Even with the summer holidays firmly established in Hungary, the country is seeing activity across the board and a couple of interesting legislative updates stand to improve the landscape even further, according to Schoenherr Managing Partner Kinga Hetenyi.
“It’s the middle of summer holidays, almost everybody is on vacation,” Hetenyi begins. “The Parliament is not in session until September and the courts are closed until August 20 – it’s a veritable relaxation period after a very busy Q2, with a huge number of M&A transactions running in parallel.” Still, despite the holidays, she reports interesting legislative updates of late.
“A major piece of new legislation that got all the lawyers excited is the new act on the registration of legal persons and the registration procedure,” Hetenyi continues. The new act, she says, is a comprehensive reform of the system which resulted in the creation of one single electronic register for all legal entities in Hungary. “Everything will now be joined in one register, it’s a major step forward! Companies, NGOs, associations, foundations, investment funds, and finally even law firms will be there.”
This, according to Hetenyi, tries to solve the existing problem of a “fragmented registration” reality for legal entities in Hungary, with often varying practices, even within the same type of register, depending on the location or the relevant judge or official actually doing the registration. “The new Act aims at standardizing and simplifying the rules, and it even introduces automatic decision-making.” She explains that “this procedure means that the documents submitted will not be examined by the registering body for their legality, but the responsibility will be shared between the registering body and the legal representative, who will have to file a declaration confirming that the documents are adequate and suitable for registration.” Hetenyi says that the new law will come into effect in July 2023, which “indicates how important and wide this reform is, if the lawmaker considered two years a necessary period for adjusting.”
Also, Hetenyi reports that a new land registry procedure is now in place in the country. “Most parts of the new law covering land registries will enter into force at the start of 2023,” she says. “This was one of the last areas in Hungary where things were mostly paper-based and will be digitalized now – everything from buying properties, all the way up to registering mortgages.” Hetenyi feels that this update will speed things up significantly and make it easier for businesses, especially in the real estate sector.
And, speaking of the real estate sector, Hetenyi reports that, in addition to the general M&A market, real estate is also booming again. “The construction market has been on quite of a rise, there are a lot of new projects everywhere, as well as planned renovations,” she says. Also, Hetenyi mentions that the banking sector is set to experience a shake-up. “There are a lot of consolidations going on right now and some interesting acquisitions and mergers are expected – the result of which could be a bank that would be a true competitor to OTP,” she says. Additionally, she mentions that Commerzbank Hungary is up for sale and it remains to be seen who will buy it.
All of this, Hetenyi says, points to a booming economy of the country. “Hungary is a front runner in terms of vaccinations in Europe and, with almost all the Covid-related restrictions being lifted, the country can only go up from here,” she says.
There are still some hurdles ahead, however, with the fact that tourism hasn’t reverted to pre-pandemic levels, Hetenyi says. But regardless of that, domestic and international financial institutions predict an uptick in Hungary’s GDP. “There is generally not a high degree of fear for a fourth wave of the pandemic, which spells out why there is such faith in a bounce-back for our economy,” she says.