There should be no technical obstacles preventing cross-border transformations of companies within the EU, according to the Supreme Court.

This decision follows the ECJ’s decision (C-378/2010) – reported in our previous Law-now article here –that companies moving their registered seat to another EU country must be given equal treatment with companies established in that country. However, Hungarian law does not permit a Hungarian company to be registered as the legal successor of a non-Hungarian company by moving its registered seat to Hungary.

The Supreme Court confirmed that, in order to preserve legal continuity between predecessor and successor companies from different member states, the closure and deletion of the predecessor company must comply with the national law of the predecessor company and the formation and registration of the successor company must comply with the national laws of the successor company.

In the relevant case, VALE Építési Kft. was nonetheless denied registration in Hungary as the legal successor of VALE Costruzioni Srl (an Italian company that decided to move its seat and business activities to Hungary and be deleted from the companies’ register in Italy) because it did not comply with Hungarian rules relating to the registration of transforming companies.

There is no other legal precedent on cross-border company transformations but both the ECJ and Supreme Court decisions give the green light, in theory at least, to companies wanting to move their seat and business activity to another member state.