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Pre-Emption Right for the Hungarian State in Case of Solar Power Investments

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As of 13 January 2024, a new government decree amends the provisions of the clearance procedure of the Government Decree on certain foreign direct investments (“FDI”). The amendment grants the Hungarian State a right of first refusal in respect of acquisitions of strategic companies whose main or additional registered activity is electricity production and pursue solar power plant-related activity that are to be acquired by foreign investors.

The Hungarian State may exercise the right through the Hungarian National Asset Management Ltd. within 60 working days. If the deadline expires without result, the right is lost. According to the amended procedure, the applicant must draw the attention of the competent minister to the possibility of a right of first refusal when filing its request. Following the submission of the request the Minister of National Economy will determine whether the transaction is covered by the right of first refusal and if so, will send the documentation to the ministry responsible for energy policy who will then decide whether the exercise of the right of first refusal is legitimate. If the ministry proposes the exercise of the pre-emption right, the FDI clearance procedure will be terminated with the reasoning that the minister responsible for energy policy is of the opinion that the exercise of the right of first refusal is justified.

Finally, according to a Government Resolution, the target companies have to be transferred to the state-owned MVM Zrt. within 6 months from their acquisition by the State and the minister responsible for energy policy is mandated to be the beneficiary of the ownership rights and obligations of the State over the strategic target companies acquired as a result of the right of first refusal.

By Rozsa Rusvai-Darazs, Attorney at law, KCG Partners Law Firm

Hungary Knowledge Partner

Nagy és Trócsányi was founded in 1991, turned into limited professional partnership (in Hungarian: ügyvédi iroda) in 1992, with the aim of offering sophisticated legal services. The firm continues to seek excellence in a comprehensive and modern practice, which spans international commercial and business law. 

The firm’s lawyers provide clients with advice and representation in an active, thoughtful and ethical manner, with a real understanding of clients‘ business needs and the markets in which they operate.

The firm is one of the largest home-grown independent law firms in Hungary. Currently Nagy és Trócsányi has 26 lawyers out of which there are 8 active partners. All partners are equity partners.

Nagy és Trócsányi is a legal entity and registered with the Budapest Bar Association. All lawyers of the Budapest office are either members of, or registered as clerks with, the Budapest Bar Association. Several of the firm’s lawyers are admitted attorneys or registered as legal consultants in New York.

The firm advises a broad range of clients, including numerous multinational corporations. 

Our activity focuses on the following practice areas: M&A, company law, litigation and dispute resolution, real estate law, banking and finance, project financing, insolvency and restructuring, venture capital investment, taxation, competition, utilities, energy, media and telecommunication.

Nagy és Trócsányi is the exclusive member firm in Hungary for Lex Mundi – the world’s leading network of independent law firms with in-depth experience in 100+countries worldwide.

The firm advises a broad range of clients, including numerous multinational corporations. Among our key clients are: OTP Bank, Sberbank, Erste Bank, Scania, KS ORKA, Mannvit, DAF Trucks, Booking.com, Museum of Fine Arts of Budapest, Hungarian Post Pte Ltd, Hiventures, Strabag, CPI Hungary, Givaudan, Marks & Spencer, CBA.

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