What fines can be imposed if a foreign investor breaches the Hungarian General or Temporary Regime regulating the FDI screening procedures? What remedies are available to the foreign investor under the Regimes? In the last part of our FDI article series, we answer these questions.

Smartlegal Schmidt&Partners reports from Hungary:

1           FINES

1.1       Fines under the General Regime

A person who breaches the obligation under the General Regime in connection with the notification shall be punished by the Hungarian Government, after examining all the circumstances of the case, by the following fines:

Natural person foreign investor	Legal person foreign investor
A fine from HUF 100.000 to HUF 1.000.000	A fine from HUF 1.000.000 to HUF 10.000.000.

1.2       Fines under the Temporary Regime

A person who fails to comply with the obligation to report and if the act is invalid under the Temporary Regime, the Hungarian Government may, after examining all the circumstances of the case, impose the following fines:

Natural person foreign investor	Legal person foreign investor
A fine of up to twice the value of the transaction, but not less than HUF 100.000.	A fine of up to twice the value of the transaction, but at least 1% of the net turnover of the strategic company[1] concerned by the transaction.

2           REMEDIES

2.1       Legal remedies under the General Regime

The Foreign Investor and the Hungarian target company may contest the prohibition decision in administrative litigation on the grounds of violation of the essential rules of the procedure and in connection with the qualification of Hungary’ security interests. The Metropolitan Court of Budapest shall have exclusive jurisdiction to this procedure. The legal representation is mandatory in the litigation.

The court shall decide on the application in a simplified action. If the court finds a violation, it shall repeal the decision and order the Hungarian Government to initiate new proceedings.

2.2       Legal remedies under the Temporary Regime

The Foreign Investor may contest the prohibition decision on the grounds of infringement of essential procedural requirements and in connection with the assessment in an administrative non-litigation procedure. It shall be noted that the legal representation is also mandatory in this procedure.

The court will decide on the application within 30 days. If the court finds a violation, it will repeal the decision and order the Hungarian Government to start a new procedure.

The article was written by dr. Péter Korózs.

SMARTLEGAL is a team of agile business & litigation lawyers in Budapest, Hungary, helping international corporate clients and individual entrepreneurs doing business in Hungary. For more information please visit our website at Smartlegal.hu

[1] Based on the last financial year of the strategic company.