The importance of ESG in business has become clearer as the moral and ecological reasons are now obvious to everyone. In theory, all companies support the idea of doing business in a more sustainable and climate-friendly way. However, in practice, companies usually only do something when they have to. In Hungary, there isn’t any binding ESG supply chain act in place yet, which could wrongly lead to the conclusion that the topic is unimportant. Yet considerations about ESG in the supply chain are no longer nice-to-have but have become a must-have globally, and Hungary is no exception. There are various locally relevant reasons for which companies must start prioritizing the management of ESG risks in their supply chain.
Recent EU-level Case Law Related to National-level Foreign Direct Investment Screening
Since the end of the 2010s foreign direct investment (“FDI”) considerations have been on the forefront of transaction planning and management. Although a unified EU-level screening mechanism is not in place, recently the European Commission (“EC”) closed a landmark case, while another one is currently ongoing before the European Court of Justice (“ECJ”) where the interplay of EU law and more specifically, EU merger law and national FDI rules were/are assessed. Dicta in these cases may have considerable implications in national FDI practice. This summary therefore provides a quick glance-through of the key notables taken from these cases.
Dentons Advises on Sale of Affidea to Groupe Bruxelles Lambert
Dentons has advised private investment firm B-Flexion and the Affidea Group on the sale of Affidea to Groupe Bruxelles Lambert. Kirkland & Ellis reportedly advised the buyer.
Bird & Bird and White & Case Advise on OTP's Acquisition of Alpha Bank in Albania
Bird & Bird has advised Hungary’s OTP Bank Group on its acquisition of the Albanian subsidiary of Greek Alpha Bank for EUR 55 million. White & Case advised Alpha Services and Holdings. Boga & Associates reportedly advised OTP as well. Kalo & Associates reportedly also advised Alpha.
Hungary: New Legislation on State Supervision of Entities of Strategic Importance
Government Decree No. 230/2022 passed on 28 June 2022 introduced a new regime which enables the Hungarian Government to place certain entities under the supervision of the Hungarian State. Such entities shall have a significant or dominant position in the energy industry, in particular in the following sectors having strategic and national security importance: (i) electricity, (ii) natural gas, (iii) crude oil, (iv) district heating and (v) mining. The legislation expressly mentions two entities, i.e. FGSZ Natural Gas Transmission Private Company Limited by Shares and the Hungarian Hydrocarbon Stockpiling Association.
Several Energy Companies Can be Subject to State Supervision
Due to the armed conflict and humanitarian disaster in Ukraine and in order to avert the consequences of such conflict in Hungary, the Government has adopted a decree that entered into force on 29 June 2022, on the basis of which, in order to safeguard the public interest of continuity and security of supply, the Government may place under the supervision of the Hungarian State the operators with significant or dominant market power in the energy industry, in particular in electricity, natural gas, petroleum, district heating and mining industry, including e.g. FGSZ Foldgazszallito Zrt. and the Hungarian Hydrocarbon Stockholders Association.
Hungary Implements New EU Cross-border Conversion Rules
EU businesses are free to cross borders and relocate their headquarters to another Member State. The amended EU directive and the corresponding new Hungarian rules aim to help companies doing so. In order to make it easier for companies to establish themselves in another Member State and to make cross-border operations more attractive, especially for small and medium-sized enterprises, the European Union decided back in 2019 to amend the EU directive on cross-border mergers, divisions and mergers.
New Land Registry Rules for Parking Spaces
The amendments to the execution government decree of the Land Registry Act entered into force on 1 May 2022, which introduced a new definition of parking space. A parking space is an area serving for the placement of a motor vehicle created in the motor vehicle storage room of a building, one side of which is connected to the access road to the parking spaces and the other three sides of which are delimited by a permanent physical marking or wall on the floor of the room. The definition also specifies the size of the parking space. This is important, since as a result, a parking space in a car storage room of a condominium may be registered as an independent property in the land registry. This only requires a proof of existence of a car storage room in the building.
Marton Kocsis Makes Partner at Cerha Hempel
Cerha Hempel Head of Competition Marton Kocsis has been promoted to Partner with the firm's Budapest office.
Could Airlines be Fined for Increasing their Prices?
In Hungary the Government recently issued a decree introducing extra profit taxes affecting several sectors, among others the aviation sector. Pursuant to the Governmental decree, as of 1 July 2022 an extra profittax is payable by ground handling companies based on the number of passengers departing from Hungary, with the exception of transit passengers. The new special tax is HUF 3,900 (approx. EUR 10) or HUF 9,750 (approx. EUR 25) per passenger depending on the passenger's final destination.
Dentons and Kinstellar Advise on USD 200 Million Green Financing for Volta
Dentons has advised Raiffeisen Bank on a USD 200 million five-year syndicated green loan facility for Volta Energy Solutions Hungary. Kinstellar advised the borrower.
Queritius and Wolf Theiss Successful for Mol in ICSID Arbitration Against Republic of Croatia
Queritius and Wolf Theiss, working with Dechert, have successfully represented the interests of the Mol Group in a USD 230 million ICSID arbitration case against the Republic of Croatia. Reportedly, Weil Gotshal & Manges, Peters & Peters, and Brick Court Chambers also represented Mol.
Whistleblowing or the Need to Regulate the Reporting of Abuse
The term "whistleblowing" means a procedure for reporting unlawful, harmful for public interest, potentially damaging or simply morally questionable behaviour at work, which helps to identify inappropriate behaviour or situations in organisations where normal channels of communication would not work or would be difficult to use, mainly because of the fear from sanctions. Reportable wrongdoing can take many forms: corruption, fraud, professional misconduct or negligence.
Building on 35-Year-Old Roots: Baker McKenzie Hungary Marks Coral Anniversary with Leadership Change
With Baker McKenzie’s Budapest office celebrating its 35th anniversary this year, we spoke with Partners Zoltan Hegymegi-Barakonyi and Akos Fehervary to learn more about the firm’s track record in the country as well as what we can expect with the former passing on the Managing Partner role to the latter this July.
ICC Arbitration Conference Celebrating ICC Arbitration Rules Translation into Hungarian: A Bittera, Kohlrusz & Toth Summary
Three European law firm partners walk into a Bar Association. No punchline here, just a fascinating look into how these partners came together on a mission to translate ICC arbitration rules into Hungarian. To mark the publication of the translated rules, one partner each from Bittera, Kohlrusz & Toth; LFB Laszlo Fekete Bagamery; and Jeantet – Avocats, brainstormed and co-organised a half-day arbitration conference at the headquarters of the Budapest and Hungarian Bar Associations in Budapest.
Recovery and Resilience Plans in CEE: Overview and Implementation
Entering into force on February 19, 2021, the EU Recovery and Resilience Facility aimed, according to the European Commission, “to mitigate the economic and social impact of the coronavirus pandemic and make European economies and societies more sustainable, resilient, and better prepared for the challenges and opportunities of the green and digital transitions.” CEE Legal Matters spoke with lawyers from Bulgaria, Greece, Hungary, Latvia, Poland, and Romania to learn what each country focused on, with its Recovery and Resilience Plan (RRP), and what difficulties lie ahead, now that these plans have been submitted to the EC.
Supervisory Briefing to Ensure Convergence in the Supervision of Investment Funds with Sustainability Features and in Combating Greenwashing
On 31 May 2022 the EU’s securities markets regulator, the European Securities and Markets Authority (ESMA), published its supervisory briefing to ensure convergence in the supervision of investment funds with sustainability features, and in combating greenwashing by investment funds.
Oppenheim Announces New Management Board
Oppenheim has announced the leadership of the firm will be handed over to its three newly-appointed board members – Jozsef Bulcsu Fenyvesi, Aron Laszlo, and Istvan Szatmary – with Fenyvesi and Laszlo to hold non-executive roles and Szatmary to take over the role of Managing Partner on July 1, 2022.