Can a Managing Director Grant a Power of Attorney for Executive Tasks?

One of the cornerstones of corporate operation is that the person responsible for management — the managing director — must perform their duties personally. The Hungarian Civil Code (Ptk.) clearly states that executive functions cannot be outsourced or transferred to another person.

Nevertheless, the practical question frequently arises: may a managing director authorise someone else to perform certain tasks, and if so, within what limits?

Below is a summary of the most important statutory rules and relevant case law.

1. The nature of a power of attorney: how far does it extend?

Under Section 6:15 of the Civil Code, a power of attorney is a unilateral legal declaration that establishes a right of representation and authorises the agent to make legal statements.

A power of attorney, however, may only be granted for acts that the principal could lawfully perform themselves, and cannot cover duties that must be performed personally.

2. Executive functions are strictly personal – express statutory prohibition

Section 3:22 (3) of the Civil Code provides that:

“The managing director shall perform their executive duties personally.”

This personal responsibility is inherent in the managerial role, which is founded on the managing director’s:

• professional judgment,

• decision-making responsibility,

• statutory obligations, and

• duty to prioritise the interests of the company.

The requirement of personal performance is reinforced by the prohibition on instructions: members — with the exception of single-member companies — may not issue individual instructions to the managing director nor may they restrict the scope of the managing director’s powers (Civil Code 3:112).

From these principles it follows that a managing director cannot transfer executive functions in a general manner and cannot issue a power of attorney that would make another person the company’s statutory representative.

3. What does case law say? – No power of attorney for executive duties

In a landmark decision (BDT2021. 4357.), the Budapest Court of Appeal confirmed that:

• a managing director may issue a power of attorney for legal representation or for procedural steps,

• but may not issue a power of attorney for the performance of executive duties, as these are strictly and mandatorily tied to the managing director personally.

In essence:

• procedural authorisation – permitted,

• authorisation for executive functions – prohibited.

Case law also makes clear that the supreme body of the company cannot transfer statutory representation either; it cannot grant a general authorisation to a third party to conclude contracts on behalf of the company (BDT2024. 4786.).

4. When may the managing director issue a power of attorney? – Only for specific, non-management acts

Despite the requirement of personal performance, a managing director may still authorise another person for certain tasks — but only if the authorisation concerns:

• a specific,

• individual,

• non-executive act.

Examples of permissible authorisations include:

• collecting postal deliveries,

• carrying out certain administrative tasks,

• issuing or signing a particular statement in a specific procedure,

• representing the company in a single, concrete matter (e.g., signing a specified contract), provided this does not amount to delegating strategic executive decision-making.

Such authorisation cannot create a general right of representation and cannot turn another person into the actual managing director of the company.

5. Summary: the correct legal practice

The managing director:

• may not grant general authorisation for executive functions,

• may not transfer their executive duties,

• may not be substituted in matters requiring personal managerial responsibility,

• but may issue specific, one-off powers of attorney for particular legal or administrative tasks.

For lawful corporate operation, executive responsibilities must remain with the person who was duly appointed by the members or the members’ meeting, and who — under the law — bears personal responsibility for the company.