A few weeks ago, the Parliament passed a new law introducing asset management foundations. Henceforth, a foundation can be entrusted with the management of larger assets too. Let’s take a look at the terms.

An asset management foundation may be established for the purpose of managing the assets allocated by the founder and for realising, by using the income accrued from such assets, the goals and objectives specified in its charter subject to legal provisions applicable to all foundations. The asset management foundation may also carry out trust management, in addition to the management of assets allocated to it. However, carrying out any other economic activity is prohibited.

To incorporate such foundation, at least 600 million forints must be allocated by the founder. Assets can be both cash and non-cash assets but it shall be allocated in full to the foundation prior to the court registration. The founder is required to specify all items of the assets in the deed of foundation in sufficient details so that they can be identified.

Compared to standard foundations, stricter rules apply to asset management foundations in terms of management and control. In case the founder assigns his rights to third parties, he is required to appoint a board of trustees of at least five members and the establishment of a supervisory board is mandatory. In case a board of trustees is appointed, the founder shall also appoint a property inspector to control the management of assets.

Asset management foundations can be established not only from scratch but also by amending the charters of existing foundations in order that the amended charter complies with the provisions of the new law.