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
Target Company The focus of the analysis under both FDI screening regimes shall be on the business activities the target company is engaged in. The 2025 FDI Act lists the NACE codes of the business activities which trigger the application of the 2025 FDI Act. If any of such NACE codes is indicated in the Hungarian company register as a business activ - ity of the target company, the 2025 FDI Act applies, regardless of whether the target actually carries out this activity. The 2018 FDI Act takes a rather complex approach in this regard as the list of the relevant activities is not clearly defined and the assessment of whether the business activities of a Hungarian company are subject to approval under the 2018 FDI Act can sel - dom be completed without the active co-operation of the target company and/or the seller(s). Therefore, it is recommended that the investor verify in advance whether a notification is required under the 2018 FDI screening regime, ideally during the due diligence of the target company. Foreign Investor Under both FDI screening regimes, the investment shall be made by a foreign investor for either of the FDI screening regimes to apply. A (natural or legal) person qualifies as foreign investor under both FDI screening regimes if: • it is a company incorporated in, or a citizen of a country outside of, the EU, the EEA and Switzer - land (“Third Country”); or • it is a company incorporated in Hungary, the EU, EEA or Switzerland in which a Third Country citizen or company has a controlling interest. Although EU, EEA and Swiss investors do not qualify as foreign investors, their investments may be subject to FDI screening under the 2025 FDI Act if (i) the value of such investment reaches a monetary threshold of HUF350 million (approximately EUR0.9 million) and (ii) such investor acquires a controlling interest (meaning either (i) being able to cast the majority of votes (alone, through intermediary entities, or pursuant to a share -
holders’ agreement) or (ii) being entitled to appoint or recall the majority of board members, managing directors or supervisory board members). Thresholds The 2018 FDI Act applies if, as a result of the relevant transaction: • the foreign investor acquires directly or indirectly more than 25% ownership interest (or more than 10% ownership interest in case of a public com - pany); • the foreign investor acquires a controlling interest; or • two or more foreign investors’ combined ownership interest exceeds 25% in a non-public company. The 2025 FDI Act applies if, as a result of the relevant transaction: • a foreign investor (including EU/EFTA citizen or entity) acquires directly or indirectly a controlling interest, subject to the investment being at least HUF350 million (EUR0.9 million) in value; • a foreign investor (other than an EU/EFTA citizen or entity) acquires directly or indirectly at least 5% ownership interest (or 3% ownership interest in case of a public company), subject to the invest - ment being at least HUF350 million (EUR0.9 mil - lion) in value; • a foreign investor (other than an EU/EFTA citizen or entity) acquires ownership interest of 10%, 20%, or 50%; or • the ownership interests of two or more foreign investors (other than EU/EFTA citizens or entities) would jointly exceed 25% in a non-public com - pany. Both FDI screening regimes are triggered by invest - ments in a less than 25% stake in a target company that is formed as a private company if this results in the combined ownership interest of the foreign inves - tors reaching a 25% threshold. 7.3 Remedies and Commitments The relevant FDI Acts are silent on the matter of rem - edies and commitments, and decisions of the com - petent authorities in FDI screening procedures are
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