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Authorization for your employees at your Hungarian business

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Authorization for your employees at your Hungarian business

An authorization always refers to some kind of representation. While employees represent the company they work for when they are meeting clients or serving them in a shop, that does not normally require a separate, official authorization. When they need to sign contracts or make payments on behalf of the company, however, they will need proof that they can do so.

Authorization is representation

By default, the managing directors of a company can represent it before authorities without further ado. They are listed in the company extract as authorized representatives, which can be confirmed online at any time. The form of representation may be independent or joint, meaning that any documents they sign may be valid with the signature of just one person or more.

For example, if your form of representation is independent, you can get a loan for your company on your own; if it is joint, you will need the signatures of the other representatives too.

At the same time, employees may also be authorized to represent the company. For that, they will need an authorization. This does not have to be submitted to the company registry to become effective, but it will need the right elements, and the right validation.

Elements of an authorization

The authorization you give to your employee must contain:

  • The data of your company (name, seat address, tax number, company registration number)
  • The stamp of your company
  • Your data (name, mother’s maiden name, permanent address in Hungary, ID card or passport number)
  • Your signature
  • The data of your employee (name, mother’s maiden name, permanent address in Hungary, ID card or passport number)
  • Your employee’s signature (optional depending on the type of authorization)
  • Tasks concerned (if possible, also the entity where the document is to be presented)
  • Date of signature
  • Date of expiry
  • Validation

As you can see, the authorization should include the data of your company, the originally authorized signatory (probably you as a managing director), and the person you are now authorizing. In most cases the signature of the newly authorized person is not required on the document to make it valid, but it is still customary to add it. Blanket authorizations do require the signature of the person authorized.

Authorizations at a company are normally given for specific tasks, such as signing agreements in specific fields, confirming payments, taking the company car to a roadworthiness check, or managing issues with the phone provider of the company. Blanket authorizations are less typical, and require stronger validation (i.e. by a notary).

The term of the authorization can be fixed or indefinite. However, even if you choose not to set a fixed expiration date, it makes sense to still add that the authorization expires when the employment relationship is terminated. However, that is difficult to check for third parties, which makes using a fix date a safer option.

How to validate an authorization?

To make an authorization valid, it needs witnesses who vouch for the truthfulness of its contents. This can be:

  • Two witnesses (any natural persons with their names, permanent addresses, and signatures indicated)
  • Attorney
  • Notary

The kind of validation you will need depends on task at hand and the legal person where you must present the authorization.

  • Authorizations are normally given for narrow or specific tasks. In these cases, an authorization with two witnesses might be enough.
  • In case you want to give someone a blanket authorization, verification by a notary is required.

Sometimes a mixture of the above might be appropriate. Your safest bet is to inquire about this at the entity where you must present the authorization. Some institutions prefer their own forms.

For example, when an employee needs to take care of something related to their company phone, the provider might require a simple authorization validated by two witnesses, but complemented by a company extract that shows that the authorizer indeed has the right to sign the authorization, and a specimen signature signed by an attorney that lets them compare the signature on the authorization to a verified sample.

Authorizations support smooth business operation

As your business grows, there will be more and more tasks you will want to delegate to your employees who can manage daily operation while you focus on executive decisions. In some cases, this will require an authorization, especially if those tasks involve representing your company before authorities, providers, or partners. Mandatory elements and type of validation will depend on the tasks you wish to include.

Helpers Hungary provides assistance to businesses operating in Hungary from setup through liquidation, offering support with business planning, accounting, and other administrative procedures that will help make your company a success. Take advantage of our ample experience and extensive network of providers.

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