On 13 January 2024, Government Decree No. 566/2023 entered into force. This Decree amended Government Decree No. 561/2022, which governs Hungary's temporary FDI screening regime under Act LVIII of 2020. The amendment introduced a state pre-emption right for foreign acquisitions of strategic companies engaged in solar energy production. If the transaction qualifies, the Minister of National Economy refers it to the energy ministry, which may propose exercising the pre-emption right within 15 business days. If exercised, the FDI review is terminated and the state becomes the buyer. The amendment also narrowed exemptions for intra-group foreign transactions.
"Section 2 For the purposes of this regulation
1. state interest: public interest not regulated by sectoral European Union and national law, relating to the security and functionality of networks and equipment, as well as the continuity of supply, or related to fundamental economic strategic interests from a national economic perspective;
2. foreign investor:
a) a legal person or other organization registered in Hungary, in another Member State of the European Union, in a state party to the Agreement on the European Economic Area (hereinafter: EEA Agreement) or in the Swiss Confederation, acquiring a specified share or influence in a strategic company as defined in point 3, if the person with a majority influence in the legal person or other organization pursuant to Act V of 2013 on the Civil Code ( hereinafter : Civil Code) is a citizen of a state outside the European Union, the European Economic Area or the Swiss Confederation or a legal person or other organization registered in such a state;
b) a citizen of a state outside the European Union, the European Economic Area and the Swiss Confederation or a legal person or other organization registered in such a state;
3. strategic company: a limited liability company, a private limited company, a public limited company or a higher education institution as a legal entity established in Hungary, the main or additional activity of which falls within the strategic sector specified in Annex 1 , in particular the energy, transport and communication sectors, and the sector referred to in points (a) to (e) of Article 4(1) of Regulation (EU) 2019/452 of the European Parliament and of the Council of 19 March 2019 establishing a framework for the screening of foreign direct investments into the Union.
Section 3 (1) In the case of a strategic company – if the conclusion of a contract, the making of a unilateral legal declaration or the resolution of the company (hereinafter collectively referred to as: legal transaction) results in the provisions of paragraphs (2)–(4) – a notification to the Minister responsible for the internal economy (hereinafter referred to as: Minister) is required in connection with the legal transactions that have been concluded:
a) the transfer of ownership interests in a strategic company, in whole or in part, on the basis of any title of transfer of ownership – including contribution in kind – free of charge or for a consideration,
b) capital increase in a strategic company,
c) transformation, merger, separation of a strategic company,
d) issuance of convertible, subscription right or convertible bonds by a strategic company,
e) establishment of a usufruct right on the shares or business interests of a strategic company.
(2) In the sectors specified in Section 2, point 3 , it is required to report if the total value of the investment reaches or exceeds 350 million forints.
a) a foreign investor as defined in Section 2, Section 2, Subsection a) , as well as a legal person or other organization registered in another Member State of the European Union, another state party to the EEA Agreement or the Swiss Confederation, or a citizen of another Member State of the European Union, another state party to the EEA Agreement or the Swiss Confederation, if
aa) directly or indirectly acquiring an ownership interest in the strategic company based on a legal transaction pursuant to points a)–c) of paragraph (1) ( hereinafter referred to as: acquisition of ownership),
ab) the acquisition, directly or indirectly, of ownership of a bond based on a unilateral legal declaration pursuant to paragraph (1) point d ) ja, the conversion, transformation or subscription of shares based on which (hereinafter: acquisition of ownership of a bond), or
ac) acquisition of a right of usufruct on a business share or share representing an ownership interest, directly or indirectly, based on a contract or unilateral legal declaration pursuant to paragraph (1) point e) ja (hereinafter collectively referred to as: acquisition of a right of usufruct)
acquires a majority interest in the strategic company directly or indirectly as a result of the Civil Code , or
b) the foreign investor referred to in Section 2 , Section 2, Subsection b) acquires a direct or indirect stake of at least 5%, or at least 3% in the case of a publicly traded joint-stock company, in the strategic company as a result of the acquisition of ownership, the acquisition of ownership of the bond, or the acquisition of the usufruct right.
(3) The notification obligation also applies if a foreign investor as defined in Section 2, Point 2, Sub-point b) acquires a 10%, 20% or 50% stake in a strategic company belonging to the sector specified in Section 2, Point 3 , as a result of the acquisition of ownership, the acquisition of ownership of a bond or the acquisition of the usufruct right, or if a foreign investor as defined in Section 2 , Point 2, Sub-point b) of Section 2, Sub-point b) of Section 2 , as a result of the acquisition of ownership, the acquisition of ownership of a bond or the acquisition of the usufruct right , the combined stake of foreign investors in a strategic company belonging to the sector specified in Section 2, Point 3 , with the exception of a publicly traded joint-stock company, exceeds 25%.
(4) The notification to the Minister and the acknowledgement of the notification are also required in the case of the transfer, transfer of the right to use or operate infrastructure, equipment and devices essential for the pursuit of activities in the sectors specified in Section 2 , Point 3, or the provision of such assets as security (hereinafter collectively referred to as: operating right), if the operating right is acquired by a foreign investor or a legal person or organization in which the foreign investor directly or indirectly has a majority influence pursuant to the Civil Code .
(5)    The provisions of this Decree shall not apply if a legal transaction pursuant to paragraph (1) entered into directly with respect to a legal person or other organization with a foreign seat simultaneously indirectly results in the provisions of paragraphs (2) to (4) with respect to a subordinate, affiliated undertaking of the legal person or other organization with a foreign seat pursuant to Act C of 2000 on Accounting , which subordinate affiliated undertaking qualifies as a strategic company.
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Section 9 (1) The Minister shall, no later than 30 working days from the receipt of the notification – or in the case referred to in paragraph (2) within the time limit specified therein – if thecircumstances specified in points b) to e) of paragraph (1) of Section 8
a) does not exist, confirms receipt of the notification in writing, or
b) exists, prohibits the acquisition of ownership, the acquisition of ownership of the bond, the acquisition of usufruct rights, the acquisition of operating rights (hereinafter collectively referred to as: prohibiting decision).
(1a)  In the case referred to in Section   10 /A – by way of derogation from Subsection (1) – the Minister shall, no later than sixty working days from the date of sending the information referred to in Section 10/A. Subsection (4) to the notifier – or in the case referred to in Subsection (2) within the time limit specified therein –,
a) if the Hungarian state does not exercise its right of pre-emption and the circumstances specified in Section 8(1)(b)–(e) do not apply, it shall confirm its acknowledgement of the notification in writing,
b) if the Hungarian state does not exercise its right of pre-emption and the circumstances specified in Section 8(1)(b)–(e) exist, it shall issue a prohibitory decision,
c) if the Hungarian state exercises its right of pre-emption, it shall terminate the procedure related to the notification in accordance with Section 10/A. (7).
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Section 8 (1) The Minister shall immediately examine, upon receipt of the notification, whether:
a) whether the notification complies with the conditions set out in Section 5 ,
b) in the event of the applicant acquiring ownership, acquiring ownership of the bond, acquiring usufruct rights, or acquiring the right to operate, is there a risk of harming or endangering the state interests, public security, or public order of Hungary, or the possibility of their occurrence, with particular regard to the security of the provision of basic social needs, in accordance with Article 36, Article 52 (1) and Article 65 (1) of the Treaty on the Functioning of the European Union ,
c) whether the notifier is directly or indirectly controlled by the government of a Member State not belonging to the European Union, including state bodies or armed forces, either through its ownership structure or significant funding,
d) whether the reporting person has been involved in activities that threaten security or public order in any Member State of the European Union, or
e) whether there is a serious risk that the reporting person will engage in criminal activity.
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10/A. §  (1)    If the legal transaction of sale and purchase resulting in the results set out in Section 3 (1) point a) and Section 3 (2) and (3) was concluded with a strategic company registered with the TEÁOR'25 code 35.12 Electricity production from renewable sources within the sector specified in line 21 of the table in Annex 1 and having activities related to solar power plants as its main or additional activity, the provisions set out in paragraphs (2) to (8) shall also apply to the assessment of the notification for acknowledgement of the legal transaction.
(2) With regard to the legal transactions referred to in paragraph (1), the Hungarian state shall have a pre-emptive right prior to all other entitled parties, which it shall exercise through the Hungarian National Asset Management Company Limited (hereinafter: MNV Zrt.) within a 60-working-day forfeiture period from the date of sending the information referred to in paragraph (4 ) to the applicant.
(3) In the case of legal transactions pursuant to paragraph (1), in addition to the provisions of Section 5, paragraph (1), the notification must include a reference to the fact that the notification falls within the scope of paragraph (1) .
(4) If, during the examination of the notification, the Minister establishes that the notification obligation under this Regulation exists with regard to the notified legal transaction and that the legal transaction qualifies as a purchase and sale transaction pursuant to paragraph (1) , and that the annexes pursuant to Section 5 (2) are available in full, including the purchase and sale contract concluded with effect dependent on the exercise of the right of pre-emption, the Minister shall inform the notifier that the legal transaction qualifies as a purchase and sale transaction pursuant to paragraph (1) and thus the Hungarian state is entitled to the right of pre-emption pursuant to paragraph (2) .
(5) The Minister shall, at the same time as informing the notifier pursuant to paragraph (4), send the documentation received during the notification – with a 15 working day response deadline – to the Minister responsible for energy policy, who shall examine the legal transaction to determine whether the exercise of the pre-emptive right pursuant to paragraph (2) is justified.
(6) In his response, the minister responsible for energy policy shall make a proposal to exercise or refrain from exercising the pre-emptive right and shall inform the minister and MNV Zrt. of this within the deadline set out in paragraph (5) , attaching the documentation necessary for exercising the pre-emptive right to the proposal sent to MNV Zrt.
(7) If the Minister receives a proposal to exercise the right of pre-emption, the Minister shall terminate the procedure related to the notification of acknowledgement of the legal transaction with the express reference to the fact that, in the opinion of the Minister responsible for energy policy, the exercise of the right of pre-emption is justified.
(8) If the minister responsible for energy policy makes a proposal to refrain from exercising the right of pre-emption in relation to the notified legal transaction within the deadline referred to in paragraph (5 ), or does not make a decision regarding the exercise of the right of pre-emption within the deadline referred to in paragraph (5) , the minister shall assess the notification on its merits.
(9) The provisions of paragraphs (1) to (8) shall not apply to solar power plants that qualify as small-scale household power plants pursuant to Section 3, Point 24 of Act LXXXVI of 2007 on Electricity ." (Government Decree No. 561/2022. (XII. 23.) on the different application of certain provisions necessary for the economic protection of Hungarian business entities during the state of emergency, adopted 24 December 2022, last amended 13 January 2024 [google translation])
Government Decree No. 561/2022. (XII. 23.) on the different application of certain provisions necessary for the economic protection of Hungarian business entities during the state of emergency, adopted 24 December 2022, last amended 13 January 2024
[<a href="https://njt.hu/jogszabaly/2022-561-20-22.undefined#NR">Decree</a>]