Category: Hungary

DLA Piper has announced that Oppenheim Partners Gabor Fejes and Zoltan Marosi are set to join the firm as a Partner and Local Partner, respectively, early in 2022.

Both Fejes and Marosi worked for Freshfields Bruckhaus Deringer when it had an office in Hungary and both stayed with the team of the Oppenheim law firm, founded in 2007 after Freshfields exited Hungary.

Fejes first joined Freshfields in 1998 and has been heading the Oppenheim Antitrust, Competition, and Trade (ACT) practice since 2007. According to DLA Piper, he specializes in Hungarian and EU antitrust competition law (cartel law), the law of unfair competition and consumer protection, as well as the meeting points of competition law and private law.

Marosi joined Freshfields in 2003. He became an Associate at Oppenheim in 2007 and was appointed to Partner in 2014. According to DLA Piper, he focuses on Hungarian and EU antitrust law, consumer protection law, and administrative litigation.

“Oppenheim is grateful to Gabor and Zoltan for their excellent work and personal commitment displayed in the last two decades,” stated an Oppenheim press statement. “Both are known as leading antitrust, competition, and trade law practitioners. They had an eminent role in building up Oppenheim’s ACT practice as one of the finest in our country and have thus contributed to Oppenheim’s reputation as a leading independent law firm covering all aspects of business law. We wish Gabor and Zoltan a lot of success and the very best in their new endeavors.”

Andras Nemeth has joined Audax Renewables Hungary as a Senior Legal Counsel.

Nemeth joins from Paks II. Nuclear Power Plant where he was the Head of the International Legal Department since November 2017. Before that, he was a Senior Legal Counsel (Team Leader) – Generation, Trading, and Sales with E.ON Hungaria between May 2016 and October 2017. Earlier still he worked for GDF Suez Energy Europe in Hungary, first as a Legal Advisor between June 2013 and March 2015 and then as a Senior Legal Counsel between April 2015 and March 2016. 

Between November 2007 and May 2013, he was an Attorney at Law with Budapest Law Firm No. 5000, preceded by working as a Legal Advisor with UPC between 2006 and 2007 and as a Trainee Attorney with Baker McKenzie between 2002 and 2004 and between 2005 and 2006.

“Having been working for four years on a truly international and ‘mega’ project, I am really looking forward to getting back into the energy trading business, where the ever-changing market environment and the regulation, be it domestic or international, always keep a corporate lawyer busy,” commented Nemeth. “Add to that the current market fluctuation, I believe that I will have little downtime. Finally, Audax is an ‘old-new’ player on the Hungarian market, meaning that even it has been on the competitive market basically since the beginning, being taken over by a new owner – and leaving the E.ON group – means that a fully functioning market player need to be set – or rather beefed-up, including creating an internal legal function. These are the challenges I am looking forward to and hoping to tackle.”

Originally reported by CEE In-House Matters.

In November 2021, a bill on the amendment of Act II of 2007 on the Entry and Stay of Third-Country Nationals in Hungary was accepted by the Parliament. The purpose of the modification is to create a new type of residence permit for “digital nomads” and it will enter into force on 1 January 2022.

The digital nomads are remote workers who travel different locations on a regular basis and use modern technology to perform their work from anywhere in the world. The new residence permit for digital nomads (so-called ‘White Card’) will allow third country nationals to live in Hungary while they work remotely for their foreign employer.

The rights relating to the new residence permit will suit to the lifestyle of digital nomads; its validity period will be shorter compared to other types of residence permit (it will be valid only for one year and might be renewed for an additional year); and the relatives of a person holding digital nomad residence permit will not be entitled to apply for the residence permit for family reunification. If the holder of digital nomad residence permit will be entitled to stay in Hungary on any other basis (e.g. working for a Hungarian company or pursuing gainful activity in Hungary), it will be necessary to change the type of the residence permit accordingly.

The purpose of the new regulation is to support tourism and to give a new boost to IT sector by attracting third country professionals to Hungary.

By Eszter Ila-Horvath, Attorney at Law, KCG Partners Law Firm

At the end of October 2021, the Hungarian Government decided to take new protection measures to contain the fourth wave of the coronavirus outbreak, as a result, from 1 November 2021 employers have the right to require their employees to be mandatorily vaccinated. This means that to increase vaccination coverage and to protect workplaces, the Government allows employers to require their employees to be vaccinated against coronavirus as a condition of employment, either as a standard working condition for all employees or as an individual working condition depending on the job. For employees who have not yet been vaccinated, the employer may set a 45-day deadline for the first vaccination. Employers who require vaccination must inform the employee of the measure, the deadline and the possible legal consequences of not vaccinating, either electronically (in e-mail) or on paper. Furthermore, an employee who is medically certified as contra-indicated to be vaccinated against the coronavirus cannot expected to be vaccinated.

The above measure was not welcomed by the Hungarian Trade Union Confederation and the public in general. The extraordinary dismissal of a COVID-19 vaccination refuser is widely considered to be unconstitutional. In the view of the opposition, the Government decree is giving employers a tool that they can abuse to quickly carry out a wave of redundancies.

Since the Constitutional Court of Hungary recently accepted petitions challenging the regulation requiring health workers to be vaccinated against coronavirus starting from 15 August 2021, it may easily happen that this new decree will be reviewed and possibly revoked as well.

One of the problems to review is that if the employee does not take the vaccination within the time limit set by the employer, the employer may order unpaid leave and if the employee still does not take the vaccination within one year, the employer may terminate the employee’s employment with immediate effect by dismissal or termination. This raises a number of concerns, as until now only the employee could request unpaid leave and the employer is not entitled to determine it.

The other problem is that when applying such measures, it must be assessed whether the restriction is proportionate to the individual right that is being restricted or whether it is necessary. Proportionality means, for example, assessing whether another measure that is less restrictive of the individual right would achieve the same result as the mandatory vaccination. The majority professional view is that in most cases a less restrictive means to keep the coronavirus out of the workplace (e.g. testing, work organization, home office, masking, and hygiene enforcement) can be achieved. For example, if the employee works from home and does not interact with others during the course of his or her work, there is no risk of the employer’s continued operation or endangering the safe working environment, and therefore there is no justification for the restriction.

Even though the decision regarding the petitions was not made yet, the Hungarian Trade Union Confederation called for an extraordinary meeting of the Permanent Consultative Forum of Industry and Government, and the Society for Civil Liberties voiced it concerns as well. Certainties will only be available once the decision of the Constitutional Court of Hungary regarding the mandatory vaccination of healthcare workers is issued, and further predictions can be made accordingly about the future of the mandatory vaccination of all employees.

By Rita Parkanyi, Partner, KCG Partners Law Firm

Immunisation Certificates played a big role in the previous wave of COVID-19 pandemic in Hungary. They were issued as a supplementary certificate to confirm that the cardholder had a positive COVID test or got at least the first shot of any of the available vaccines. At many stages of the pandemic, cardholders enjoyed specific privileges compared to the others (i.e. card was asked at many places that had an indoor room, such as theatres, cinemas, restaurants etc.). Even though the European COVID passport became available from 1 July 2021 among the EU, it is only issued for persons, who got an EU-approved vaccine. Since Hungary choose to vaccinate with non-EU-approved vaccines, the dichotomy of the certificates still remains.

In June 2021 almost 1000 person joined an application that was submitted to the Hungarian Constitutional Court. They argued that the Hungarian State violated non-discriminatory rules when it granted special privileges to owners of immunisation certificates. They argued furthermore that there were many among the ones who refused to vaccinate, who could, out of health considerations, not get vaccinated and such regulations are discriminatory.

The Constitutional Court rejected these applications on two bases. Firstly, according to the Fundamental Law of Hungary fundamental rights can be restricted in a State of Danger and the restrictions in question were introduced for a legitimate goal, namely the battling of the pandemic and the reduction of economical, health and safety consequences.

The second ground, on the basis of which the submissions were rejected is the right for self-determination. In this question the Constitutional Court held that since the vaccination was not mandatory, there was no violation of the right for self-determination.

Based on the above the Constitutional Court rejected the thousand applications. The decision was issued on 5 October 2021 and is final after being published in the Hungarian Official Gazette.

By Levente Csengery, Partner, KCG Partners Law Firm

Schoenherr has advised S-Immo on its acquisition of the BudaPart Gate office building from Market Asset Management. HP Legal Hajdu & Partners advised the seller.

According to Schoenherr, the 20,000-square-meter BudaPart Gate office building, located in Budapest, is the first office building constructed in the BudaPart urban development area and is 100% occupied. The transaction is expected to close by the end of 2021.

S-Immo is an Austria-based real estate investment company managing approximately EUR 2,5 billion in real estate assets in Austria, Germany, and the CEE region. Market Asset Management is a subsidiary of the Hungarian construction company Market Epitoin.

“BudaPart Gate exactly matches our vision of a high-quality, modern, and sustainable office building,” S-immo Management Board Member Herwig Teufelsdorfer commented. “We are very pleased to have expanded our portfolio in Budapest with a property that is ESG-compliant across the board. The property’s high occupancy rate and earning power will have an immediate positive impact on our cash flow.”

The Schoenherr team was led by Vienna-based Managing Partner Michael Lagler and Budapest Head of Real Estate Laszlo Krupl and included Vienna-based Counsel Rainer Clemens, as well as Budapest-based Associates Adrian Menczelesz, Anita Vertes, and Viktoria Magyar.

DLA Piper has advised Erste Bank on a EUR 60 million loan to Futureal for the realization and operation of the second phase of Budapest One for a period of more than 10 years.

According to Futureal, “the 25,000 square meter first phase of the complex was handed over at the beginning of 2020. The construction of the nearly 20,000 square meter second phase and the 19,000 square meter third phase is progressing according to plan as they already reached their highest point in May this year. The office park with 3,500 square meters of commercial space is also complemented by 2,500 square meters of green space. Tenants will be able to move into the premises of the last two phases in the second half of 2022.”

DLA Piper did not reply to our inquiry on the matter.

Hungary has introduced a UBO register in line with the EU’s 4th Anti-Money Laundering Directive by way of Act XLIII of 2021 on the Establishment and Operation of the Data Reporting Background for the Identification Tasks of Financial and Other Service Providers (“Act”). Certain provisions of the Act will come into force at a later date.

According to the Act, the data on UBOs must be reported to the Hungarian Tax and Customs Authority by the account-holding bank. The first report was due by 12 June 2021. Afterwards, UBOs are obliged to inform their companies of any change in their personal data within 15 days and the companies must update their bank accounts within 5 days. 

As of 1 October 2021, the account-holding banks are obliged to transmit the UBO data of their clients to the UBO register each month.

Starting from 1 February 2022, all service providers who are required by law to perform a client due diligence process under the Money Laundering Act (e.g. lawyers, notaries, accountants, etc.) will be obliged to verify the UBO data of their clients in the UBO register. If there is any discrepancy between the register and the results of their own client due diligence process, the service providers must report it to the UBO register.

The Act introduced the TT index, which essentially shows the trustworthiness of the data in the UBO. The TT index starts at 10 and decreases by 1 point if a service provider and by 2 points if any authority, prosecutor or court reports that there is material inaccuracy in the registered data. If the TT index falls below 8 points, the entity in question will be classified as “uncertain” and if it falls below 6 points and remains there for 60 days, the classification will change to “unreliable”. In both cases it is possible to be classified as “reliable” again, i.e. regain 10 points on the TT index, by updating or confirming the registered data.

Starting from 1 July 2022, if the “uncertain” classification of an entity is not changed for a period of 180 days, this status will be published on the website of the UBO register. If an entity is classified as “unreliable”, that status will be published on the website of the UBO register and the entity will be considered a high-risk entity from an AML perspective, and the service providers must refuse to complete any transactions exceeding the value of HUF 4.5 million (approx. EUR 12,000) for any entity with an “unreliable” UBO status.

Since the consequences of “uncertain” or “unreliable” classifications are serious, all entities are strongly advised to verify their UBO data in the UBO register on a regular basis and notify their banks and service providers of any changes.

By Zoltan Nadasdy, Counsel, and Esztella Cseh, Legal Advisor, Noerr

Kinstellar has advised US-based X-Chem on its acquisition of Hungary’s ComInnex.

X-Chem provides pharmaceutical and biotech companies with solutions for screening, hit validation, and lead optimization. The company leverages its DNA-encoded chemical library (DEL) platform to discover novel small molecule leads against therapeutic targets.

ComInnex is a chemistry service organization, supporting early-stage drug discovery through its products and services. The company has over 20 years of experience in offering custom chemistry, chemical library development and synthesis, project management, and customer service.

“As a united company, with an increased global presence, we are positioned to meet the increasing demand for innovative chemistry solutions and high-quality discovery services worldwide,” X-Chem CEO Matt Clark commented. “The acquisition of ComInnex further extends X-Chem’s expertise and scale of DEL services to help biopharma clients of any size efficiently unlock exponential possibilities in small molecule drug discovery.”

“Combining X-Chem, the world leader and pioneer of high-quality DEL technology, and ComInnex, a leader in the most important trends and novel approaches in early-stage drug discovery chemistry, will yield a powerhouse partner for innovative drug discovery solutions,” added ComInnex CEO Alex Drijver.

The Kinstellar team was led by Partner Anthony O’Connor and included Managing Associate Agnes Zsofia Szabo, Senior Associate Eszter Takacsi-Nagy, and Junior Associates Bertalan Vanya and Judit Sos.

Editor’s Note: After this article was published, CEE Legal Matters learned that Jalsovszky advised the sellers on the transaction. The firm’s team included Managing Partner Pal Jalsovszky and Senior Attorneys Peter Gyimesi and Agnes Bejo.

CMS has advised Austrian Hypo-Bank Burgenland on the sale of its Hungarian subsidiary Sopron Bank Burgenland to MagNet Bank. Oppenheim reportedly advised the MagNet Bank.

The transaction remains contingent on regulatory approval by the Hungarian Central Bank.

According to CMS, “following the sale of Sopron Bank, Hypo-Bank Burgenland will focus on serving corporate clients in Hungary, especially in the area of real estate financing.”

Hypo-Bank Burgenland is a regional bank in Austria and has been a part of the GRAWE Group since 2006. MagNet Bank is an independent Hungarian bank, established in 1995 as a savings cooperative. According to its website, it is a value-based bank and a community-building financial institution.

The CMS team was led by Partners Andreas Koehler and Erika Papp and included Senior Counsels Szilvia Kabacs and Eszter Kalman, Senior Associate Zsolt Zsurzsa, and Senior Consultant Arpad Lantos.