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
confidential. Nor is there any official guidance as to the competent authorities’ approach regarding rem - edies or other commitments. Therefore, the authors are not aware of any occasion when any remedy or commitment has been requested or required by the competent authorities. Although the competent minis - tries have made some attempts at providing guidance to the addressees on some of the more ambiguous parts of the FDI screening regimes, insight into which factors are considered during the approval process have not been issued so far. 7.4 National Security Review Enforcement The Decision and the Right to Appeal The competent authorities (ministries) may prohibit an investment under both FDI regimes. The immediate legal consequence is that the transaction becomes null and void if, despite the parties’ decision to move forward with a transaction, the director of the target company is obligated by law to prevent the investor from exercising its voting rights in the company (or admitting the investor in the share register). A decision on the prohibition of the transaction may be challenged through a non-contentious administrative procedure on the grounds that the substantive proce - dural rules have been violated or that the findings or the reasoning of the competent authority’s decision contains flaws. The court, however, is not permitted to amend the prohibiting decision; it may only order Under the 2018 FDI Act, an investment may be pro - hibited if it poses a threat to the national security, whereas the 2025 FDI Act contains an exhaustive list of those circumstances which, if present (either one or more), the minister may prohibit the investment. Such circumstances include: • a threat to the interest, public security or public order of Hungary or the possibility of the occur - rence of such, in particular with regard to security of supply of basic social needs; • the foreign investor being directly or indirectly con - trolled by a third-country government; that the FDI screening is repeated. Criteria for a Prohibiting Decision
• the foreign investor has already been involved in activities affecting security or public order in a member state; or • there is a serious risk that the foreign investor engages in illegal or criminal activities. Non-Compliance Non-compliance with the minister’s decision in any of the FDI regimes, or failure to notify the minister when required, may result in fines and an ex-post procedure once the authorities discover the non-compliance. An ex-post FDI screening may only be initiated in the five years since the investment and in the 18-month period from the date the minister became aware of the non- compliance under the 2018 FDI Act and the six-month period from the date the minister became aware of the non-compliance under the 2025 FDI Act. Should the minister impose an ex-post prohibition under the 2018 FDI Act, the investor will have 30 days to dispose of its ownership interest in the target company, with the Hungarian state having a pre-emption right on such disposal. The maximum amount of fine that may be imposed under the 2018 FDI screening regime is HUF10 mil - lion (approximately EUR25,000), while the 2025 FDI screening regime allows for a fine of up to two times the total transaction (investment) value, but a mini - mum 1% of the annual net turnover of the target com - pany in the preceding financial year. Special rules apply to companies engaged in certain regulated sectors, most notably the financial, energy and media sectors (see 3.2 Regulation of Domestic M&A Transactions ). Completing a transaction involv - ing companies operating in such sectors may also require the prior approval of the competent regulatory bodies, setting further preconditions and documen - tation requirements. The competent authorities for these sectors include the National Bank of Hungary, the MEKH, and the Media Council. Further special rules may be applicable to companies operating in certain other regulated industries, such as insurance or mining. 8. Other Review/Approvals 8.1 Other Regimes
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