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
Investment Control in the Financial Sector Companies operating in the financial sector, such as banks, payment service providers and investment firms, are subject to specific restrictions in terms of their ownership structure. Any investor who intends to acquire a holding in an undertaking operating in the financial sector which represents 10% or more of the capital or of the voting rights must apply for the approval of the National Bank of Hungary. Simi - lar requirements apply to exceeding the threshold of 20%, 33% and 50%. Although the requirements are different for each sub- sector within the financial sector, generally, investors in any kind of financial services firm are required to verify their good business reputation. In the assess - ment of the investor’s reputation, the regulator may request documents regarding its ownership status or information on present or past business endeavours. Investment Control in the Energy Sector The MEKH’s prior approval is required for any natural gas, electricity, or district heating licensee’s demerger, merger with another company, transformation, termi - nation without legal succession, or reduction of its registered capital by at least one quarter. The MEKH’s prior approval is required for an acquisi - tion of voting rights or influence to control voting rights reaching or exceeding a 5%, 20%, 25%, 33%, 50%, 75% or 90% threshold, or reaching a 100% threshold of a natural gas, electricity or district heating licensee. In case a transaction results in the direct acquisition of ownership interests or voting rights in a natural gas or electricity public company licensee, or in the indirect acquisition of ownership interests or voting rights in a licensee being the subsidiary of such public company licensee, then, should such ownership interest or vot - ing right reach or exceed: • a 5%, 10%, 15%, 20% threshold, the MEKH’s acknowledgement must be requested immediately after closing; • a 25%, 33%, 50%, 75% threshold or reaches a 100 % threshold, the MEKH’s prior approval must be requested; or
• a 40%, 45%, 80%, 85%, 90% and every 1% above 90%, the MEKH’s acknowledgement must be requested immediately after closing (in addition to its prior approval in the previous item). Further, the MEKH’s prior approval is required for the outsourcing of a substantial part of the licensed activ - ity of a natural gas or electricity licensee, or for the transfer or other disposal of the fundamental assets and property rights specified in its operating licence, including their assignment, lease, long-term use by another person, encumbrance, or pledge as security. Whereas the MEKH’s prior notification is required for the outsourcing of other parts of the licensed activity of a natural gas or electricity licensee. In the absence of the prior approval or the acknowl - edgement (whichever is applicable) of the MEKH, the acquiring party will not be able to exercise vot - ing rights in the company (but will be able to receive dividends) and may not be entered into the register of shareholders. Furthermore, the MEKH may impose a fine up to the maximum amount of 1% of the net rev - enues originating from the licensed activity or HUF100 million (approximately EUR260,000), whichever is the higher, on the licensee and/or the person acquiring the voting rights or influence to control the voting rights therein. Certain exemptions may apply if the target company is a combined small power plant licensee, a private line licensee, a direct line licensee, a charging station operator, a waste heat seller licensee, a one-stop- shop international transmission pipeline licensee, a restricted natural gas trading licensee, a natural gas trader, or a location-specific service provider. How - ever, even if an exemption from the prior approval or acknowledgement applies (which should be checked on a case-by-case basis), the MEKH must be notified within 30 days of the acquisition of ownership inter - ests or voting rights. In the absence of such notifica - tion, the MEKH may impose a fine. Investment Control in the Media Sector The Media Council’s approval is required for M&A where at least two of the company groups involved in the concentration have editorial control, bear editorial responsibility and the primary objective of which is
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