Private company limited by shares (Zrt.)
Articles of association may stipulate that transfer of shares is subject to a right of first refusal (in favor of 1 or more shareholders) or approval of the shareholders' meeting (eg, to prevent transfer to a competitor). Such restrictions are effective vis-à-vis 3rd parties only if they are included on the share certificate or (in case of dematerialized shares) on the document deposited with the central depository during the creation of shares.
Limited liability company (Kft.)
Business quota may be transferred freely amongst quotaholders. However, the articles of association may stipulate a right of first refusal in favor of the other quotaholders.
Business quota can only be transferred to a 3rd party if in the business quota is fully paid up. Other quotaholders of Kft., the Kft. itself or a person designated by the quotaholders' meeting – in this order – has a right of first refusal.
The right of first refusal may be exercised pro rata by the quotaholders.
The articles of association may also stipulate that approval of the quotaholders' meeting is required for the transfer of a business quota to a 3rd party (eg, to prevent transfer to a competitor).
Foreign investment control regulations
The minister of home affairs must be notified of certain transactions and he has the right to block them if the transaction is deemed against the national security interests of Hungary. A transaction is subject to such notification if, among other things, (i) the investor is incorporated in, or resident of, a country that is not part of the EU, the EEA or Switzerland, (ii) a key industry sector (eg, national defense, financial services or energy) is involved or (iii) the transaction pertains to, among others, the acquisition of more than 25 percent of the shares in a Hungarian entity.
Under recent COVID-19 legislation, the minister responsible for the domestic economy must be notified of certain transactions and he has the right to block them if he deems them to be against the national interests of Hungary. The scope of this legislation is much wider than the previous (and still existing, parallel notification regime concerning only “foreign investors” (ie, investors whose beneficial owner is a resident of a country that is not part of the EU, EEA or Switzerland.) Accordingly, the newly introduced notification regime is applicable if, among other things, (i) the investor is incorporated in, or resident of, a country that is not part of the EU, the EEA or Switzerland (ii) the target company conducts its business in a key industry sector (eg, pharma, leisure or energy), (iii) the transaction pertains to, among others, the acquisition of at least 10 percent of the shares in a Hungarian company if the aggregate value of the transaction reaches HUF350 million (USD980,000). The investment screening regime also applies to investors incorporated in the EU, EEA or Switzerland if they acquire a controlling shareholding in the Hungarian target company operating in the relevant sector provided aggregate value of the transaction reaches HUF350 million (USD980,000).
With reference to the war in Ukraine, some of the rules of the above COVID-19 FDI legislation has been temporarily amended (eg, the 10 percent threshold regarding the shares has been reduced to 5 percent and the financial sector has been added as key industry sector).