Recent modifications of Act no. CXL of 2007 on the Cross Border Merger of Limited Liability Companies (the “Cross Border Merger Act”), effective from 23 June 2017, introduced a new, simplified procedure for cross border merger that enables companies from other EU member states to move their registered seats to Hungary.
According to this procedure, limited liability companies from elsewhere in the EU may move their registered seat to Hungary in such a way that they merge into an empty company founded in Hungary, directly for the purpose of the merger. The newly established company as acquiring company shall be registered in the Hungarian Companies’ Register with the extension “established with a view to merger” (in Hungarian: “egyesülés céljára alapított”) in its company name. The company does not receive a tax identification number or statistical code, and is not obliged to open a bank account. The acquiring company is not entitled to pursue any business activity until the merger becomes effective.
Pursuant to the Cross Border Merger Act, the establishment of the acquiring Hungarian company and the commencement of the merger occur simultaneously thus shortening the process since the founders of the acquiring company shall approve corporate establishment documents and merger documents at the same time. The documents that are generally required by the Companies Act shall be attached to the application for company establishment together with the common draft of the merger agreement and the report prepared by the executive officers of the merging company.
If the merger occurs, the acquiring company, or if two or more companies merge, the successor company shall operate according to the general rules applicable for the given company form. Within a period of 8 days starting from the registration of the merger, the acquiring company shall arrange for the opening of the bank account and the transfer of the cash contribution to that account. The acquiring company now receives a tax identification number and statistical code.
If the merger is not registered within a period of 1 year commencing from the date when the acquiring company is registered to the Hungarian Companies’ Register, the competent Court of Registration will automatically delete the acquiring company from the Register.
Pursuant to the closing provisions of the amendment to the Cross Border Merger Act, the new provisions shall be applied to any application for company registration submitted after 23 June 2017. As of the publication of this article, no company has been registered to the Hungarian Companies Register with the extension of “established with a view to merger”.