new partnership framework is established in order to regulate the relationship between the EU and the United Kingdom as of 1st January 2021 in which a company law and insolvency law agreement is not incorporated. The withdrawal of the United Kingdom from the European Union will result in the United Kingdom becoming a ‘third country’ from the point of view of company law.

The website of the European Commission on company law  provides general information in the field of EU company law.


Notice of the European Commission on withdrawal of the United Kingdom and EU rules on company law:

Companies incorporated in the United Kingdom will qualify as third-country companies, and therefore will not automatically be recognised under Article 54 of the Treaty on the Functioning of the European Union by Member States. Member States will not be obliged to recognise the legal personality and limited liability of companies which are incorporated in the United Kingdom, but have their central administration or principal place of business in the EU-27. UK incorporated companies may be recognised in accordance with each Member State’s national law (regulations in private international law concerning companies and the subsequently applicable substantive company law), or international law treaties. As a consequence, depending on the applicable national or international regulations, such companies might not have a legal standing in the EU and shareholders might be personally liable for the debts of the company.

Branches of UK incorporated companies in EU-27 Member States will qualify as branches of third country companies and rules relevant to branches of third country companies will apply.

Subsidiaries of UK incorporated companies that are incorporated in EU-27 Member States will continue to qualify EU companies and all relevant EU (and national) rules will extend to them.

Act XXIV of 1988 on the Investment of Foreign Nationals in Hungary requires undertakings from non-EEA countries to create an establishment in Hungary as a condition of permanent economic activity. This requirement can be fulfilled either by establishing a company under Hungarian law (subsidiary), or by establishing a branch, or for foreign natural person entrepreneurs, by registering in Hungary as an entrepreneur exercising independent economic activity. Sectoral regulation may provide for activities carrying out necessarily by a domestic subsidiary, in this case Hungarian branch established by a third country company shall not carry out that activity.

As a consequence of the above, following the withdrawal companies incorporated in the UK will have to start economic activity in Hungary by establishing a subsidiary (company) under Hungarian law, acquiring shares in a company incorporated in Hungary, or establishing a branch in Hungary that is registered in the Hungarian company register. Hungarian law (Act CXXXII of 1997 on the Hungarian Branches of Foreign Companies – the Fkt.) recognises branches as legal entities in civil and administrative legal relationships.

After a withdrawal with no deal, if companies incorporated in the UK have branches or sales representatives registered in the Hungarian company register, then the terms of the Ftk. will apply to their legal personality, legal status, operations, legal relationships, employees and liquidation, and the Law on Company Procedures (Act V of 2006) will apply to changes in registration and deletions from the company register.

The Fkt. regulates the related Hungarian procedure when insolvency proceedings are instituted against a foreign parent company, or when a Hungarian branch becomes insolvent, this will also apply to the Hungarian branches of companies incorporated in the UK and, in addition to the specific regulations of the Ftk., non-litigious civil proceedings governed by Act XLIX of 1991 on bankruptcy and liquidations proceedings will take place.

EU law on disclosure, incorporation, maintaining and modifying capital, and cross-border conversions, mergers and divisions will no longer apply to the United Kingdom. Therefore, in terms of appropriate safeguards, parties involved in companies incorporated in the UK – including employees, creditors and investors – will only be able to rely on the UK’s national law.

The EU law on mandatory disclosure in individual company records (e.g. instruments of constitution; the appointment, dismissal and information related to company representatives; company accounts; other insolvency proceedings initiated against companies; and documents and information related to change of the registered office) will not apply.

EU law on access to company information in EU company registers, including cross-border, will not apply to the United Kingdom. This means, that following the withdrawal the UK’s company register will not be connected with the Business Register Interconnection System (BRIS), and the EU e-Justice Portal will not provide information on UK companies. Furthermore, EU company registers will not receive notifications of individual changes to UK companies (changes to UK companies with branches in EU-27 companies; cross-border mergers affecting at least one EU and one UK company).

The company law forms of European Company (SE), European Cooperative Society, European Economic Interest Grouping and European grouping of territorial cooperation will no longer be available in the United Kingdom.