Kinga Pázmándi: Economy, law, corporation - Some theoretical and practical dimensions of Hungarian company law regulation (GJ, 2025. Különszám, 13-22. o.)

Abstract - Economy, law, corporation - Some theoretical and practical dimensions of Hungarian company law regulation

This study analyses theeconomic and legal approaches to the concept of a company, with particular regard to the provisions of the Civil Code (Act V of 2013) on legal entities. We discuss the company in two dimensions: on the one hand, within the framework of transaction cost theory in economics, where, following the ideas of Ronald Coase and Oliver Williamson, the company appears as an optimal alternative to market mechanisms; on and the need for flexible regulation of its organisational forms. The study uses detailed statistical analysis to examine the dynamics of business forms from the 1990s to the present day. The analysis highlights the economic role of micro, small and medium-sized enterprises in the Hungarian market.. The study presents the development model of the Hungarian business sector through the close interconnection of legal and economic frameworks, which requires stability and adaptability from corporate law.

Absztrakt - Gazdaság, jog, vállalat - A magyar társasági jogi szabályozás néhány elméleti és gyakorlati dimenziója

A tanulmány a gazdasági társaság fogalmának közgazdasági és jogi megközelítéseit elemzi, különös tekintettel a Polgári Törvénykönyv (2013. évi V. törvény) jogi személyekre vonatkozó rendelkezéseire. A társaságot két dimenzióban tárgyaljuk: egyrészt a közgazdaságtan tranzakciós költségelméletének keretében, ahol Ronald Coase és Oliver Williamson gondolatait követve a társaság a piaci mechanizmusok optimális alternatívájaként jelenik meg; másrészt a jogi személyiség státuszának keretében, amely felveti a társasági autonómia kérdését és a szervezeti formák rugalmas szabályozásának szükségességét. A tanulmány részletes statisztikai elemzéssel vizsgálja a vállalati formák dinamikáját az 1990-es évektől napjainkig. Az elemzés kiemeli a mikro-, kis- és középvállalkozások gazdasági szerepét a magyar piacon. A tanulmány a jogi és gazdasági keretek szoros összefonódásán keresztül bemutatja a magyar üzleti szektor fejlődésének modelljét, amely stabilitást és alkalmazkodóképességet igényel a társasági jogtól.

I. Introduction - Corporate entities on the borderline between economics and law

When considering corporate legal entities and legal personality, it seems essential to examine the relation of the concept of "company" s to economics, which analyses market functioning, and to jurisprudence, which sets out the status of market participants within a normative framework. There are significant differences between the approach of economics and that of the law, which are important and instructive.

As many aspects of market analysis (such as the attitudes of market participants, the market impact of legal constraints, the measurement and measurability of effective intervention, and the many interrelationships of competitiveness) "derive" from economic analyses, as an inseparable medium of economic law, it is also a good "support" insofar as it helps to determine regulatory trends, guidelines, or even corrections.

1. The economic theoretical context of the concept of "company"

In economics, the concept of "company" is defined according to different schools of thought, but there is no uniform definition, as different theoretical frameworks emphasise different aspects. According to Ronald Coase's pioneering work ("The Nature of the Firm", 1937), the firm was created to minimise the transaction costs that would be incurred by using market mechanisms. According to Coase, companies are created to eliminate the costs associated with the use of market mechanisms, such as the difficulties of price negotiations or contract conclusion. A company is a kind of alternative to market organisation, where the entrepreneur decides on the allocation of production factors, thus replacing external market transactions with internal organisational coordination. Coase also points out that the size of a company is the result of a balance between internal management costs and market transaction costs. As long as the increase in internal organisational costs is lower than the costs of market transactions, it is economical to expand the company.

The theory essentially laid the foundation for the economics approach to transaction costs, and later researchers, such as Oliver Williamson, further developed it to provide a more detailed analysis of corporate organisational structures and operational efficiency. According to Williamson, companies are not only created to use internal hierarchies instead of market mechanisms, but also because different transaction conditions make different organisational forms optimal. Thus, the choice between hierarchy (internal company

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operations) and the market (external transactions) is fundamentally about minimising transaction costs. This theory contributed to the emergence of the so-called "new institutional economics," which interprets the economic efficiency of organisations through transaction costs. Williamson's transaction cost theory had a significant impact on jurisprudence, particularly in the areas of contract law and corporate law. The framework he developed opened up a new perspective for analysing the efficiency of contractual relationships, the status law of organisations and the legal instruments of economic management, thus linking legal structures with economic optimisation.[1] In the field of company law, Williamson's ‚agency theory'[2] contributed significantly to a better understanding of corporate governance structures. He portrayed companies as entities that use internal organisational rules to reduce transaction costs and losses arising from agency problems (e.g. conflicts of interest between owners and managers). This approach laid the foundation for the analysis of corporate governance reforms, including the regulation of board structures, shareholder rights and managerial responsibility.

Williamson also pointed out that the economic goal of regulation is to reduce transaction costs and address market imperfections. This perspective has significantly influenced the design of public service regulation, such as in the energy and telecommunications sectors, where natural monopolies and long-term contracts are prominent issues. His theory helped to understand when government intervention is justified and when it is more effective to leave regulation to the market. Williamson's work played a central role in integrating new institutional economics into jurisprudence. The economic analysis of institutions and legal structures contributed to the strengthening of the "Law and Economics" movement, which examines the effectiveness of legislation through transaction costs and resource allocation. Williamson's influence is therefore not only theoretical but also practical, as the approaches he proposes can be used in the creation of legislation, the planning of corporate and contractual strategies, and the development of economic regulation.