The decree 227/2020 regarding the control of foreign investment issued by the Hungarian government on 25 May, 2020 has been revoked and the rules are now provided for by Law LVIII of 2020. The obligation for foreign investors to request the acknowledgement of the minister upon investing in a Hungarian strategic company shall remain until 31 December 2020.
Pursuant to Section 85. (§276-292.) of the law, the provisions are similar to that of the former government decree 227/2020, however, there are some modifications. Please find some of the amendments of the rules highlighted below.
1. in case of investors (natural persons or legal entities) not resident of the European Union (EU), the European Economic Area (EEA), the Swiss Confederation or investors registered outside the EU, the EEA or the Swiss Confederation, if as a result of the acquisition
- the direct or indirect holding of such investor exceeds 10% and the transaction value is HUF 350 million or above,
- the direct or indirect holding of such investor exceeds 15%, 20% or 50%,
- such investor would have directly or indirectly a majority influence (=over 50% holding or qualified holding) and the transaction value is HUF 350 million or above, or
- the aggregate holding of all of the foreign investors of the respective strategic company exceeds 25%.
2. in case of legal entities registered in the EU, the EEA, the Swiss Confederation, if as a result of such acquisition, such investor would have directly or indirectly a majority influence (=over 50% holding or qualified holding) and the transaction value is HUF 350 million or above.
3. Clause (1) applies if the investor resident or registered outside the EU, the EEA or the Swiss Confederation has majority holding in a legal entity registered in Hungary, the EU, the EEA or the Swiss Confederation and the acquisition is realized through this legal entity.
Under the new regulation, the relevant minister has 30 working days instead of 45 working days from the receipt of the necessary documentation to acknowledge or ban the acquisition.
The range of impacted sectors have also been changed, as the Financial and insurance services sector has been removed. The currently effective list is stipulated in a new government decree no. 289/2020. of 17 June 2020.
Please find our earlier Newsflash in the topic at the following link: https://gss.unicreditgroup.eu/markets/hungary/newsflashes/new-law-foreign-investments-hungary
Impact on investors:. Acquisition of ownership in companies operating in sectors considered strategic requires an acknowledgment from the government with modified conditions stipulated in the Law LVIII. of 2020