Hungary tightens controls over foreign corporate takeoversEuropost
Foreign investors in Hungary will have to apply for a permit to acquire more than 10% of a local company this year in businesses deemed strategically important, a government decree published late on Monday said.
Prime Minister Viktor Orban has made maintaining control over the country’s economy a major policy cornerstone since his government came to power in 2010.
The takeover decree will be in effect until the end of 2020 and apply to deals worth more than €1 million ($1.10 million) in sectors like healthcare, tourism, energy, food production, waste management, construction, finance, shipping, defence, communication and information technology.
Tamas Schanda, a deputy minister at the Innovation and Technology Ministry, said that the new rules would protect Hungarian companies from foreigners who want to take advantage of the coronavirus crisis to gain market share.
Limit on foreign takeovers to expire at end-2020
“This is not only a question of economics but also of sovereignty,” he said on Tuesday at an online press briefing. “If we allow foreigners to take over Hungarian (companies) fast and easy profit-taking can easily overshadow the interests of the Hungarian economy and people,” he added.
Foreign investors will need to submit documentation of the proposed deals to the minister of innovation and technology, who will have 45 days to either approve or deny the request.
The Finance Ministry expects Hungary’s economy to contract by more than 3% this year and rebound by 4.8% next year.
Hungary’s parliament granted Prime Minister Orban the right to rule by decree in March to help to fight the coronavirus crisis. This was widely criticised partly because it was open-ended.
But last week, the government said it would propose an end to these emergency powers by early June. It is expected to propose this in a bill later on Tuesday. The foreign takeover rule will be one of the last to be brought in via decree.