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Coronavirus – Foreign investment law amendments – Hungary

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Impact on foreign investment law in Hungary

The Government Decree 189/2021 (21.IV.) has extended the previous deadline of 30 June 2021 for the notification obligation to 31 December 2021. Therefore, in the case of a strategic company, the foreign investor's obligation to notify the Minister of the Economy relating to the following transactions will continue to apply until 31 December 2021:

  • the transfer, in whole or in part, of a shareholding in a strategic company, free of charge or for consideration, by way of any transfer of ownership, including in-kind contributions
  • capital increase in a strategic company
  • transformation, merger, and division of a strategic company
  • convertible bonds issued by a strategic company, and the issuing of a bond with a subscription right or which is convertible
  • establishment of a usufruct right on the shares of a strategic company

The concept of state interest has been supplemented, and public interest relating to a fundamental economic strategic interest from a national economy will also be considered a state interest in addition to the previous concept.

The definition of strategic company has also been amended to include higher education institutions. According to a new, effective definition, a limited liability company, private limited company, public limited company or higher education institution domiciled in Hungary is considered a strategic company whose main or additional activity as defined in the Government Decree belongs to the sector of strategic importance according to this activity, in particular energy, transport, communications sectors and to the sector defined in the Article 4 (1) point a)-e) of the Regulation (EU) 2019/452 of the European Parliament and of the Council of 19 March 2019 establishing a framework for the screening of foreign direct investments into the Union.

The Government Decree 188/2021 (21.IV.) has extended the scope of activities under which a company established in Hungary falls within a sector of strategic importance and includes the following activities: publishing, film, video or television production, sound recording and publishing, broadcasting, telecommunications, higher education or activities relating to education.

You can find out the details of the regulation of strategic companies in our previous newsletter on foreign investments in Hungary.