An FDI notification obligation arises if a foreign investor - whether from a third country (non-EU) or, in certain cases, from an EU Member State, EEA State, or Switzerland - acquires a shareholding or influence in a Hungarian company operating in a strategic sector, based on the Hungarian Government Decree 561/2022 (XII. 23.) on FDI rules.
The scope of strategic sectors is defined in the annex to the Government Decree and the relevant EU regulations, and is determined based on the activity (TEÁOR) codes registered in the company data whether a given company falls within the regulation’s scope.
The Government Decree grants the Hungarian State the right of pre-emption in two scenarios, under different rules:
- From 13 January 2024, the Hungarian State has a pre-emption right vis-à-vis foreign investors if the sale and purchase relates to a strategic company engaged in solar power generation registered under TEÁOR’25 code 35.12 Electric power generation from renewable sources, either as its main or additional activity. In this case, the State’s pre-emption right may only be exercised through MNV Zrt. (the Hungarian National Asset Management Zrt.).
- From 24 June 2025: applicable also to notifications already pending on the effective date, regardless of the target company’s main or additional activities or the type of transaction, the Hungarian State may exercise its pre-emption right under the same conditions as those under the given transaction if the Hungarian State adopts a prohibitive decision regarding the transaction. In this case, the pre-emption right may be exercised either through MNV Zrt. or another designated entity.
The deadline for assessing FDI notifications increased from 30 to 45 working days from 24 June 2025, and the minister may extend the review up to three additional times, by up to 30 working days each, if clarifying the facts of the case so requires.
On 1 June 2025, the Hungarian Parliament adopted a new Act whose provisions affecting FDI rules will enter into force on 19 August 2025. Under the currently available and Parliament-approved text of the Act, from 19 August 2025, the Hungarian State’s broadly applicable pre-emption right, which may be used if it issues a prohibitive decision, will cease to apply to foreign investments in strategic companies and will remain in force only for solar power plant investments.
It cannot be excluded that the FDI rules in the Act will be amended in the future if the legislator intends to grant the Hungarian State a pre-emption right, even after 19 August 2025, in line with the currently effective regulation, for foreign investments in strategic companies.
By Lilla Majoros, Attorney at Law, KCG Partners Law Firm
