The Hungarian government has issued a new Government Decree No. 566/2023 (XII.14) that amends Government Decree No. 561/2022. (XII. 23.) (i.e. the 2022 FDI Decree) on the different application of certain measures necessary for the economic protection of business associations in Hungary during the state of emergency.
According to the amendment to the 2022 FDI Decree, which enters into force on 13 January 2024, the Hungarian state now has a pre-emption right for certain transactions that are subject to the 2022 FDI Decree that supersedes pre-emption rights granted to any other beneficiary. The Hungarian state may exercise this pre-emption right through the Hungarian National Asset Management Ltd. The transactions that are subject to this statutory pre-emption right are acquisitions of strategic companies by foreign investors where the strategic company pursues solar power plant-related activity with its main or other registered activity being electricity production (statistical code: 3511’08).
The FDI procedure conducted by the Minister of National Economy based on the 2022 FDI Decree has been modified and extended for solar power plant acquisitions. After the foreign investor files its requests for such an acquisition, the Minister of National Economy will examine the documentation. If the Minister establishes that the transaction is subject to the 2022 FDI Decree and the acquisition is related to a solar power plant, the Minister will notify the ministry responsible for energy politics, which will determine whether or not the pre-emption right is legitimate. In its response, the competent ministry will make a proposal either to exercise the pre-emption right or waive it. If the ministry proposes exercising the pre-emption right, the Minister of National Economy will terminate its procedure for the acknowledgement of the transaction with the express reasoning that in the opinion of the ministry responsible for energy politics the exercising of the pre-emption right is legitimate. If the ministry proposes waiving the pre-emption right or if no response is given by the ministry responsible for energy politics within 15 business days, the Minister of National Economy will continue the procedure for acknowledging the transaction and will issue a decision to the foreign investor.
The detailed rules for this new statutory pre-emption right have not yet been adopted and published.
Another aspect of the 2022 FDI Decree Amendment is that only these transactions apply to the 2022 FDI Decree and affect only foreign entities and Hungarian strategic company subsidiaries of such foreign entities. Intra-group transactions taking place between two entities that belong to the same company group and targeting a Hungarian strategic company are subject to the existing FDI procedure.
For more information on this decree, contact your regular CMS advisor or local CMS experts: Anikó Kircsi, Zoltán Poronyi or Szabina Marsi.
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