Recently, there has been a great deal of attention on the regulation governing foreign investments in Hungary, and on changes to the legal provisions concerning so-called “strategic companies.” The regulation has attracted professional interest and attention due to the introduction and extension of the state’s right of first refusal, as well as the significant extension of procedural deadlines. It appears that the turbulent trend of changes in the rules finally came to a halt with the entry into force of the relevant chapter of Act L of 2025 on August 19, which elevated certain emergency provisions to statutory level. These rules are briefly described below.
Strategic companies – still an unusually broad category
The regulation defines the concept of a strategic company in an extremely broad scope. This category includes business associations and higher education institutions engaged in any of the business activities specified in the corresponding annex as their main or secondary business activity. A first quick glance at the annex reveals that it is difficult to find any significant market player that cannot be classified as a strategic company. Among others, the entire retail and wholesale, communications, industrial, manufacturing, food and tourism sectors are subject to the regulation.
Foreign investors
This definition primarily includes third-country nationals, legal entities, and Hungarian or EU companies under their control. However, the rule remains that if a transaction is worth at least HUF 350 million and results in the acquisition of a majority influence, a citizen of an EU or EEA member state or Switzerland, or a legal entity registered there, is also considered a foreign investor.
Notification obligation and confirmation of acknowledgement
Based on the above, as general rule, all foreign investors are required to notify the minister responsible for the domestic economy if they acquire at least a 5% stake in a strategic company within the framework of a transaction with value of at least HUF 350 million. However, in the case of acquisition of a 10% stake or acquisition of assets or infrastructure essential for strategic activities, the value of the transaction is irrelevant.
Ministerial investigation
Following the notification, the competent minister shall examine whether there are any circumstances specified by law primarily related to the violation of public order and public safety or the protection of state interests. The deadline for the investigation is 30 working days, which may be extended by 15 days in particularly justified cases. A decision is then made to confirm or prohibit the transaction.
The state’s right of first refusal
A relatively new rule is that the Hungarian state has a right of first refusal over all other parties in the case of relevant transactions involving strategic companies engaged in electricity generation from renewable sources using solar power plants. The state has a 90-day deadline to decide on the matter.
For more information, please contact our expert, Nándor Beck.
