EU: ECJ Rules On Cross-Border Conversions

In a series of landmark cases, the European Court of Justice (ECJ) has shaped European company law by exploring the scope of the freedom of establishment with regard to companies. In its latest decision, VALE (Case C-378/10), issued on 12 July 2012, the ECJ had to rule on the possibility of so-called cross-border conversions.

Facts of the case

VALE Costruzioni Srl ("VALE Costruzioni"), a limited liability company originally established under Italian law, decided to discontinue business in Italy and to transfer its seat and business to Hungary in order to operate there in accordance with Hungarian law. On its request, the company was deleted from the Italian commercial register. Subsequently, the director of VALE Costruzioni and another natural person adopted the articles of association of VALE Építési kft ("VALE Építési"), a limited liability company under Hungarian law, with a view to registration in the Hungarian commercial register. In the registration