HUNGARY LAW AND PRACTICE Contributed by: Pál Szabó, Barnabás Simon, Eszter Katona, Ádám Simon, Mihály Harcos, Karim Laribi, Gábor Kutai and István Szalay-Csala, Bird & Bir d
one of the various trading platforms of the Budapest Stock Exchange (BSE), including the BSE prime mar - ket and the BSE Xtend market, which is a multilateral trading facility operated by the BSE that primarily tar - gets small and medium-sized enterprises. Listing and prospectus requirements, as well as reporting obliga - tions of the BSE Xtend market, are not as stringent as those of the BSE prime market, therefore, the number of companies that may be eligible for listing on this platform is considerably higher than those eligible for listing on the BSE prime market. 5.2 Securities Regulation The Hungarian Civil Code sets out the fundamental rules governing securities issued in Hungary, such as method of creation (printed or dematerialised), the essential content requirements and the main rules of security transfers. Additional rules may also apply in terms of certain specific securities, such as bonds, investment units and promissory notes, which are set out in various statutory instruments, such as the Capi - tal Market Act (Act CXX of 2001), the Investment Firms Act (Act CXXXVIII of 2007) and the Promissory Note Act (Act CLXXXV of 2017). Certain instruments of the EU capital-markets legis - lation, like the Prospectus Regulation and the Mar - ket Abuse Regulation (MAR), are directly applicable in Hungary, while others, such as the Undertakings for Collective Investment in Transferable Securities (UCITS) Directive and the Alternative Investment Fund Managers (AIFM) Directive, regulating the estab - lishment and operation of investment funds, apply through national laws implementing EU law. The Prospectus Regulation distinguishes between public issuances of securities based on whether the obligation to publish a prospectus applies. The main exemptions include: • offers of securities aiming exclusively at qualified investors; • offers of securities aiming at fewer than 150 per - sons other than qualified investors; and • offers of securities whose denomination per unit amounts to at least EUR100,000.
Depending on which trading platform the security is offered, either a prospectus or an information docu - ment is required to be prepared. The prospectus is a considerably longer document than the information document, and the preparation of a prospectus is a time-consuming exercise, which often takes months to complete. The prospectus is also subject to the approval of the National Bank of Hungary as opposed to the information document which can be prepared in a concise format and is only subject to the approval of the BSE. The various BSE trading platforms may provide for further listing and exchange requirements to be complied with, which are publicly available at the BSE website. 5.3 Investment Funds Rules on the operation and establishment of invest - ment funds are primarily set out in national laws imple - menting the AIFM Directive and the UCITS Directive. These Directives distinguish between investment funds based in an EU member state and in a third country by providing for a certain set of rules and requirements that are only applicable to third-country investment funds. Such rules and requirements have been implemented and are still applicable in Hungary, but the authors are not aware of any Hungarian laws imposing further requirements on foreign investors structured as investment funds. As of 1 January 2025, a notable development is the expansion of the Hungarian AML and UBO Register Acts to explicitly include certain private equity and venture capital funds within the scope of UBO report - ing obligations. This change brings long-awaited clar - ity to an area previously marked by legal uncertainty and inconsistent market practice. Although the obliga - tion to report UBO data will only take effect for exist - ing funds from July 2026, newly established funds are already subject to the revised rules. UBO data will not be publicly accessible but may be disclosed to com - petent authorities or to third parties demonstrating a legitimate interest.
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