1. MI FDI Screening
MI FDI Screening applies to (i) investors from outside the EU, Switzerland and EEA, and to (ii) any subsidiary of such an investor if the subsidiary is established in the EU, Switzerland or an EEA member state and the investor holds a majority of the vote rights in the subsidiary or has a decisive influence in the subsidiary. Under Decree 532/2020, the investors from the EU, Switzerland and EEA must also be considered as a foreign investor until 30 June 2021. The foreign investor must obtain the prior approval of the Ministry of Interior if it intends to:
- directly or indirectly acquire more than a 25 % interest (in the case of a publicly listed company, a 10 % interest) in an existing or yet to be established company with its registered seat in Hungary, provided that this company pursues activities that are deemed sensitive for national security (“Hungarian Company“);
- acquire decisive influence in a Hungarian Company;
- establish a branch office in Hungary; or
- acquire a right to operate or use sensitive infrastructure or assets in Hungary.
All transactions that result in a foreign investor acquiring more than a 25 % interest in a Hungarian Company are subject to foreign investment control. Moreover, prior approval is required when a foreign investor acquires an interest of less than 25 % but this acquisition results in more than a 25 % interest in the respective Hungarian Company being held by (several) foreign investors.
2. MNE FDI Screening
Under Act 2020, investments by foreign investors acquiring an interest exceeding (i) 10 % and a value of HUF 350m (approx. EUR 1m), (ii) 15 %, 20 % or 50 % irrespective of its value, or (iii) 25 % if acquired by more than one foreign investor, require the approval of the Ministry. The foreign investor must notify the Ministry if it intends to acquire the right to use or operate infrastructure necessary for pursuing activities in strategic sectors (including using such strategic infrastructure as collateral).
A “foreign investor” is (a) a company or organisation domiciled in, or a citizen of, a state outside of the EU, the EEA or Switzerland, or (b) a company or organisation whose majority owner is domiciled in, or a citizen of, a state outside of the EU, the EEA or Switzerland. However, certain acquisitions of a majority interest require the Ministry’s approval if the foreign investor is a company or other organisation domiciled in the EU, the EEA or Switzerland.
Act 2020 applies to investments in companies that have their seat in Hungary and:
- are a limited liability or private limited or public (listed) company; and
- operate in specified “strategic” sectors.
However, Act 2020 is not applicable if a transaction affects the foreign company directly, if such foreign company has a Hungarian subsidiary which qualifies as a strategic company. Therefore, transactions over the level of a Hungarian subsidiary (qualifying as a strategic company), may not be approved by the Ministry. This exemption applies to asset deals as well. Moreover, Act 2020 also not applicable in case of intra-group transactions.