A new draft bill proposes that certain foreign direct investments into Hungary will require the approval of the Interior Ministry. The new rules are proposed to take effect from 29 June 2018, and should be considered in all relevant transactions with a timeline extending beyond this date.

The Interior Ministry is proposing a draft bill that would require its approval for all investments by non-EU or non-EEA persons or entities, if the investment results in an ownership stake exceeding 25% in a Hungarian company that is active in certain sensitive sectors. The sectors affected include in particular defence, dual use products, cryptography and wire-tapping products, financial services, energy, nuclear technology, government registries, healthcare and the telecommunications sector. During the approval process, the Minister will evaluate whether “the acquisition harms Hungary’s national security interests”. The Minister must issue a decision within 60 days, but this deadline can be extended by an additional 60 days. If the Minister prohibits such an investment, the parties can appeal to the Government.

The bill is currently in its initial state, meaning it has yet to be discussed within the Government and then submitted to the Parliament. Therefore, before the bill is adopted, we expect that it will be subject to amendments and fine-tuning.

The Ministry’s press release and proposal are available in Hungarian at its website.