HUNGARY Law and Practice Contributed by: Mihály Barcza and József Bulcsú Fenyvesi, Oppenheim Law Firm
These rules are relevant for natural or legal persons acting as direct or indirect investors (the latter means holding a majority control in the investing company), who are registered or are resident outside the Euro- pean Economic Area or Switzerland. The law is only applicable if the current or planned activities of the Hungarian target company relate to certain strategic sectors as listed by the law. These include activities typically relevant to national security (eg, defence, dual-use products, cryptography and wire-tapping products) or government IT services, as well as key services in the financial, energy and tel- ecoms sectors. The law is applicable if any of the following triggering events occur. • If in an existing Hungarian company: (a) a foreign investor acquires a direct or indirect participation interest exceeding 25% (10% in the case of Nyrts), either solely or together with other foreign investors; (b) a foreign investor acquires a dominant influ- ence as defined by the Hungarian civil law, either solely or together with other foreign investors; or (c) a foreign investor whose ownership share already exceeds 25% wishes to extend the scope of activities of the company to the listed strategic activities. • If a foreign investor establishes a new Hungar- ian company, in which the participation interest of the foreign investor would exceed 25% (10% for Nyrts). • If a foreign investor registers a branch office in Hungary for the purpose of carrying out the listed strategic activities. The minister shall be notified before the implementa- tion of such transactions and is entitled to block such a transaction if it “harms Hungary’s security inter- ests”. This blocking decision may not be challenged before the Hungarian courts on substantive grounds (ie, questioning whether the transaction indeed has “harming” effects); it can only be challenged on the grounds of a serious procedural breach.
Beyond the above, under another legal regime (which is in force as at the end of August 2025), ministerial approval is also necessary if: • the investor qualifies as a foreign investor; • the relevant transaction relates to certain specific strategic sectors defined by the law; and • the relevant transaction qualifies as a triggering event. These rules are primarily relevant for natural or legal persons acting as direct or indirect investors (the lat- ter means holding a majority control in the investing company), who are registered or are resident outside the European Economic Area or Switzerland. In cer- tain events, the rules are also relevant for natural or legal persons registered or resident in the European Economic Area or Switzerland. This regime is applicable if the current activities of the Hungarian target company relate to certain strategic sectors as listed by the relevant law, including energy, traffic, communications, critical infrastructure, critical technologies and dual-use items, supply of critical inputs, access to sensitive information, and freedom and pluralism of the media. The law is applicable if in an existing Hungarian stra- tegic Kft or Zrt or Nyrt or an institute of higher educa- tion, as a result of any transfer of shareholding, capital increase, transformation, merger, demerger, issuance of convertible or subscription bonds, or granting a usufruct right: • a foreign investor who is registered or is resident outside the European Economic Area or Switzer- land directly or indirectly acquires – (a) at least a 5% shareholding (or 3% in a Nyrt), provided that the total value of the investment reaches or exceeds HUF350 million (approxi- mately EUR875,000); or (b) a 10%, 20% or 50% shareholding; or (c) a shareholding (except in a Nyrt) with the result that the total shareholdings of foreign investors exceed 25%; or • a foreign investor who is registered or is resident within the European Economic Area or Switzer- land directly or indirectly acquires a shareholding
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