A mass of legal regulations for the end of the year

It is a tradition in Hungary that a mass of legal regulations are modified by the end of the year and this is what happened also this year. Amendments affected, among others, the bankruptcy act, the land act, the electricity and gas act, the waste management act and finance legislation. We have prepared a non-exhaustive summary of these amendments.

1. Act LXVII of 2022 -Amendment of acts relating to agricultural lands
The new legislation modifies in several aspects the pre-emption regulation applicable to transfer of agricultural land and forests. On one hand, it introduces stricter requirements to qualify as local neighbour and the preferential pre-emption right of local neighbour is applicable only to such person who (i) has its center of main interest in the neighbour and (ii) is owner or user of the given neighbouring property since at least one year. The amendment further introduces some new preferential pre-emption rights, mainly in favour of local animal farmers and local farmers using ecologically advanced technology in their activity. Finally, the legislator intends to limit the artificial over-pricing of agricultural lands and the parties are obliged to provide in their sale and purchase agreement a reasonable motivation of applying a purchase price exceeding a certain limit defined by law.
Some specific rules have also been modified in respect of the regulation applicable to terminating joint property in respect of agricultural lands (Act LXXI of 2020). This act is aimed at assisting the owners in effectively terminating the joint property and the act was relatively generally applied and the present modification intended to address some uncertainties arising from practical application of the act. The modification affects mainly procedural rules.
The modifications will enter into effect on 1 January 2023 while the modifications affecting the pricing will enter into effect on 1 May 2023.
2. Act LXVIII. of 2022 – “Salad” act
The Act modifies several laws that are not specifically related with each other, including the bankruptcy act, the property lease agreement, and several laws relating to state property management.
Bankruptcy Act (Act XLIX of 1991)
The amendment provides the liquidator the right to create new employment during the liquidation procedure for reasons relating to the liquidation. In addition, the Act introduces a couple of technical modifications.
Property lease Act (Act LXXVIII of 1993)
The amendment clarifies the conditions of the lessor exercising statutory call option regarding state-owned properties. According to the new regulation, the purchase price applied upon exercise of the call option shall be defined by an expert and not only a value defined unilaterally by the State.
Act on State property (Act CVI of 2007)
The modification identifies new cases where tendering requirement does not apply for granting usage right (but not transfer of title) in respect of State property. A minimum value of HUF 25,000,000 has been introduced in respect of usage of tangible assets, furthermore, the minimum term of contracts (including service contracts) has been increased from 90 days to one year.
Act on National property (Act CXCVI of 2011)
The amendment introduces the term „State property to be rolled out” where the task of the property manager is to make use of, or sell the given asset as soon as possible. A further novelty is that the Act introduces a new right that is the “ right of operation” the replaces the former property management right. The legislator’s purpose for such amendment is that the modification act declares in this respect that any national property subject to such right cannot be included within the liquidated assets during a liquidation procedure.
3. Financial acts
Act on mortgage credit institutions (Act XXX of 1997)
The amendment act provides new collateral for the mortgage credit institutions by which they can provide new form of refinancing. Under the current regime, the mortgage credit institutions could provide refinancing to the commercial banks by using and transferring the non-accessory mortgage which was also used as the collateral of the credit provided.
The new security structure makes use of the options provided by the Civil Code and allows refinancing by providing a mortgage credit secured by a mortgage over receivables which can obtained by the mortgage credit institution on portfolio level. Under this regime, the mortgage credit institution receives also a sub-mortgage regulated under Paragraph 5:140 § of the Civil Code. The amendment enters into effect on 1 January 2023.
Act on investment undertakings (Act CXXXVIII of 2007)
The act (Act LXIX of 2022) contains an amendment for EU law harmonization purposes according to which the blockchain technology could also serve as a mean of issuance of financial tools (including crypto tools). The amendment will enter into effect on 23 March 2023.
Act on money circulation services (Act LXXXV of 2009)
The legislator noticed the spread of the so called cashback services, therefore it decreased the free of charge limit of HUF 150,000 applicable for cash machine services to HUF 40,000 in case of cashback.
Other acts
The Credit institutions act, the Insurance act and the act on the National Bank of Hungary have also been modified. In the Credit institutions act, the regulation on the deposit insurance affecting deposits of municipalities has been amended, the National Bank of Hungary received additional authority supervision competences, while the successors obtained the right to access the life insurance data of the deceased person prior to receiving the heritage distribution decision. The amendments enter into effect on 1 January 2023.
4. Energy acts
Electric energy act (Act LXXXVI of 2007)
According to the amendment act (Act LXX of 2022), MAVÍR, as system operator becomes entitled not only to purchase balancing energy, but also to sell the eventual surplus. This purports to allow the flexibility of the system.
Gas act (Act XL of 2008)
The amendment introduces the notion of energy regulating test environment, created by the legislator in order to enhance energy innovations. The Hungarian Energy and Utility Regulatory Authority is entitled to grant permit for participation in such test environment. The legislator further satisfied EU law harmonization requirement by introducing new rules applicable in gas crisis situations primarily by submitting to the EU Commission a roadmap for filling gas storage facilities.
The amendments will enter into effect as of 1 January 2023.
5. Modification of laws relating to waste management
By adopting Act LXXVI of 2022, the act on waste (Act CLXXXV of 2012) has been considerably modified. The main reason for the amendment was to adapt for the introduction of the concession-based model.
The environment protection product fee act (Act LXXXV of 2011) was modified as a consequence of the increase of the manufacturer’s liability. The other relating reason and scope of application of the modification is the introduction of amendments necessary for the transition to the waste management concession model. The amendments enter into effect on 1 July 2023.
The new concession model was also the reason for the amendment of the waste management act. In this respect, redefinition of the State’s obligations and establishment of the legal ground of data migration for the holder of the concession were the core elements of the amendment. The amendment contains detailed interim rules in order to promote a smooth transition to the new system.
6. Permit requirement of foreign investors acquiring interest in Hungarian strategic companies
With a view to the emergency situation proclaimed as a result of the Russian-Ukrainian war, the Government extended with its decree the authorization system applicable for acquisition of interest by foreign investors in strategic Hungarian companies. The notification obligation affects not only investors originating from third countries, but also those originating from the EU, the EEA and Switzerland.
The strategic companies are those who perform the activities listed in the exhibit of the decree (Gov. Decree No. 561/2022 (XII.23.)), which are basically identical to those so identified in the previous regime. The authorization process falls within the competence of the Minister responsible for inner trade (which is the Minister for Economic Development) which also complies with the former system.
The decree entered into effect on 24 December 2022 and will remain in effect for the duration of the emergency.