Restriction on foreign investment after the state of emergency

June 18, 2020 | Vocational

The omnibus act on the “transitional rules relating to the termination of the state of emergency and health alert” adopted on 16 June 2020 allows for the continuation of several rules promulgated by government decrees during the state of emergency. Our expert lawyer reviewed an important company law topic in his recent article: rules on the restriction on foreign investments in Hungary.

To understand the complex regulation, two basic concepts needs clarification: who qualifies as a foreign investor and what a “strategic company” is. Our author also summarized in which cases companies have notification obligation, with what deadlines and what fines can be imposed.

How foreign is a foreigner? In particular, we would like to draw your attention to the fact that notification is required when acquiring  majority influence (51%) in a strategic company, directly or indirectly,  by a legal person or entity even if it is established in the EU, EEA Member State or Switzerland.

Moreover, the notification obligation is not just a pure notice: the minister either acknowledges or prohibits the transaction – indeed it is rather an authorization. Sanctions for the failure of giving notification are serious, therefore examining the preliminary issues described in our article in Hungarian and analyzing each transaction requires enhanced attention.

The rules related to the economic protection of Hungarian “strategic companies” had been introduced by a government decree in May, and the new omnibus act extends their force until 31 December 2020.

For detailed information in English, please contact us.