Hungary Act L of 2025 — Special FDI Screening Regime for Strategic Companies

Mechanism

Hungary operates two parallel FDI screening regimes:

1. General Regime — implementing EU Regulation 2019/452 since 2019, targeting acquisitions by non-EU/EEA investors in EU-defined critical sectors. 2. Special Regime ("Second Regime") — Hungary-specific cross-sector screening for "strategic companies", originally enacted via Government Decree 561/2022 as a war-emergency measure under the 2022 Russia–Ukraine crisis legal framework. Act L of 2025 elevates this emergency decree to permanent statutory level, alongside other war-emergency instruments covering asylum procedures, EU Court judgment implementation (Case C-123/22), price monitoring, insolvency procedure modifications, defense infrastructure permitting, and carbon quota mechanisms.

Strategic-company definition

Hungarian-registered LLCs (Kft.), closed-end stock companies (Zrt.), public stock companies (Nyrt.), or higher-education institutions whose main or secondary activities fall into the strategic-sector catalogue (energy, transport, communications, telecoms, pharma, food processing, defence, financial services, healthcare).

Notification triggers

A notification + approval requirement is triggered when a transaction results in:

• Direct or indirect majority control over a strategic company, OR
• ≥5% interest (≥3% for publicly listed companies), OR
• Ownership or operation rights over strategic infrastructure / assets,

AND transaction value reaches HUF 350 million (~EUR 890,000).

Notification is due within 10 days of executing the underlying agreement. The Minister of National Economy originally had 30 business days to decide (extendable by max 15 calendar days); Act XCIII of 2025 extended this to 45 business days.

State pre-emption (right of first refusal)

For photovoltaic generation companies (NACE 35.11'08, "Production of electricity"), excluding sub-50 kVA household installations, the Hungarian state — exercised through MNV Zrt. (Magyar Nemzeti Vagyonkezelő Zrt., the Hungarian National Asset Management Company) — holds statutory right of first refusal on share transactions.

Procedural avenue

Act L of 2025 modified the appellate avenue for prohibitive decisions: challenges now proceed in administrative contentious court proceedings (instead of the prior non-contentious procedure), aligning the Special Regime with broader Hungarian administrative litigation doctrine.

Why severity 4

• Cross-sector mandatory pre-clearance covering ~9 strategic

industries — broader than most EU peer regimes (DE AWG covers defence + critical-tech; FR Décret 2014-479 covers a defined list of activities; NL Wet Vifo covers vital providers + sensitive technology).

• Low monetary threshold (HUF 350m ≈ EUR 890k) captures

mid-market M&A that would fall below most peer-regime thresholds.

• State right of first refusal (state actively replaces the

buyer, not merely vetoes) — exceptional in EU context.

• Aggressive non-EU acquirer focus in practice: Hungarian

authorities have used the regime to block / condition Chinese and Russian-linked acquisitions in energy, telecoms, and banking.

• Concentrated capital-market impact — Hungary's BUX is small

but the regime is binding on EU/US strategic acquirers (Vodafone Hungary exits, MKB Bank / Granit Bank / Budapest Bank consolidation, Yettel mobile-operator transactions all routed through the Second Regime in 2023-25).

Downstream implications

• Fills a structural IPTM gap (HU previously had 1 filing — Decree

81/2025 EKD subsidy — despite being a top-tier 2024-26 EV / battery / FDI-screening actor).

• Establishes the parent authority under which Hungarian state

vetoes of cross-border M&A (Vodafone Hungary, banking-sector consolidation, energy transactions) are exercised.

• Sets baseline for any future HU action against Chinese / Russian

strategic acquirers (precedent: state pre-emption on PV plants, blocking BorsodChem / MOL / OTP-Bank cross-border bids).

• Reinforces the EU peer-set of national FDI gates parallel to the

EU Reg 2019/452 framework: Hungary now joins NL (Wet Vifo, filed 2022-05-18), DE (AWG §§55-62), FR (Décret 2014-479), IT (Golden Power), UK (NSI Act 2021) with a permanent statutory instrument.

Open questions

• Magyar Közlöny exact issue number for Act L of 2025 and Act XCIII

of 2025 (canonical via njt.jog.gov.hu; locator at magyarkozlony.hu issue archive).

• How the 45-business-day screening period (post-Dec 2025) interacts

with EU Reg 2019/452 cross-border notification timelines.

• Whether the bank-financing collateral exclusion (post-XCIII) will

be narrowly construed (audit-enforced security only) or extend to refinancing of existing strategic-company debt portfolios.