Best Acquisition / Leveraged Finance Lawyers in Hungary

About Acquisition / Leveraged Finance Law in Hungary

Acquisition and leveraged finance are specialized areas of law that facilitate the funding of mergers, acquisitions, and other significant business transactions. In Hungary, acquisition finance typically involves providing loans or other financial products to support the purchase of companies, assets, or shares. Leveraged finance refers to the use of borrowed funds to increase the potential return of an investment, often through structures that rely heavily on debt relative to equity. Hungarian law adapts to European financial standards, but it also features distinctive local regulations affecting loan structuring, security interests, enforcement, and corporate governance in such transactions.

Why You May Need a Lawyer

Dealing with acquisition or leveraged finance in Hungary involves navigating complex legal, financial, and regulatory landscapes. Common situations where legal expertise may be essential include:

• Structuring acquisition loans or leveraged buyouts
• Negotiating and drafting finance agreements
• Providing advice on security packages and collateral arrangements
• Ensuring compliance with Hungarian and European banking laws
• Managing cross-border elements with foreign investors or lenders
• Advising on tax implications and corporate structuring
• Handling disputes or issues that arise during financing processes

Local Laws Overview

There are specific laws and regulations in Hungary that directly impact acquisition and leveraged finance transactions. Key considerations include:

• Banking Act and Financial Supervision: Regulates the provision of loans and credit facilities by Hungarian and foreign financial institutions.
• Civil Code: Sets out rules regarding contracts, security interests, guarantees, pledges, and mortgages that secure acquisition finance transactions.
• Company Law: Governs the acquisition of shares, mergers, demergers, and corporate documentation required for such deals.
• Competition Law: Acquisitions may be subject to notification or approval by the Hungarian Competition Authority if certain thresholds are met.
• Foreign Exchange Controls: While Hungary has liberal foreign exchange rules, certain transactions involving non-Hungarian parties may require notification.
• Taxation: The Hungarian tax regime can significantly impact structuring, with stamp duties and withholding taxes on interest payments or dividends.
• Cross-Border Aspects: European Union regulations and directives play an important role, especially for multi-jurisdictional deals.

Frequently Asked Questions

What is acquisition finance?

Acquisition finance refers to loans, bonds, or other financial instruments used to fund the purchase of companies or significant assets. In Hungary, it is subject to both national and European banking and financial regulations.

What is leveraged finance and how does it work?

Leveraged finance involves borrowing funds, often through loans that are secured against the assets of the acquired company, to increase the buying power for mergers or acquisitions. It typically carries higher risk and return due to the larger amount of debt.

Do I need to involve Hungarian banks in acquisition finance?

Not necessarily. While local banks may participate, it is common for international financial institutions to be involved, especially for cross-border transactions. However, Hungarian legal requirements must still be observed.

Are there restrictions on foreign purchasers using acquisition finance in Hungary?

Foreign entities can acquire Hungarian businesses, but there may be sector-specific rules, notification requirements, or approval needed, especially in regulated industries.

How are security interests created and perfected in Hungary?

Security interests, such as pledges and mortgages, must be documented in writing and registered in relevant public registries to be valid and enforceable against third parties.

What happens if the borrower defaults on an acquisition loan?

Lenders typically have rights under the security agreements to enforce collateral, initiate debt recovery proceedings, or potentially take control of the borrower or target company, subject to Hungarian law.

Are acquisition or leveraged finance agreements customizable?

Yes, agreements can be tailored to fit the parties' needs, but they must comply with mandatory Hungarian legal requirements, such as registration, disclosure, and approval processes.

Is due diligence important in leveraged finance?

Absolutely. Legal, financial, and tax due diligence are critical to identify risks, verify representations, and ensure that the transaction structure is sound and compliant with Hungarian law.

What are the typical costs involved in acquisition finance deals in Hungary?

Costs may include legal fees, due diligence expenses, registration fees, stamp duties, taxation on interest or transactions, and potentially competition authority notification fees.

Can legal disputes in acquisition finance be resolved through arbitration?

Yes, parties can agree to resolve disputes through arbitration, either in Hungary or in another jurisdiction, as set out in their contract. However, this does not affect mandatory public law remedies available under Hungarian law.

Additional Resources

If you require further information, the following resources and bodies may be useful:

• Hungarian National Bank (MNB) - Supervises banking and financial services
• Hungarian Competition Authority (GVH) - Regulates competition and merger clearance
• Hungarian Ministry of Justice - Oversees company and commercial law
• Hungarian Chamber of Commerce and Industry - Provides business and legal guidance
• Professional bodies of attorneys and legal consultants specializing in finance law

Next Steps

If you need legal assistance in acquisition or leveraged finance in Hungary, consider the following steps:

• Identify the nature and scale of your planned transaction or issue
• Gather all relevant company, financial, and transaction documents
• Consult with a Hungarian lawyer who specializes in acquisition and leveraged finance
• Discuss structuring options, regulatory requirements, and potential risks
• Ensure all agreements are properly drafted, negotiated, and registered as legally required
• Stay updated on relevant legal developments and compliance obligations