Hungary’s M&A market may have had a slower start to the year, but activity quickly ramped up, keeping lawyers busier than ever, according to Oppenheim Partner Jozsef Bulcsu Fenyvesi. Still, Fenyvesi notes, a recent and short-lived amendment to the country’s FDI regime introduced serious delays and even potential state intervention into an already complex transactional landscape.
"This year started off a bit more slowly than the last, and for a while, it looked like we’d see a milder workload overall," Fenyvesi begins. "But things picked up rather quickly, and now we’re even busier than we were last year. Despite some turbulent conditions in the M&A market, we’ve been fortunate to stay consistently engaged."
Explaining what sectors have been most active in terms of transactional work, Fenyvesi says that he has "seen a fairly broad range. Our portfolio currently includes deals involving energy, particularly renewables, as well as commercial, manufacturing, financial institutions, and insurance companies. So, there’s been strong deal activity on both the sell and buy sides across a colorful mix of sectors."
Importantly, Fenyvesi mentions a change to Hungary’s FDI regime "that’s been a major development. At the end of June, the government adopted a new decree amending the FDI approval process for acquisitions involving 'strategic companies' in Hungary. This notion of 'strategic' is interpreted quite broadly, touching on sectors such as retail, healthcare, financial services, and more, meaning that most transactions we work on are potentially affected." As Fenyvesi reports, the amendment, which took immediate effect, extended the review deadline for the relevant ministry from 30 business days to 45, with the option of up to three additional extensions of 30 days each. "In practice, this means an approval process could stretch out to six or seven months, introducing serious delays and uncertainty."
Moreover, Fenyvesi reports that the decree introduced an expansion of a state preemption right. "It’s quite a serious shift. The amendment introduced a general preemption right for the state in cases where an FDI application is denied. If the Ministry of Interior rejects an FDI application, the Hungarian National Asset Management Company, an arm of the state, can step into the deal on the same terms. That raises serious questions around contractual freedom: imagine negotiating a joint venture with a carefully selected partner, only to find yourself instead in business with the state if the approval is denied," Fenyvesi explains.
However, the change to the FDI regime that the decree introduced appears to be only temporary. "The decree will be incorporated into a new legislative act set to take effect on August 19, 2025. Once that happens, the standard review period will revert to 30 business days, and the universal preemption right will be eliminated," Fenyvesi says. "Because the current amendment applies retroactively to ongoing cases, it gives the impression of having been designed as a stopgap, though one that significantly affects transactions in the meantime," he notes.
“Interestingly, the timing and retroactive effect of the amendment give the impression that it may have been designed to impact ongoing FDI procedures, not just future transactions. For instance, filings made before the amendment’s June 24 entry into force are now subject to its extended deadlines and new preemption rules, creating unexpected complications mid-process," Fenyvesi adds in the end. "More broadly, this shifting regulatory framework may undermine predictability for market participants."
