By virtue of the Act on Controlling Foreign Investments Violating Hungary's Security Interests (in force from 1 January 2019), a sector-specific, mandatory notification, review and authorisation mechanism applies to the establishment of a new enterprise or acquisition of interest in an existing enterprise by a person from outside the European Economic Area of shareholding or control (10% or 25%) in companies operating in sectors of defence and dual-use goods; production of intelligence tools; provision of financial and payment systems services; and services related to electricity, natural gas, water, and telecommunications.
In the context of the COVID-19 crisis, the Hungarian government established a temporary screening procedure for inward investment, applicable to investors from both inside and outside the European Union, that operates separately and in parallel to the existing procedure established under the Act on Controlling Foreign Investments Violating Hungary's Security Interests. The temporary mechanism under Government Decree 227/2020 entered into force 26 May 2020 and was later confirmed without modification both by a Law (Act on the Transitional Rules related to the End of the State of Danger and Pandemic Preparedness (LVIII of 2020), in force from 17 June 2020) and by a Government Decree (289/2020, in force from 17 June 2020). The new law, in principle, extends the application of this regime until 31 December 2021.
Under the supervision of the Minister of Innovation and Technology, the temporary procedure applies to transactions in a range of sectors that are not currently subject to review under the existing procedure (such as tourism, the production of building materials and temporary employment agency services). Prior governmental approval is needed in 21 industries, including health care, pharmaceutical, medical device manufacturing, but also some non-medical industries. Approval will be denied, if an investment violates or threatens public security or order, in particular security of supply of basic social needs. The temporary rules also establish new screening thresholds that require foreign investors acquiring interests in relevant sectors exceeding (i) 10% and a value of HUF 350 million, (ii) 15%, 20% or 50% irrespective of value, or (iii) 25% if acquired by more than one foreign investor, to seek approval from the Minister.

"Section 1 
For the purposes of this act
1. foreign investor shall mean:
a) a national of a state outside the European Union, the European Economic Area and the Swiss Confederation or a legal entity or other organization registered in such a state,
b) a legal entity registered domestically, in another Member State of the European Union, another member state of the European Economic Area or the Swiss Confederation acquiring ownership or interest as specified under Section 2 (1) in an economic entity registered in Hungary, with activities laid down under Section 2 (4), if the person with controlling interest in the legal entity as specified in the Act on the Civil Code (hereinafter: ACC) is a national of a state outside the European Union, the European Economic Area or the Swiss Confederation, or a legal entity or other organization registered in such a state;
2. acquisition of ownership shall mean the acquisition of ownership share or interest as specified under Sections 2 (1) and (2) in an economic entity registered in Hungary with activities laid down under Section 2 (4), by establishing an economic entity or by acquisition, as well as establishing a branch as specified under Section 2 (3).
Section 2 
(1) Foreign investors may acquire, in an economic entity registered in Hungary with activities specified under (4), by establishing an economic entity or by acquisition
a) directly or indirectly ownership share beyond 25% - in the case of public limited companies, ownership share beyond 10% - or
b) controlling interest as specified in the ACC after notifying the minister designated in the Government decree (hereinafter: Minister) and receiving confirmation of the acknowledgement of this notification.
(2) The notification obligation under (1) holds also where the foreign investor's acquisition of under 25% would result in the total share of foreign investors in an economic entity registered in Hungary and with activities specified under (4) – with the exception of public limited companies – exceeding 25% altogether. [...]
(4) The activities subject to the notification obligation as specified under (1)-(3) are the following:
a) manufacture of weapons and ammunition as well as of military equipment and devices subject to licence,
b) manufacture of dual use products,
c) manufacture of intelligence devices and equipment specified in the government decree on the detailed rules of obtaining a licence for military activity and certifying businesses,
d) provision of financial services specified in the act on credit institutions and financial enterprises and from among auxiliary financial services, the operation of a payment system,
e) services governed by the act on electricity,
f) services governed by the act on natural gas supply,
g) services governed by the act on water public utility services,
h) services governed by the act on electronic communications,
i) the set-up, development and operation of electronic information systems governed by the act on the electronic information security of central and local government agencies.
[...]
Section 6 [...]
(3) On the basis of the notification the minister shall examine if the acquisition of ownership or the acquisition of the right of operation by the foreign investor or the conduction of newly adopted activities violate Hungary's security interests. 
(4) After receiving the notification the minister shall check without delay if the notification complies with the requirements set under Section 5 and examine whether a circumstance outlined under (3) in relation to the foreign investor's acquisition of ownership or acquisition of the right of operation, or in relation to conducting the newly adopted activity exists. The minister shall, within 60 days following the receipt of the notification – or in the case outlined under (5), within the deadline specified therein – and if a circumstance specified under (3)
a) does not exist, confirm the acknowledgement of the notification in writing, or if
b) it exists, the minister shall prohibit the acquisition of ownership, the acquisition of the right of operation or shall prohibit starting the newly adopted activity (hereinafter: prohibiting decision).[...]" (Act on Controlling Foreign Investments Violating Hungary's Security Interests (LVII of 2018), last amended 1 February 2021, Sections 1, 2 and 6 [unofficial translation as of 10 April 2019])
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"85. Measures necessary for the economic protection of companies established in Hungary in order to prevent a human epidemic causing a mass illness endangering the safety of life and property and to eliminate its consequences
[...]
§ 276. For the purposes of this chapter
1. public interest: the public interest in the security and operation of networks and equipment and in the continuity of supply, not governed by sectoral European Union and national law;
2. foreign investor:
a) of § 277 (2) of ownership in specified engaged in specified activities under, Hungary based business organization or controlling influence domestically and in other EU Member States, other Member States or the Swiss Confederation in the European Economic Area registered legal person or other organization, if the person with a majority influence in the legal person or other entity under the Civil Code Act is a citizen of a state outside the European Union, the European Economic Area and the Swiss Confederation or a legal person or other entity registered in such a state,
(b) a national of a State other than the European Union, the European Economic Area and the Swiss Confederation, or a legal person or other entity incorporated in such a State;
3. strategic company: a limited liability company, a private limited company or a public limited company domiciled in Hungary, whose main activity or additional activity as defined in the Government Decree is direct foreign investment in the energy, transport, communications and EU sectors. belongs to a sector of strategic importance within the meaning of Article 4 (1) ( a) to (e) of Regulation (EU) 2019/452 of the European Parliament and of the Council of 19 March 2019 establishing a framework for investment screening, excluding financial infrastructure.
§ 277. 
(1) In the case of a strategic company - if the conclusion of the contract, the making of a unilateral legal declaration or the decision of the company (hereinafter: legal transaction) results in paragraphs (2) - (4) - to the Minister of the Interior hereinafter referred to as "the Minister") is required in connection with legal transactions concluded by 30 June 2021:
(a) the transfer, in whole or in part, of a shareholding in a strategic company, free of charge or for consideration, by way of any transfer of ownership, including in-kind contributions,
b) capital increase in a strategic company,
c) transformation, merger, division of a strategic company,
d) the issuance of bonds that are convertible, subscription rights or convertible by a strategic company,
e) the establishment of a usufruct right on the shares of a strategic company.
(2) In the sectors specified in Section 276, Clause 3 , it is obliged to notify if the total value of the investment reaches or exceeds HUF 350 million
a) of § 276 section 2 a) subsection foreign investors by and registered in other EU Member States, other Member States or the Swiss Confederation in the European Economic Area, legal person or other organization or other European Union Member States of the European Economic A national of another Member State of the region or of the Swiss Confederation if
(aa) the acquisition, directly or indirectly, of a shareholding in a strategic company pursuant to the legal transaction referred to in points (a ) to ( c) of paragraph 1 (hereinafter referred to as "acquisition");
(ab) the acquisition, directly or indirectly, by virtue of a unilateral declaration under paragraph 1 ( d) , of a bond the conversion, conversion or subscription of shares pursuant thereto (hereinafter "the acquisition of ownership of a bond"), or
(ac) the acquisition of a right of usufruct, directly or indirectly, by virtue of a contract or a unilateral declaration of rights under paragraph 1 ( e) (hereinafter collectively: the acquisition of a right of usufruct);
directly or indirectly acquires a majority influence in the strategic company in accordance with the Civil Code Act,
b) a foreign investor pursuant to Section 276 (2) acquires, directly or indirectly, a holding of at least 10% in the strategic company as a result of the acquisition of ownership, the acquisition of ownership of the bond or the acquisition of a usufruct right.
(3) The notification obligation also exists if the foreign investor pursuant to Section 276 (2) acquires 15% of the strategic company belonging to the sector specified in Section 276 (3) as a result of the acquisition of ownership, the acquisition of ownership of the bond or the acquisition of usufruct . inch or 50 inch acquires 20%% stake, or if § 276 paragraph 2 of foreign investor ownership of the acquisition, the acquisition of ownership of bonds or acquisition of beneficial ownership of § 276 paragraph 3 within designated strategic sector with the exception of a public limited company, the combined shareholding of foreign investors exceeds 25%.
(4) The notification to the Minister and the acknowledgment of the notification are necessary for the transfer of the infrastructure, equipment and tools essential for the continuation of activities belonging to the sectors specified in Section 276 (3) , transfer of the right to use or operate or pledge of such assets (hereinafter together operating right) even if the right of operation is acquired by a foreign investor or a legal person or organization in which the foreign investor has, directly or indirectly, a controlling influence in accordance with the Civil Code Act.
(5) of this chapter shall not apply if the Agreement with respect to foreign-based legal entity or other organization, paragraph (1) results in a transaction qualifying as a strategic company in foreign-based legal person or other organization, based subsidiary in Hungary as indicated in (2) - (4) paragraph 1 .
(6) provisions of this Chapter shall not apply where a legal transaction under paragraph 1 in respect of a foreign legal person or other entity is entered into in respect of affiliated undertakings under Act C of 2000 on Accounting .
[...]
§ 283. 
(1) Upon receipt of the notification, the Minister shall immediately examine whether
a) whether the notification complies with the conditions laid down in Section 279 ,
b) in the case of the acquisition of property, the acquisition of the ownership of the bond, the acquisition of the usufruct right, the acquisition of the right to operate, the state interest, public security, public order of Hungary is violated or endangered, or in accordance with Articles 36, 52 (1) and 65 (1) of the Treaty on the Functioning of the European Union,
(c) whether the notifier is not controlled, directly or indirectly, by an administrative body of a State belonging to the European Union, including public bodies or the armed forces, whether through its ownership structure or significant funding;
(d) the notifier has already been involved in a security or public order activity in a Member State of the European Union; or
(e) whether there is a serious risk that the notifier will engage in illegal or criminal activity.
(2) The Secretary no later than 30 working days of receipt of the notification - or paragraph (3) inside, if the - if the time limits specified therein under paragraph (1) e) b) of the circumstances set out in
(a) fails to do so, acknowledge receipt of the notification in writing, or
b) exists, prohibits the acquisition of property, the acquisition of ownership of the bond, the acquisition of the right of usufruct, the acquisition of the right of operation (hereinafter together: prohibition decision).
(3) In particularly justified cases, the Minister may extend the period of inspection under subsection (2) by a maximum of fifteen days, of which the notifier shall be notified in writing before the expiry of the fifteen-day period.[...]" (Act on the Transitional Rules related to the End of the State of Danger and Pandemic Preparedness (LVIII of 2020), last amended 2 July 2021, §§ 276, 277 and 283 [google translation])
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"§ 1 Annex 1 sets out the areas of activity under which a company registered in Hungary sector of strategic importance.
Annex I
[see the full legal text for the list of activities]" (Government Decree defining the measures required for the economic protection of companies having their seats in Hungary (289/2020), in force from 17 June 2020, § 1 and Annex I [google translation])
Act on Controlling Foreign Investments Violating Hungary's Security Interests (LVII of 2018), last amended 1 February 2021, Sections 1, 2 and 6
Act on the Transitional Rules related to the End of the State of Danger and Pandemic Preparedness (LVIII of 2020), last amended 2 July 2021, §§ 276, 277 and 283
Government Decree defining the measures required for the economic protection of companies having their seats in Hungary (289/2020), in force from 17 June 2020, § 1 and Annex I
[<a href="https://njt.hu/jogszabaly/2018-57-00-00.3">Act</a>],[<a href="https://njt.hu/jogszabaly/2020-58-00-00.16">Act</a>],[<a href="https://njt.hu/jogszabaly/2020-289-20-22">Decree</a>],[<a href="https://www.oecd.org/officialdocuments/publicdisplaydocumentpdf/?cote=DAF/INV/RD(2019)2/REV1&docLanguage=En">Investment policy related to national security, Notification by Hungary</a>]