COVID 19 – CRISIS MANAGEMENT POLICIES IN CENTRAL EUROPE- Supervision of Companies by the Hungarian State- No. 3

Hungary’s Government declared a state of emergency on 11 March 2020 and established the Operational Group assisting the Prime Minister in order to deal with the COVID-19 epidemic.

On 14 March 2020, the Government created the Task Force Responsible for the Security of Vital Hungarian Companies (the “Task Force”) led by the Minister of Defence. The Task Force’s mission is to (i) identify companies, both state- and non-state-owned, which are vital for the functioning of Hungary (the “Vital Companies”) and (ii) make the preparations for the potential takeover of the Vital Companies’ supervision.

So far, the Task Force has identified 140 Vital Companies and more than half of them were also named (the “Named Vital Companies”), among them Auchan Magyarország Kft. and Robert Bosch Korlátolt Felelősségű Társaság. (The full list of these Named Vital Companies is accessible on the following Hungarian language website of the Hungarian military:

On 18 March 2020, the Government established the military management force (the “Management Force”). As per the relevant decision of the government, the Management Force has the task to facilitate the communication and cooperation between the Vital Companies, the Government, the Task Force and the Operational Group. According to the website mentioned above, the members of the Management Force have been present at the Named Vital Companies as of 19 March 2020.

The above measures do not mean that the Named Vital Companies are under the supervision of the Hungarian State. The conditions of such supervision are set out in the Disaster Protection Act:
In case there is an imminent danger of the deterioration of the state of emergency, the government may – so as to avoid such deterioration – order in its decree that the operation of a company be placed under the supervision of the Hungarian State. This supervision means that the Minister of Finance or the Government Commissioner
• examines the company’s financial position,
• approves and countersigns the company’s financial undertakings and
• decides on the matters falling within the competence of the company’s main body (e.g. general assembly, members’ meeting) in connection with (i) the direct prevention of the situation giving rise to the extraordinary measure or (ii) the mitigation of the consequences of such situation (i.e. in the present case, the COVID-19 epidemic).

The Hungarian State immediately informs in writing the company’s executive officers and supervisory board members of its decisions falling within the competence of the company’s main body. Otherwise, the competence of the company’s main body is not affected.

It is important to note that the Hungarian State shall compensate the company or its owner for their actual losses (i) incurred as a result of the decisions taken by the Minister of Finance (or the Government Commissioner) within his competence, (ii) in respect of the period when a government decree was in force which was subsequently annulled by the Hungarian Constitutional Court.

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