible with the social intent of that right shall be regarded as an abuse of rights, particularly if it would lead to damaging the national economy, harassing persons, impairing their rights and legal interests, or acquiring undue advantages.

(3) If a right is abused in the repudiation of a statement required by law and this conduct does injury to an important public interest or a particular substantial private interest, the court is entitled to substitute its judgment for the party's legal statement, provided there is no other way of averting the injury. A court judgment may be substituted for a statement, especially if the statement had been made contingent upon the bestowal of an illicit advantage.

Section 6

The court may award damages payable in full or in part by a party whose willful conduct has explicitly induced another, bona fide person to act in a manner that has brought harm to this person through no fault of his own.

Section 7

(1) Each and every government agency shall be obliged to protect the rights provided by law. Unless otherwise stipulated by law, these rights shall be judicially enforced.

(2) Parties may resort to arbitration instead of litigation if at least one of them is professionally engaged in an economic activity, if the legal dispute is in connection with that activity, and if the parties are able to freely dispose over the subject of the proceeding.



Title I


Chapter I

Legal Capacity

Section 8

(1) All persons in the Republic of Hungary shall have legal capacity; all persons shall be entitled to have rights and obligations.

(2) Legal capacity shall be equal regardless of age, sex, race, ethnic background, or religious affiliation.

(3) Contracts and unilateral statements limiting legal capacity shall be null and void.

Section 9

Legal capacity shall be due each person, if born alive, from the day of conception. The three hundredth day preceding the date of birth shall be considered the day of conception, which, however, may be proved to have occurred earlier or later. The day of birth shall be included in the aforementioned period.

Section 10

If it is necessary for the protection of a child's rights, particularly if there is a conflict of interest between the child and its legal representative, a conservator must be appointed before the child is born.

Chapter II

Legal Competency

Section 11

(1) Everybody whose competency is not limited or disqualified by the law is legally competent.

(2) Whosoever is competent is himself entitled to conclude contracts and make other legal statements.

(3) Any contract or a unilateral statement restricting legal competency shall be null and void.

Diminished Capacity

Section 12

(1) A minor shall be of diminished capacity if he or she has reached the age of fourteen years and is not incompetent.

(2) Persons who have not yet reached the age of eighteen years shall be deemed minors, unless they are married. Marriage shall not constitute adulthood if the marriage has been annulled by a court owing to the absence of the guardian's permission, which is necessary because of incompetency or minority.

Section 13

(1) Persons of legal age shall be of diminished capacity if a court has placed them in the custody of a conservator to that effect.

(2) Persons whose necessary discretionary ability for conducting their affairs is - owing to their mental state, unsound mind, or pathological addiction - permanently or recurrently diminished shall be placed by a court in a conservatorship that limits their competency.

(3) The limitation of legal competency shall cease upon the termination of conservatorship.

Section 14

(1) Unless otherwise provided by law, the legal statement of a person with diminished capacity shall not be deemed valid without the subsequent approval or consent of that person's legal representative. If and when persons of diminished capacity become competent, they shall be entitled to make their own decisions concerning the validity of their pending legal statements.

(2) Persons of diminished capacity shall, without the participation of their legal representatives, be entitled

a) to make legal statements of a personal nature for which they are authorized by legal regulation;

b) to conclude contracts of minor importance aimed at satisfying their everyday needs;

c) to dispose of the earnings they acquire through work, unless otherwise provided by law, and assume obligations up to the extent of their earnings;

d) to conclude contracts that only offer advantages.

(3) With the permission of the guardian, legal representatives shall be entitled to refuse gifts that are promised or given to minors of diminished capacity. Should a conservator not approve of a legal representative's statement of refusal, the conservator's decision shall replace the legal representative's statement of acceptance.

(4) Legal representatives shall be entitled to issue legal statements in the name of persons of diminished capacity, except when the law requires the statement to be made by the person with diminished capacity himself or when the statement concerns earnings acquired through work.

Legal Incompetency

Section 15

Minors under the age of fourteen years are legally incompetent.

Section 16

(1) Persons whom the court has placed in a conservatorship precluding legal competency shall also be legally incompetent.

(2) Persons of legal age whose necessary discretionary ability for conducting their affairs is - owing to their mental state or unsound mind - completely and permanently absent shall be placed by a court in a conservatorship that limits their competency.

(3) If the court, for the same reason, places a minor in a conservatorship precluding legal competency, this conservatorship shall come into effect when the minor reaches legal age. The minor, however, loses his legal competency on the date on which the relevant decision becomes legally binding.

(4) Legally incompetent persons shall recover competency when conservatorship is terminated.

Section 17

Persons who are completely lacking the mental ability to conduct their affairs are legally incompetent even if they are not placed in the custody of a conservator.

Section 18

(1) Legal statements made by incompetent persons shall be null and void; their legal representatives shall proceed on their behalf.

(2) Contracts of minor importance that are generally concluded in large numbers and do not require special consideration and have been concluded directly by incompetent persons and have already been performed shall not be considered null and void.

(3) Legal statements made by incompetent persons of legal age who have not been placed in the custody of a conservator shall not be considered null and void on the grounds of incompetence, if the contents and circumstances of any legal statement can lead to the conclusion that the statement would also have been justified had the party been legally competent.

Common Provisions

Section 19

(1) The approval of the guardian is required for the validity of statements made by legal representatives, if the legal statements concern

a) the maintenance of a person who is incompetent or of diminished capacity,

b) rights or obligations that, by virtue of inheritance, fall upon a person who is incompetent or of diminished capacity,

c) property, the value of which exceeds the limit prescribed in a separate legal regulation.

(2) The approval of the guardian is not required for the validity of a legal statement that has been judged valid by a court or notary public.

Section 20

(1) A person who is incompetent or of diminished capacity shall not be entitled, even with the approval of his guardian, to make valid legal statements by which he gives gifts, undertakes obligations without adequate consideration, or waives his rights without consideration.

(2) This provision shall not prevent incompetent persons from having control over earnings that they acquire through work; nor shall it exclude usual and customary gift giving.

(3) Offers for public purposes and refusals to inherit property items that can be individually refused shall be valid with the approval of a guardian.

Section 21

(1) Nullity on the basis of incompetence or diminished capacity can only be cited in the interest of a person who is incompetent or of diminished capacity.

(2) Persons who mislead other parties regarding their legal competence shall be held accountable for such conduct, and they can be obliged to perform contracts on the basis of their accountability.

Chapter III

Cessation of Legal Capacity;

Legal Declaration of Death

Section 22

Legal capacity ceases with death.

Section 23

Missing persons may be declared legally dead by the court five years after the date of disappearance if there has been no information of any kind during the five-year period to indicate that they are alive.

Section 24

(1) The court shall declare the date of death upon due consideration of the circumstances.

(2) If consideration of the circumstances fails to be conclusive, the date of death shall be the fifteenth day of the month following the month of the person's disappearance.

Section 25

(1) A person declared legally dead shall be considered dead until there is evidence to the contrary.

(2) If it is conclusively resolved that the person declared legally dead had disappeared before or after the date indicated in the relevant decision, and the conditions for the declaration of death are otherwise valid, the court shall amend the legal declaration of death accordingly. In this case, the legal consequences shall change in accordance with the amended resolution.

(3) If it has been conclusively resolved that a person declared legally dead had disappeared after the date indicated in the relevant decision and the conditions for the legal declaration of death are not valid, the court shall repeal the decision pertaining to the declaration of death. Unless an exemption is granted by law, the legal consequences that have proceeded from the decision shall be null and void.

(4) If a person who has been declared legally dead is found, the decision shall be set aside, and, unless a exemption is granted by law, the legal consequences proceeding therefrom shall be null and void.

Title II

Chapter IV

Sections 26-27

Title III


Chapter V

Legal Capacity; Establishment and Termination of Artificial Persons

Section 28

(1) The State, as the subject of property related legal relations, shall be deemed an artificial person.

(2) According to the legal regulations that govern them, artificial persons include state, local government, economic, social, and other organizations.

(3) All artificial persons have legal capacity. Unless otherwise provided by legal regulations, the legal capacity of artificial persons shall extend to all those rights and obligations that do not inherently pertain solely to individual human beings.

Section 29

(1) The conditions for establishing and terminating artificial persons shall be defined by law for each type of artificial person. Artificial persons may also be established by law.

(2) The name, activity, headquarters, and (unless stipulated in a separate legal regulation) the representatives of each artificial person shall be described in the legal regulation, resolution, or document pertaining to the foundation of the artificial person.

(3) The representative of an artificial person shall be authorized to sign on behalf of the artificial person. If a document required by law to be issued in writing is not signed by the representative, the signatures of two persons vested with the right of representation shall be necessary. The signatures of two persons with the right of representation shall always be required for any orders pertaining to a bank account. A legal regulation may deviate for these provisions.

(4) If a legal regulation makes the creation of an artificial person contingent upon registration, any change in the registered conditions in respect of third parties can only be effective if the change is registered.

Section 30

(1) Unless otherwise provided by legal regulation or, on the basis of authorization granted by such legal regulation, a declaration of foundation or charter, the organizational units of an artificial person (manufacturing units, branch offices, business premises, plants, offices, local representations or groups, basic units, sections, etc.) shall not be artificial persons.

(2) The head of an organizational unit shall act as the representative of the artificial person in the area determined by the intended operation of the unit. A legal regulation, declaration of foundation or charter may provide otherwise.

Chapter VI

Special Provisions Pertaining to Different Types of Artificial Persons

1. State-Owned Companies

Section 31

(1) State-owned companies are artificial persons.

(2) State-owned companies shall independently manage the assets entrusted to them in a manner and with the responsibility prescribed by law.

(3) State-owned companies shall bear responsibility for their obligations with the assets entrusted to them.

(4) The state shall govern and supervise the management and other activities of companies in the manner prescribed by legal regulation.

(5) The name of a state-owned company shall generally refer to the activity of the company. The name of a company shall be determined in such a manner that it will be able to distinguish that company from other economic organizations.

(6) State-owned companies are represented by their directors. Directors may, on occasion or with respect to a specific category of affairs, transfer this power to one of the company's employees.

Section 32

(1) The general management of state-owned companies is provided by

a) the company council,

b) the general meeting or assembly of delegates of the company's employees, or

c) the director.

(2) Directors shall act independently and with personal responsibility with regard to matters that do not fall within the realm of corporate jurisdiction.

(3) State-owned companies shall not be deprived of the assets they manage; although legal regulations can stipulate otherwise.

Section 33

The specific rules pertaining to state-owned companies shall be prescribed in a separate law.

2. Trusts

Section 34

(1) A founding body may establish a trust to promote the efficient operation and development of several companies under its control and direct these companies. Trusts and the companies managed by trusts are artificial persons.

(2) The companies managed by a trust shall be listed in the trust's declaration of foundation.

(3) The specific regulations pertaining to trusts shall be prescribed by a separate law.

3. Other State-Owned Economic Organizations

Section 35

Unless otherwise provided by legal regulations, the provisions pertaining to state-owned companies shall govern the legal personality of other state-owned economic organizations as well.

4. Budgetary Institutions

Section 36

(1) Budgetary institutions are artificial persons.

(2) Each budgetary institution shall be represented by the head of the institution, who may, on occasion or with respect to a specific category of affairs, transfer this power to one of the institution's employees.

Section 37

(1) Budgetary institutions shall be under the obligation to make restitution, reimbursement and compensation and shall also bear responsibility for liabilities assumed towards bona fide persons, even to an extent that exceeds their budgets.

(2) In such cases, funding by the central budget shall be provided in accordance with the regulations governing the management of the central budget.

5. Cooperatives

Section 38

A cooperative is a community established in accordance with the principle of freedom of association and self-reliance, which, with the financial contributions and personal participation of the members, pursues entrepreneurial and other activities that serve the interests of its members within the framework of democratic self-government.

Sections 39-50

Section 51

The specific rules pertaining to cooperatives shall be established by a separate law.

6. Business Associations Qualifying as Artificial Persons

Section 52

(1) The state, artificial persons, unincorporated business associations and natural persons may found economic associations with their own company names to pursue and promote economic activities within a business partnership.

(2) Joint enterprises, limited liability companies, and joint-stock companies are business associations that operate as artificial persons.


Section 53


(2) Joint enterprises are business associations, founded by their members, which are liable for their obligations primarily to the extent of their assets. Should the assets of the company be insufficient to cover debts, the members shall, as sureties, be jointly liable, in proportion to their contributions, for the debts of the joint enterprise.

(3) Limited liability companies are business associations founded with an initial capital (subscribed capital) consisting of capital contributions of a predetermined amount, in the case of which the members' obligations to the company extend only to the provision of their capital contributions, and to other possible contributions as set forth in the articles of incorporation. With the exceptions defined by law, members shall not bear liability for the company's obligations.

(4) Joint-stock companies are business associations founded with a share capital (subscribed capital) consisting of shares of a predetermined number and nominal value, in the case of which the obligations of members (shareholders) to the joint-stock company extend to the provision of the nominal value or issue value of shares. With the exceptions defined by law, shareholders shall not bear liability for the obligations of a joint-stock company.

Section 54

(1) Articles of incorporation (charter) shall be required for the foundation of a business association, while the foundation of a joint-stock company requires bylaws (charter).

(2) Articles of incorporation shall include the following:

a) name and headquarters of the company,

b) members of the company including, with the exception of shareholders in the bylaws, name (company name) and domicile (registered address),

c) the company's sphere of activities,

d) the company's subscribed capital and the method and date of provision of the subscribed capital (members' contributions),

e) the method of signing for the company,

f) the name and domicile of executive officers,

g) the duration of the business association, if founded for a limited period of time, and

h) any other information required by the Act on Business Associations for each form of business association.

(3) Business associations come into existence on the day on which they are entered into the register of companies.

Section 55

Business associations are represented vis- -vis third persons and before courts and authorities by the director (in joint enterprises), the managing director (in limited liability companies), or the members of the board of directors (in joint-stock companies).

Section 56

(1) Business associations shall be terminated, if

a) the time of operation defined by the articles of incorporation (or bylaws) has expired or another condition of termination has occurred;

b) they resolve to terminate themselves without a legal successor;

c) they resolve to terminate themselves with a legal successor (transformation);

d) if the number of their members falls to one, with the exception of limited liability companies and joint-stock companies, and no new member is registered at the court of registration within the period prescribed by law;

e) the court of registration declares them terminated;

f) the court of registration orders their cancellation ex officio;

g) the court terminates them in the course of liquidation;

h) the provisions of the Act on Business Associations relating to certain forms of business associations so prescribe.

(2) The specific regulations pertaining to business associations shall be determined by a separate law.

7. Non-Profit Companies

Section 57

(1) Non-profit companies are legal persons, serving the common interests of society on a regular basis, without aiming to acquire profits or accumulate assets. Non-profit companies may carry on business-type economic activities in the interest of promoting their non-profit activities. Profits generated by a company's activities may not be distributed among the members.

(2) In respect of non-profit companies, the common regulations pertaining to business associations and the provisions on limited liability companies prescribed in the Act on Business Associations shall be duly applied, with due regard to the differences set forth in this Act.

(3) The articles of incorporation of non-profit companies shall specify the public service activities and, when applicable, any business-type economic activities performed by the non-profit company. The articles of incorporation shall also prescribe the mode of utilizing the assets, described in Subsection (3) of Section 60, for public purposes in the event of the company's termination.

Section 58

(1) Non-profit companies may also be established as the companies of certain artificial persons, including companies whose names includes the term "institution", or if a business association is transformed into a non-profit company. In this case, the non-profit company shall become the legal successor of the company (institution) of said artificial persons or of the business association.

(2) In respect of the foundation of non-profit companies as described in Subsection (1), the provisions on the transformation of business associations shall be duly applied, unless the legal predecessor is a limited liability company that may be transformed into a non-profit company by having its articles of incorporation amended accordingly.

(3) Non-profit companies come into existence on the day on which they are entered into the register of companies.

(4) The designation "non-profit company" or its abbreviation ("kht.") shall be included in the company's registered name.

(5) Members may also be invited to join non-profit companies through public announcements.

Section 59

(1) All contracts concerning the pursuit of public service activities that are concluded by non-profit companies with agencies responsible for fulfilling the common needs of society shall be approved by the non-profit company's members' meeting.

(2) All non-profit companies are required to establish supervisory boards and choose auditors. The supervisory board, upon revealing any violation of a contract concerning the conditions for pursuing public service activities, shall immediately call a general meeting of the non-profit company's members.

(3) Contracts concluded on the basis of Subsection (1) are public, and any concerned person may have access to them.

Section 60

(1) Non-profit companies may not be transformed into business associations, they may only merge with other non-profit companies or demerge into several such companies. The provisions of the Act on Business Associations shall be duly applied to such mergers and demergers.

(2) Upon termination, the court of registration shall remove non-profit companies from the register of companies, and such companies shall be regarded as terminated.

(3) In the event of the termination of a non-profit company without a legal successor, only the members' core deposits may be disbursed at their original value once all of the obligations have been settled. Any assets remaining thereafter shall be used for public purposes.

8. Societies and Public Corporations

Section 61

Societies are voluntarily established self-governing organizations that are formed for the purposes defined in their statutes, have registered membership, and organize their members' activities in order to achieve their objectives. Societies are artificial persons.

Section 62

(1) The bylaws of societies shall include provisions regarding the society's name, purpose, registered office, and structure.

(2) Societies come into existence when they are registered by the court.

(3) Societies shall manage their assets independently. Societies may not be formed with the principal purpose of performing economic activities.

(4) Societies shall be liable for their debts with their own assets. The members, above and beyond the payment of membership dues, shall not be responsible for the liabilities of the society with their own assets.

Section 63

Societies shall cease to exist if

a) their dissolution or merger with other societies is resolved by its supreme body;

b) they are dissolved or declared terminated by a duly authorized agency.

Section 64

For the purposes of this Act, the provisions pertaining to societies shall govern social organizations formed on the basis of the right of association.

Section 65

(1) Public corporations are self-governing organizations with registered membership whose establishment has been ordered by law. Public corporations perform public duties related to their membership and/or the activities performed by their membership. Public corporations are artificial persons.

(2) Public corporations are, in particular, the Hungarian Academy of Sciences, the chamber of commerce, and professional associations.

(3) The law can prescribe certain public duties that must be performed by public corporations. Public bodies have the authorization, defined by law, to fulfill public duties, and they shall exercise such rights through self-management.

(4) The law may prescribe that certain public duties be performed exclusively by public corporations and that certain activities may only be performed by members of public corporations.

(5) Data relating to public duties performed by public corporations are of public interest.

(6) Unless otherwise provided by law, the provisions pertaining to societies shall be duly applied to public corporations.

Sections 66-69

9. Companies of Certain Artificial Persons

Section 70

(1) Local governments and the national association of cooperatives shall be entitled to establish companies. Such companies are artificial persons.

(2) Societies shall only be entitled to establish companies if the authority to do so is granted by the society's statutes.

Section 71

(1) A company's charter must specify, in addition to the facts and circumstances defined in Subsection (2) of Section 29, the name of the founding artificial person, the company's initial assets, and other facts and circumstances stipulated by legal regulations.

(2) The names of companies shall include a reference to their activities, and their names shall be selected in order to distinguish each company from other economic organizations.

(3) Companies are deemed established upon registration in the register of companies and they are deemed terminated upon being stricken from the register of companies.

Section 72

(1) The founding artificial person shall, within the limits of the law, determine the sphere of activities of a company and shall provide the assets necessary for such activities.

(2) The founding artificial person may receive a share of the company's profits remaining after obligations to the state budget have been met to the extent determined in the charter.

(3) The founding artificial person is responsible for the liabilities of the company as surety.

(4) The director of a company is appointed and removed by the founding artificial person, which exercises other employer's rights regarding the director's employment.

(5) The founding body shall be entitled to stipulate that the general management of the company be carried out by an executive body (in addition to the appointed director). The order of establishing the executive body, the number of its members, and the scope of its authority must be prescribed in the charter, and this and the other matters pertaining to its operation must also be included in the organizational and operating regulations.

(6) The founding artificial person shall be entitled to terminate the company.

(7) If the company is terminated without a legal successor (with the exception of liquidation), there shall be a final settlement. The provisions of Act VI of 1977 on State-Owned Companies (frequently amended) shall be applied to the manner in which the final settlement is conducted, with the difference that any remaining assets may be claimed by the founding body.

Section 73

(1) The director represents the company vis- -vis third persons, before courts and other authorities. The director shall be entitled to transfer such authority occasionally, or with respect to specific categories of affairs, to employees of the company. The authority to represent and sign for the company shall be registered in the proxy book.

(2) The organizational and operating regulations of a company shall be determined by the director in order to ensure the most appropriate organizational structure possible for sustaining the company's activities.

10. Subsidiaries

Section 74

(1) Economic organizations and other artificial persons engaged in economic activities, defined in legal regulations, shall be entitled to establish subsidiaries. Subsidiaries are artificial persons.

(2) The charter of a subsidiary shall prescribe, in addition to the facts and circumstances defined in Subsection (2) of Section 29 and in Subsection (1) of Section 71, the manner in which the subsidiary and the founding body will cooperate as well as the rights and obligations of the founding body and the subsidiary in connection with their cooperation.

(3) The provisions pertaining to the companies of certain artificial persons shall be applied to subsidiaries with the exception that, unless otherwise provided by legal regulation, the prior consent of the Minister of Finance is not required for the establishment of a subsidiary.

(4) Additional provisions pertaining to subsidiaries shall be determined by a separate legal regulation.

11. Foundation

Section 74/A

(1) Private persons, artificial persons, and unincorporated business associations (jointly referred to hereinafter as "founders") shall be entitled to form a foundation in a charter in order to serve a long-term public interest. A foundation may not be formed for the principal purpose of performing economic activities. A foundation shall provide sufficient assets for achieving its objectives. A foundation is an artificial person.

(2) A foundation is deemed established once it has been registered by the court. Registration cannot be refused if the charter is in conformity with the conditions prescribed in this Act.

(3) A founder may not withdraw a foundation after registration.

(4) A foundation is registered by the county court of competency in the area of the foundation's registered office or by the Metropolitan Court of Budapest (jointly referred to hereinafter as the "court"). The application for registration shall be submitted to the court by the founder with the charter attached.

(5) The court shall, in nonlitigious proceedings, expedite its decisions concerning registrations. The court shall also send a copy of its decision on registration to the public prosecutor's office.

(6) A foundation is deemed terminated upon removal from the register. The relevant provisions concerning the registration of a foundation shall be duly applied to removal.

Section 74/B

(1) The charter of a foundation shall contain:

a) the name,

b) the purpose,

c) the available assets and the manner in which they are to be utilized, and

d) the registered office.

(2) A founder may prescribed the conditions of joining along with other options in the charter.

(3) A founder shall, in the charter, be entitled to declare an organizational unit of the foundation to be an artificial person, if such organizational unit has an independent administrative and representative body, and if it has the necessary assets, allocated from the assets assigned for the purposes of the foundation, for operation.

(4) If a founder allows others to join the foundation (open foundation), anybody may join the foundation under the conditions set forth in the charter. For the creation of an open foundation, assets that are at least sufficient for commencing operation must be made available to the foundation.

(5) A founder shall be entitled, in justified cases, to amend the charter, without causing any injury to the foundation's name, purpose, or assets. The provisions on the registration of a foundation shall otherwise be appropriately applied to amending the charter.

(6) The provisions governing the financial management of societies [Subsection (3) of Section 62] shall be applied to the financial management of foundations.

Section 74/C

(1) A founder shall be entitled to designate a managing body in the charter or create a separate organization for such purpose. The managing body (organization) shall represent the foundation.

(2) The court shall order the appointment of a managing body (organization) if the founder has failed to provide for one or if the managing body (organization) does not undertake to perform this task.

(3) A managing body (organization) in which the founder is entitled, directly or indirectly, to assert any controlling influence regarding the utilization of the foundation's assets may not be appointed or established.

(4) The founder, if establishing a separate organization for the management of the foundation, shall prescribe the composition thereof in the charter and designate the person authorized to represent the foundation. If more than one person is authorized to represent the foundation, the founder shall also prescribe the manner and extent to which the right of representation can be exercised. Any limitation on the right of representation shall have no effect vis- -vis bona fide third persons.

(5) The foundation shall be liable for any damages caused to a third person by the managing body (organization) or an officer (member) thereof in the course of fulfilling its/his responsibilities. An officer (member) who causes damage to the foundation shall be liable for the damage caused in that capacity in accordance with the general rules of civil law.

(6) If the activities of the managing body (organization) jeopardize a foundation's objectives, the founder shall be entitled to dismiss the managing body and appoint another body (organization) to replace it. The court shall be entitled to do this following the death or termination of the founder.

Section 74/D

If a foundation has been endowed by will, the court shall be notified thereof; such foundation shall be deemed a public charge if its endowment is not in conformity with the conditions prescribed by law.

Section 74/E

(1) The court shall remove a foundation from the register, if:

a) the objective defined in the charter has been realized;

b) the period of time defined in the charter has elapsed;

c) the condition defined in the charter has occurred.

(2) A foundation shall also be removed from the register if the court orders it to be terminated or merged with another foundation.

(3) On the basis of a petition filed by the public prosecutor's office, the court shall order the termination of a foundation if it has become impossible to achieve its objective, or if the foundation's registration is refused owing to a change in the law.

(4) The court may terminate a foundation if any of the activities of the managing body (organization) jeopardize the objective of the foundation and the founder, despite a court order, fails to dismiss the managing body and appoint another body (organization) to replace it.

(5) Unless otherwise stipulated in the charter, the assets of a terminated foundation shall be allocated by the court for the support of another foundation with a similar purpose.

(6) Upon the joint request of the founders, the court shall, for the purpose of establishing a new foundation or merging with another foundation, be entitled to order the merger of the foundations, if such merger is in consonance with realizing the objectives of the foundations concerned. For the court proceeding, the new or duly amended charter shall also be attached to the application for the merger of foundations, while the provisions pertaining to the registration of foundations shall be applied with regard to other issues.

Section 74/F

(1) The public prosecutor's office shall, in accordance with the relevant regulations, exercise legal supervision of foundation activities.

(2) The public prosecutor shall be entitled to file for court action if the legitimacy of a foundation's activities cannot be otherwise ensured. The court shall order the foundation's management to restore the lawful operation of the foundation by a specific deadline. The court shall terminate the foundation if the management fails to comply by the aforementioned deadline.

Section 74/G

(1) A public foundation may be established by Parliament, the Government, or the representative body of a local government for the purpose of continuous performance of public responsibilities. The establishment of public foundations can be made mandatory by law.

(2) For the purposes of Subsection (1), the state or local government responsibilities that are prescribed by legal regulation to be provided by the state or local government shall be deemed as public responsibilities. The establishment of a public foundation shall not affect the obligation of the state or local government for fulfilling such responsibilities.

(3) A public foundation may also be formed by a foundation donating its entire assets, with the consent of the founder, to a duly authorized body in order to establish a public foundation with the same objective. The party entitled to form a public foundation, if it accepts the donation, shall establish the public foundation together with the foundation's founder. The foundation shall be terminated upon the establishment of the public foundation, which shall thereby become its legal successor, and the founders of the public foundation shall, unless otherwise provided in the charter, exercise the founders' rights together.

(4) A body entitled to found a public foundation shall only be entitled to establish foundations that are public foundations.

(5) When a public foundation is established, the charter shall also specify the managing body; or a separate body, including the body entitled to supervise the managing body, shall be created for this purpose.

(6) The charters of public foundations must be published in an official gazette.

(7) Unless otherwise provided by law, anybody shall be entitled to join a public foundation without conditions; however, the charter can stipulate that joining is contingent upon the approval of the managing body (organization).

(8) The managing body (organization) shall report to the founder annually on the operation of the public foundation, and it shall publish the most important details of its financial affairs. The legitimacy and propriety of the financial management of public foundations, with the exception of public foundations founded by the representative body of a local government, shall be overseen by the State Audit Office.

(9) The court shall, upon the founder's request, terminate a public foundation in a non-litigious proceeding if there is no longer any need for the public responsibility, or if the public responsibility can be performed more efficiently in another way or through a different organizational structure. When a public foundation is terminated, the foundation's assets shall, after satisfying any creditors, remain with the founder, who shall use the assets for a purpose similar to that of the terminated public foundation and shall appropriately inform the public thereof.

(10) Concerning those matters not specifically regulated, the provisions pertaining to foundations shall also be applied to public foundations.

12. Professional Associations

Section 74/H

(1) A professional association is an incorporated cooperative association founded by its members in order to promote their business activities, coordinate their economic activities, and represent their professional interests. A professional association shall not aim for profit; its members shall sustain unlimited joint and several liability for any liabilities exceeding its assets.

(2) A professional association may also pursue other service and joint economic activities in support of its coordination duties.

(3) Professional associations come into existence when they are entered into the register of companies, effective as of the day of registration.

(4) The designation "professional association" shall be indicated in the corporate name of the cooperative association.

(5) The detailed regulations on professional associations shall be established in a separate law.

Title IV


Chapter VII

Inherent Rights and Rights Related to Intellectual Products

Inherent Rights

Section 75

(1) Inherent rights shall be respected by everyone. Inherent rights are protected by law.

(2) The provisions on the protection of inherent rights shall also apply to artificial persons, unless such protection, by virtue of its very nature, can only be given to private persons.

(3) Inherent rights shall not be deemed violated by conduct that is approved by the holder of the rights, provided the granting of such approval is not in violation or breach of the interests of society. A contract or unilateral statement that otherwise restricts inherent rights is null and void.

Section 76

Discrimination against private persons on the grounds of gender, race, ancestry, national origin, or religion; violation of the freedom of conscience; any unlawful restriction of personal freedom; injury to body or health; contempt for or insult to the honor, integrity, or human dignity of private persons shall be deemed as violations of inherent rights.

Section 77

(1) Everybody has the right to bear a name.

(2) Scientific, literary, or artistic activities or activities accompanying public performances may be pursued under an assumed name without injuring the rights and legal interests of other persons.

(3) The name of an artificial person must be different from the names of other previously registered artificial persons who are engaged in similar activities in the same field of endeavor.

(4) The illegal use of another person's name or a name similar to that of another person shall be deemed a violation of the right to bear a name. A person engaged in scientific, literary, or artistic activities, if his name can be confused with the name of another person who has already been engaged in similar activities, shall not even be entitled to use his own name without a distinctive addendum or omission while engaged in such activities.

Section 78

(1) The protection of inherent rights shall also include protection against defamation.

(2) The statement, publication, or dissemination of an injurious untrue fact pertaining to another person or a true fact with an untrue implication that pertains to another person shall be deemed defamation.

Section 79

(1) If a daily newspaper, a magazine (periodical), the radio, the television, or a news service publishes or disseminates false facts or distorts true facts about a person, the person affected shall be entitled to demand, in addition to other actions provided by law, the publication of an announcement to identify the false or distorted facts and indicate the true facts (rectification).

(2) The rectification shall be published within eight days of receipt of the relevant demand in the case daily papers, in the next issue of a periodical or a news service in the same manner, or (also within eight days) at the same time of the day if the defamation had been broadcast over radio and television.

Section 80

(1) Any misuse of the likeness or recorded voice of another person shall be deemed as a violation of inherent rights.

(2) With the exception of public performances, the consent of the person affected shall be required for the public use of his likeness or recorded voice.

(3) A likeness (recorded voice) of a missing person or a person under criminal prosecution for a felony offense may be used for substantial public interests or a justifiable private interest with the permission of the authorities.

Section 81

A person who has violated the sanctity of the mails or has come into the possession of a private, industrial, or business secret and publishes such secret without authorization, or abuses it in any other way, shall be construed as having violated an inherent right.

Section 82

The rights pertaining to private dwellings and to the premises used by artificial persons are protected by law.

Section 83

(1) Data management and data processing by computer or other means may not violate inherent rights.

(2) Information from registered data may only be disclosed to duly authorized bodies or persons (in addition to the person concerned).

(3) If any registered fact or datum is false, the person affected shall be entitled to demand that the false fact or datum be corrected in a manner prescribed by a separate legal regulation.

Section 84

(1) A person whose inherent rights have been violated may have the following options under civil law, depending on the circumstances of the case:

a) demand a court declaration of the occurrence of the infringement,

b) demand to have the infringement discontinued and the perpetrator restrained from further infringement;

c) demand that the perpetrator make restitution in a statement or by some other suitable means and, if necessary, that the perpetrator, at his own expense, make an appropriate public disclosure for restitution;

d) demand the termination of the injurious situation and the restoration of the previous state by and at the expense of the perpetrator and, furthermore, to have the effects of the infringement nullified or deprived of their injurious nature;

e) file charges for punitive damages in accordance with the liability regulations under civil law.

(2) If the amount of punitive damages that can be imposed is insufficient to mitigate the gravity of the actionable conduct, the court shall also be entitled to penalize the perpetrator by ordering him to pay a fine to be used for public purposes.

(3) The above provisions shall also apply if the infringement occurred through the publication of an illegal advertisement.

Section 85

(1) Notwithstanding the provisions of Subsections (2) and (3), inherent rights may only be enforced personally. A person with diminished capacity may take action himself in the protection of his inherent rights.

(2) The legal representative of an incompetent person, or the relative or conservator of a missing person whose whereabouts are unknown shall be entitled to proceed in the protection of that person's inherent rights.

(3) In the case of injury to the memory of a deceased person, the relative and/or the person having been named heir apparent in the will of the deceased shall be entitled to file for court action. If conduct causing defamation to a deceased person (former artificial person) infringes upon the public interest, the public prosecutor shall also be entitled to enforce this inherent right.

(4) If a legal injury has been rendered probable and delay might result in irreparable damage, the court shall be entitled to take provisional measures, in the course of which it shall be entitled to issue an injunction to seize the instruments of legal injury.

Rights Related to Intellectual Products

Section 86

(1) Intellectual products are protected by law.

(2) In addition to the provisions of this Act, protection is prescribed for certain specified types of creations and certain related activities by copyright law, industrial rights protection (patent, trademark, certification of origin and design protection), innovation law and legal regulations protecting the producers of sound recordings.

(3) Intellectual products that are not regulated by separate legal regulations but which can be used by the general public and have not yet become part of the public domain shall also be protected by law.

(4) Persons shall also be entitled to protection with respect to that economic, technical, and organizational knowledge and experience that has pecuniary value. The beginning and duration of the period of protection shall be determined by a legal regulation.

Section 87

(1) A person whose rights with regard to intellectual products have been violated may file charges under the civil law titles governing violations of inherent rights (in addition to the protection prescribed by separate legal regulations).

(2) Within the sphere of protection provided for intellectual products that do not fall within the scope of separate legal regulations and for economic, technical, and organizational knowledge and experience of pecuniary value, obligees may also demand a share of the financial proceeds from persons who have expropriated or used their achievements.

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