New legal instrument in company law: the separation

The provisions of Act XXXIX of 2023 amending Act CLXXVI of 2013 on the transformation, merger and division of certain legal entities, and amending Act XXXIX of 2023 on the amendments to the law in order to increase the competitiveness of the economy have created a new legal possibility in company law in relation to the transformation of companies.

 The provisions of the Civil Code (Civil Code), the Companies Act (Companies Act) and the Accounting Act (Accounting Act) have also been amended accordingly in connection with the rules of this new legal institution of transformation.

 A spin-off is effected by the survival of the original legal entity and the creation of a successor company with certain assets, of which the original legal entity becomes the sole member. The original company thus becomes the parent company of the new company. 

In the case of a demerger, the court will not remove the original going concern from which the company being demerged is being removed from the register when the demerger is registered.

 In the case of a demerger, only the original, predecessor company can change ownership, so only a preliminary assessment is required to determine whether a new member will join or whether a former member will cease to be a member of the company.

 In the case of a separation, all members of the original legal entity remain members of the predecessor company, unless they cease to be members at the time of the separation.

In determining the subscribed capital of the remaining legal person, the shareholding of the legal person created by the divorce shall not be taken into account.

It is important to note that a demerger cannot be interpreted as a transformation of a beneficiary, and therefore a liability to pay duty may arise in relation to tangible assets that are transferred in return for consideration in the process.

It is interesting to note that a demerger is an exception to the prohibition of division in the case of public limited companies.

Dr. György Zalavári LL.M.
Ecovis Zalavári Legal Hungary
Lawyer | Mediator | Corporate Law and Data Protection Specialist
gyorgy.zalavari@ecovis.hu