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The Ecovis network lawyers assist clients in Hungary and many other countries. For companies looking to expand in China, German lawyer Richard Hoffmann, founder of Ecovis Heidelberg, can provide support. 

With years of German and international experience, Richard Hoffmann has successfully assisted hundreds of companies in navigating the complexities of legal, tax and compliance issues in China, with his special knowledge of the Chinese business environment. The following is an English translation of Richard Hoffmann's article on the fight against corruption in China, published in English and translated with permission.

"In recent years, there has been an increasing number of cases of businessmen and celebrities getting into trouble for financial crimes or corruption. Examples are often in the news and often involve tycoons or people in the entertainment industry. 

As China tightens regulations and penalties increase, foreign and multinational companies based in China need to be careful in the way they do business. Internal corruption and inadequate safeguards can make companies liable for crimes committed by their employees. Therefore, companies need to keep a number of things in mind and be aware of the different types of behaviour that lead to commercial corruption.

This section provides an overview of the basic legal framework in China and the different types of commercial corruption, and then provides useful insights for companies that are dealing with or trying to prevent corruption.

Under the chairman of the anti-corruption campaign, Xi Jinping

In 2012, when Xi Jin-ping first took office, he introduced and implemented the largest organised anti-corruption campaign China has ever seen, with the aim of cracking down on "tigers and flies" (a term used to refer to high-ranking officials and local civil servants). Since then, more than 4.5 million people have been investigated and more than 200,000 officials have been suspended pending trial, according to the Central Commission for Discipline Inspection (CCDI). 

The public sector was initially the most affected by the start of the campaign, but slowly the crackdown on corruption in the private sector and foreign companies has been stepped up. In 2014, a major British pharmaceutical company was fined half a billion dollars for bribing doctors and hospitals to promote its products. This policy and the crackdown on corruption will continue, as President Xi Jinping said after the 20th Party Congress report that he will continue to pursue and root out corruption in China.

What are the different types of trade corruption in China?

Passive bribery, extortion and embezzlement by a company employee

The following conduct is punishable:

-taking unlawful possession of company money,

-Unlawful acceptance of money or property in exchange for favours.

Penalties for accepting bribes range from three years' imprisonment to a fixed term for "relatively large" amounts. In serious circumstances, up to 10 years' imprisonment can be imposed, while "particularly large" offences can carry a life sentence. All penalties include a fine.

Bribery of a company employee

Article 164 of the Chinese Criminal Code states that it is illegal to give money or property to a company employee and is punishable by up to three years' imprisonment, and in some cases up to 10 years' imprisonment, depending on the offence.

Bribery by a company

In the case of a company bribing an employee, Article 164 of the Chinese Criminal Code stipulates that the company and the person(s) directly committing the offence may be fined and imprisoned for a fixed term. Even if the activity does not result in a criminal offence, the company may still be held liable and fined between 10,000 and 200,000 yuan.

How can I prevent corruption in my company?

Of course, there are steps and procedures that need to be put in place in a Chinese company to reduce the risk of corruption among employees. Examples include:

-A clear policy on reimbursement 

Employees should know what types of expenses are reimbursable and how the process works. Reimbursement strategies can help identify suspicious behaviour such as corruption or fraud. Details should be included in the staff handbook so that all employees have access to it.

-Corporate seal management

As they have a very strong legal basis in China, company seals can easily be misused by employees or third parties by signing contracts, permits, etc. without the company's knowledge. In addition, it is advisable to distribute the responsibility for the management of company seals (not giving too much power to one person). In foreign companies, the legal representative usually manages the seal, which makes it difficult for the company to maintain its independence as to how the seal is used.

What can I do as a company if the worst happens?

What to do depends on the seriousness of the infringement. However, there are several things and steps that a Chinese company should be aware of. An independent investigation should be carried out by an internal audit/compliance team or by a trusted external third party. Depending on the outcome, several types of action are possible:

-Persuading the employee to resign,

-Termination by the employer for the reasons involved (e.g. breach of contract, code of conduct, etc.),

-terminate the contracts of the suppliers concerned,

-Implement crisis management once the situation has been made public.

The consequences of non-compliance

In preventing corruption, it is essential for Chinese companies to build up their own defence mechanisms and learn how to deal with these circumstances when any form of corruption occurs. Bribery committed by an employee is considered as the company's own act and therefore subject to civil and criminal liability. An exception is when the employee's conduct does not promote competitive advantage or business opportunities.

If government agencies are involved in the investigation, Chinese companies must cooperate and provide the requested information. Concealment or obstruction can lead to more severe penalties (such as higher fines and penalties for those involved).

 On the other hand, active cooperation can reduce the severity of the punishment or even eliminate it altogether under Chinese criminal code sections. Chinese companies are advised to focus on communication and support among all stakeholders to fully cooperate with the authorities during the investigation process.

Our useful advice

All in all, no one wants to find evidence of corruption in their own Chinese company. If it does happen, you need to know what the next steps are. Putting in place a detailed compliance system from the start is a good foundation and a significant step towards preventing corruption. Understanding and implementing the legal framework of Chinese law within the company and communicating this to employees is essential. It makes sense to employ an expert to oversee and ensure the company's compliance, with significant knowledge of the Chinese legal system, language and culture."

If you are looking to expand your company in China, contact Dr György Zalavári, lawyer at Ecovis Hungary Legal's international contact.

Dr. György Zalavári LL.M.
Ecovis Zalavári Legal Hungary
Lawyer | Mediator | Corporate Law and Data Protection Specialist
gyorgy.zalavari@ecovis.hu

In every lawyer's life, there are cases that will be remembered at the end of his or her career, because of their complexity, their professional uniqueness or their incredibly long duration. One such case is about to be concluded in our law firm, in which our client, seeking justice, will finally get his money, with interest, after 18 years of litigation and enforcement proceedings.

The case started 18 years ago over an unpaid, high-value invoice from a client who was building a building to order. The client took possession of the building, started using it, but failed to pay the final invoice, not only depriving our client of profits, but also pushing his company to the brink of insolvency due to subcontractor and project-related taxes.

To enforce the claim, our client filed a lawsuit and after all the appeals, finally obtained six court decisions and, after just 7 years, had an enforceable judgment on his claim.

But then he was disappointed, the bailiff was unable to recover his claim because the debtor had transferred the property twice in succession, by sale and trust, to other legal entities in which he had an interest.

We spent the next 8 years trying to prove, and finally succeeding, in various court proceedings the collateral nature of these fraudulent transactions. These proceedings have exhausted, often on several occasions, all the remedies available under the Civil Procedure Code and have been the subject of two judgments in the form of leading decisions.

Our client's chances were greatly enhanced by the fact that, in the second foreclosure case, the courts, on our motion, placed the property under security in foreclosure as an insurance measure to prevent further transfers. This avoided the risk that, following successful court proceedings, the property, which offered the possibility of recovering the debt, would be permanently excluded from enforcement.

Of course, the debtor also objected to all the measures taken by the executor during the enforcement procedure, contested every step of the procedure, made unfounded denunciations, and therefore the enforcement procedure could only be concluded years after the last court decision had become final.

Finally, after 18 years, when the case came of age, our client will receive the principal amount of his unpaid invoice, together with interest and the legal costs awarded by the courts. Unfortunately, in this case, too, we suffered a loss due to the practice of the courts in winning cases where, on several occasions, instead of the market, actual legal representation fees, the courts in charge of the case calculated lower legal costs based on an unknown calculation, and therefore, despite successful legal representation, the bailiff was able to recover less than the market, actual fees for our client in this case.

The debt recovery, which turned out to be a long procession, turned out to be fortunate for our client, thanks to the fact that, unlike in many other cases, the debtor did not manage to remove the assets securing the claim during the enforcement of the legitimate claim due to the attachment.

Dr. György Zalavári LL.M.
Ecovis Zalavári Legal Hungary
Lawyer | Mediator | Corporate Law and Data Protection Specialist
gyorgy.zalavari@ecovis.hu

The answer is simple: yes, you can. Although the Hungarian Civil Code has allowed this possibility for many years, in practice we find that this solution is more often used in the structures of foreign companies.

According to Hungarian law, it is possible for a company to have a legal entity as its managing director, but in this case the legal entity is also obliged to appoint a natural person to act as managing director on its behalf.   

In relation to this natural person, the legal provisions and restrictions that would otherwise apply to the appointment of a natural person as a managing director should also be examined.

In the case of Hungarian companies with a foreign parent company, it also happens that the managing director of the foreign company is another company, and the managing director of this other company is also another company.In such a case, not only the company certificate of the foreign parent company but also the company certificate of the company of the managing director of the foreign parent company must be submitted in the Hungarian company procedure when the Hungarian company is established. 

This is necessary because the application for company registration must be accompanied by the document from which the right to represent the foreign member can be established, and this also applies to the other company representing the foreign company.

 Although this document is not listed as a mandatory attachment in the Act on Company Procedure, it is a requirement that can be deduced from the general rules. 

Based on the practical knowledge of the lawyer Dr. György Zalavári, the author of this article, it is important to note that the prosecutor's office investigating the proceedings of the commercial court will pay attention to this element and, in case of its absence, will bring an action against the registration order even if the commercial judge has decided on the registration of the company without it.

However, it can create an unpleasant situation in the life of the company if bankruptcy or liquidation proceedings are initiated against the other company representing it, because it is then recommended to take immediate action to change the company's representation. Otherwise, it may even happen that the bankruptcy trustee or liquidator of the other company becomes the natural person entitled to act on behalf of your company. 

Therefore, if another company is the managing director of our company, it is important to keep a close eye on its legal status and operation and, if necessary, to take swift and timely action to change the representation.

Dr. György Zalavári LL.M.
Ecovis Zalavári Legal Hungary
Lawyer | Mediator | Corporate Law and Data Protection Specialist
gyorgy.zalavari@ecovis.hu

The acceleration of company registration procedures has reduced the importance of the pre-incorporation phase, but it is a necessary stage in the life of any company. 

The pre-company is created by the signature of the founders of the memorandum and articles of association and countersigned by a lawyer, and is dissolved by registration in the Trade Register or by the final refusal of an application for registration or the withdrawal of the application for registration.

Although the pre-company is formed as described above, it may not commence commercial activities until the application for registration has been filed with the Commercial Court. 

The tax authority will then establish the tax number for the pre-company, stating that this is not otherwise a necessary condition for carrying out the economic activity, but that care must be taken in the economic activity carried out at this stage in order to ensure that the tax deduction is exercised in a lawful manner. [KGD.2008. 176] If, however, the tax authority refuses to issue a tax number, the founders are jointly and severally liable for the tax obligations of the pre-company. [Art. 22]

The pre-corporate nature of the company must be indicated in the company's documents and declarations; failing this, a declaration made by the pre-corporate company is, if the company is not registered, a declaration made jointly by the founders.

A pre-company is not a separate legal form: it is governed by the rules applicable to the company which it is intended to set up, except that there can be no change in the members except by operation of law, i.e. the shares cannot be transferred; it cannot form or become a member of a company; it cannot be the subject of proceedings to exclude a member; and it cannot be the subject of a transformation, merger, division or dissolution without succession. In the pre-company stage, the articles of association may not be amended, except upon request of the court of registration and the body competent to grant official authorisation, but the Civil Code does not preclude the members of the pre-company from amending the articles of association, with the amendment taking effect on the day following the registration of the company. [BDT2006. 1453.]

The pre-company may therefore conclude contracts after the application for registration, which are considered legal transactions of the company after registration. If, however, the registration of the company is finally refused or the application for registration is withdrawn, the pre-company must cease to exist without delay and the obligations entered into must be met out of the assets made available to the company being formed. 

The founders shall be jointly and severally liable to third parties for any claims that cannot be settled. If, in the company being formed, the liability of the member for the obligations of the company has been limited and there remain, despite the member's liability, unpaid debts, the directors of the company being formed shall be jointly and severally liable to third parties for such debts.

Dr. György Zalavári LL.M.
Ecovis Zalavári Legal Hungary
Lawyer | Mediator | Corporate Law and Data Protection Specialist
gyorgy.zalavari@ecovis.hu

Since the GDPR came into force, the concept of data protection has become part of our daily lives, and the very first step in contacting almost any service provider is to give consent to the processing of our data.

 However, data protection is not only crucial in the life of a company, but also in the life of a condominium, since in Hungary, condominiums are mainly owned by natural persons. It is important to know that the provisions on data protection do not apply to the data of companies, as this public information is available to anyone, and the rules on business confidentiality may be of more interest in relation to it.

What personal data processing is involved in a condominium? 

Obviously, the natural identification data of private owners, which are available to all other owners in the deed of association, are certainly personal data that need to be protected. This also includes the contact details that owners use to communicate with each other by telephone or email, as this is information that is not known to third parties and that must be protected. 

In addition to these data, the common representative of the condominium also has the bank account details of the co-owners, which are nowadays also considered as highly sensitive information.

Many condominiums have cameras in common areas, stairwells or in the gardens of the condominium to ensure the security of property and persons. The use of cameras is a major privacy issue, and it is essential that condominium owners establish appropriate use and policies before installing such equipment on their property.

But what do co-owners need to do to comply with the relevant data protection rules?

Dr. György Zalavári, a data protection lawyer, points out that the condominium's privacy documentation must be approved by the general assembly and an extract of the documentation, with the essential information on data management, must be placed in the condominium in such a way that it is available to everyone upon entering the property.

It is not excluded that a condominium with a particularly large number of sub-units and thus a significant number of owners may even have to elect a data protection officer by law - this is a requirement in the case of large-scale processing of personal data.

If you have any questions regarding the data management of your condominium, please contact our data protection lawyer, Dr. György Zalavári, who will be happy to assist you.

Dr. György Zalavári LL.M.
Ecovis Zalavári Legal Hungary
Lawyer | Mediator | Corporate Law and Data Protection Specialist
gyorgy.zalavari@ecovis.hu

In the case of a gift, the donor transfers the ownership of an object to the donee free of charge, with the possibility of reclaiming it under certain circumstances.

One of the legal bases for reclaiming a gift is if the donor needs it for his/her subsistence. It is important to note that only the gift still existing can be recovered and only if its return does not endanger the subsistence of the donee. The donee is not obliged to return the gift even if the donor adequately provides for the donor's subsistence by means of an annuity or maintenance in kind.

The gift may also be recovered for a serious infringement committed by the donee or a relative living with the donee at the expense of the donor or a close relative. In addition to the above, it is also possible to claim not only the existing gift, but also the value of the value of the gift that has been replaced. 

A serious breach of a criminal offence or a breach of a legal obligation is considered to be a serious breach, provided that a final court or administrative decision is not a prerequisite for the claim to be enforceable, but the mere deterioration of the relationship between the parties or the lack of respect for the donor is not sufficient.

 The gift cannot be recovered if the gift or the value substituted for it is no longer present at the time the infringement was committed.

Finally, the donor can also claim the gift back if he or she has subsequently made the gift on the basis of a presumption that has been permanently frustrated, without which the gift would not have been made. Three conditions must be considered in this context: (i) the transaction was based on a presumption; (ii) without the presumption the transaction would not have been concluded; (iii) the presumption was subsequently permanently frustrated. In the examination, the circumstances surrounding the gift must be carefully weighed, for example, 'the relationship which existed between the donor and the donee before the gift was made is of great importance; the value of the object of the gift must also be examined, and in connection with this whether the gift is so significant that it may be reasonably inferred that the donor was in fact induced to make the gift by the presumption which he had put forward' [PK. 76]. 

The gift cannot be recovered or the value substituted for the gift cannot be claimed if the failure of the assumption on which the gift was based was caused by the donor's wrongful conduct.

The gift can never be reclaimed at the normal rate, but it can never be reclaimed even if the gift-giver has forgiven the offence. Forgiveness or waiver of reclaiming is when the gift-giver does not reclaim the gift after a long period of time without good cause.

Dr. György Zalavári LL.M.
Ecovis Zalavári Legal Hungary
Lawyer | Mediator | Corporate Law and Data Protection Specialist
gyorgy.zalavari@ecovis.hu

Previously, access to the case file was only possible for litigants in person, in the proceedings before the court, at the court's administrative office, during office hours.

Today, however, it is possible to consult the documents in a civil case online without having to be present in person.

To do this, you will need a personal government Client Gateway+ access. In the first step, we need to register for a Client Gateway, which we can do at the government offices or document offices of the capital and county government offices and district offices, at the National Tax and Customs Administration's priority customer services, and at Hungary's diplomatic and consular missions abroad, or electronically at the website of the National Tax and Customs Administration, which we can access from 1 January 2016. 

If you are in possession of a valid permanent ID card with an electronic signature issued after 1 January 2016, we can carry out the authentication at ugyfelkapu.gov.hu/regisztracio/regEszemelyi or by using the identification service via video technology at https://magyarorszag.hu/szuf_fooldal under the Client Gate menu.

If you already have a Client Gateway, you can use it to set up the one step more secure Client Gateway+ access, which already requires the user to provide two-factor authentication using a mobile phone authentication program.

This higher level of security can also be achieved with an ID card with an appropriate electronic signature. This enhanced digital protection, which provides access via a more stringent protocol, will result in only the authorised persons having access to our litigation data.

Once these preliminary steps have been taken, we can log on to the court online at https://eakta.birosag.hu/, where our application will be examined in the first instance in relation to our specific case, to see whether we are entitled to access.

Once we have received authorisation from the judge, we can access the legal documents of the case at any time of the day or night through this online Client Access System (CASS). This facility is open not only to the parties to the litigation but also to their lawyers who have registered as legal representatives in the litigation.

It is important to emphasise that for access to any document, it is necessary that the judge in charge classifies the document accordingly, depending on which party is entitled to access it. It may be that a document cannot be opened in the system because the judge presiding over the case has not given us electronic authorisation to do so.

The documents include pleadings of the parties, minutes of hearings, summons and other orders, time limits and internal court orders.

This system will greatly facilitate the work of clients and their legal representatives involved in litigation and will also reduce the workload of the courts, as they will no longer have to visit the courts in person to examine paper files and will no longer have to spend time moving files and supervising access to them, as this will be done automatically through digital control.

However, it is still possible that, on request, the old method of examining paper files in the court's administrative office may be used.

Dr. György Zalavári LL.M.
Ecovis Zalavári Legal Hungary
Lawyer | Mediator | Corporate Law and Data Protection Specialist
gyorgy.zalavari@ecovis.hu

A summons to a pre-suit settlement attempt, especially in simpler disputes, can provide a fast and cost-effective dispute resolution forum for citizens seeking redress.

The procedural rules laid down in the Code of Civil Procedure provide that a party to a dispute may, prior to the commencement of proceedings, request the district court or tribunal which would otherwise have jurisdiction to hear the case to summon the other party to a settlement attempt.

The procedure is considered to be fast, as the court sets a deadline for the attempted settlement within thirty days of receipt of the request.

If the parties manage to reach an agreement, the court will record it in the minutes. A settlement approved by the court has the same effect as a judgment: if one of the parties fails to comply, it can be enforced by execution.

If no agreement is reached by the deadline, the court will issue an order declaring the proceedings ineffective and closing them. 

If the applicant fails to appear, the court shall, at the request of the opposing party who has appeared, order him to pay the costs.

An important procedural rule is that, in cases falling within the jurisdiction of the courts, the parties must also appoint a legal representative when attempting to reach a settlement.

The costs of summoning a lawyer to a settlement attempt are relatively low, as the fee payable is limited to HUF 15 000, but the rules on legal aid apply in the same way as in litigation.

A court summons may also be requested if the parties have previously been in mediation and one of them wishes to have the agreement reached in mediation put into a court settlement. In this procedure, legal representation is no longer mandatory and the court will also set a deadline of thirty days from the date of receipt of the request for an attempt at conciliation.

A settlement attempt summons thus allows the parties to a dispute to discuss their case relatively quickly and at low cost before the court as the main dispute resolution forum and then to reach a settlement with the court's assistance.

Dr. György Zalavári LL.M.
Ecovis Zalavári Legal Hungary
Lawyer | Mediator | Corporate Law and Data Protection Specialist
gyorgy.zalavari@ecovis.hu

In order to ensure the public authenticity of the company register, the Court of Registration enforces the lawful operation of the company by means of the supervision procedure.

 The supervision procedures can be divided into two main categories: ordinary and special supervision procedures. In previous posts, we have dealt with the general rules and, among the special procedures, we have described the procedures for the winding up of a company with an unknown registered office and the procedure for the application of a person registered in the commercial register. We have also previously touched on the special statutory procedures for declaring companies in liquidation and for members of limited and general partnerships. In the present post, we present two special legality supervision procedures which have not yet been discussed and which occur relatively less frequently: the suspension of the operation of a company and the initiation of proceedings before another authority.

The suspension of the operation of a company [Section 85 of the Companies Act] may take place if the Commercial Court becomes officially aware that the company or its member is subject to a financial or property restriction measure based on an international legal obligation or an EU law order.

The background legislation for the suspension is contained in Act LII of 2017 on the Implementation of Financial and Property Restrictive Measures Ordered by the European Union and the UN Security Council. The UNSC may decide to impose restrictive measures in order to maintain or restore international peace and security, which UN member states must implement. In addition to general trade embargoes against individual countries, it is also possible to adopt targeted sanctions, which directly impose sanctions only on persons or entities that may be responsible for acts that threaten international peace and security (so-called "sanctioned persons"). The European Union decides to impose restrictive measures within the framework of its Common Foreign and Security Policy, both with a view to implementing the above-mentioned UNSC resolutions at EU level and autonomously, in order to implement EU foreign policy.

The Commercial Court may initiate proceedings before another authority [Section 86 of the Companies Act] if it deems it necessary to do so in order to protect the interests of members or the rights of creditors due to the unlawful operation of the company or the unlawful activities of its management. Such an initiative is typically taken when the company is carrying out a supervised activity without a licence or in excess of the limits of the licence; for example, the commercial court initiates a supervisory procedure with the National Bank of Hungary as the authority supervising the financial intermediary system if it detects unauthorised financial or investment services activities. 

The authority that initiated the procedure must inform the company court within 30 days whether or not it has initiated the procedure, given that the authority concerned has discretion as to whether or not to initiate the procedure and the company court has no right of appeal if the authority decides not to initiate the procedure. The requested authority is also obliged to subsequently notify the company court of the termination of the proceedings initiated and of the measures taken.

Dr. György Zalavári LL.M.
Ecovis Zalavári Legal Hungary
Lawyer | Mediator | Corporate Law and Data Protection Specialist
gyorgy.zalavari@ecovis.hu

On 1st of January 2022, the new provisions of the Act on the Shaping and Protection of the Built Environment on the Glass Gate entered into force. In this blog article, Dr. György Zalavári, partner lawyer of Ecovis Hungary Legal, summarizes the essential elements of the new law.

The official name of the Glassgate is the Construction Monitoring and Data System; it is an IT solution that is part of the National Construction Monitoring and Data System. It aims to facilitate legal employment in the construction industry, monitor construction contracting and provide the possibility to analyse the data collected. Glassgate records data on entries and exits to and from construction sites and makes this information available to the bodies and registers specified in the legislation.

The Glass Gate records, in real time, the details of employees authorised to be present on the construction site for work purposes and of persons (guests) entering and leaving the site for non-work purposes. Employees and guests may only enter the construction site after using the access control system. Guests may only enter the construction work area after their data has been recorded.

All employers are required to register with the system before using the Glassgate and to update their registration regularly as necessary. Registration is done electronically. The registration must record the quality of the business, the tax number taken directly from the electronic construction logbook, the business or person with whom the person concerned has a contractual relationship for the execution of a construction project, the names of the employees, the tax identification number and the unique identifier of the identification device. The employer is responsible for providing the data.

During the stay on the construction site, the name of the employee, his/her tax identification number, his/her professional activity, the time of entry and exit from the construction site and the tax identification number of the employer shall be recorded. When logging the guest's details, the name is required to be the identification of the identity document, the date of entry and exit and the purpose of entry.

In order to protect personal data, the operator shall process the entry and exit data to and from the Glassdoor using encryption procedures and provide the authorised bodies with an unencryption key. Only the state tax authority and the employment supervisory authority are entitled to access the data concerning the employee for the purposes and only to the extent necessary for the purposes. Data relating to the stay of the guest, with the exception of personal data, may be accessed only by the State Tax Authority for the purposes of verifying the lawfulness of employment, checking tax and contribution obligations and analysing construction data. The building control authority is entitled to access the data stored in the Glasshouse without disclosing personal data. The National Construction Monitoring and Data System automatically transmits the attendance data of the employees to the e-Construction Logbook and automatically takes the company's tax number from the Construction Logbook.

The obligations concerning the use of the Glass Gate System are monitored by the authority. The employer shall be responsible for the legality of the stay of guests on the construction site and for the correct use of the Glass Gate System. This responsibility shall be discharged if the employee is unable to use the Glass Door properly due to the actions or omissions of the main contractor or if the proper use is prevented by a malfunction or other extraordinary event. The general contractor shall be liable for any omissions or infringements attributable to him during the use of the Glass Door.

According to the justification of the law, the installation of the Glass Gate will facilitate physical, on-site inspections under the General Administrative Procedure, reduce administrative burdens and make it easier to establish whether the presence of an employee or other person on the territory is lawful and whether the company is complying with labour rules. The Glassdoor system facilitates tax audits of companies' tax obligations in relation to employment.

The Glass Gates Act will apply to construction works for which the public procurement procedure was launched after 31 December 2021 and where a legal penalty for non-compliance cannot be imposed and established until 1 July 2022.

Dr. György Zalavári LL.M.
Ecovis Zalavári Legal Hungary
Lawyer | Mediator | Corporate Law and Data Protection Specialist
gyorgy.zalavari@ecovis.hu

Act XXV of 2023 on Complaints, Whistleblowing of Public Interest and the Rules for Reporting Abuse (hereinafter the Complaints Act) and the Whistleblowing Directive (EU) 2019/1937 of the European Parliament and of the Council require that companies with more than 50 employees and those subject to Article 1(1) and (1a) of Act LIII of 2017 on the Prevention and Combating of Money Laundering and Terrorist Financing must operate an abuse reporting protection system.

The latter category includes, inter alia, accountants, auditors, tax advisors, tax consultants, lawyers, law firms and head office service providers.

Dr. György Zalavári, attorney-at-law, points out that the above-mentioned companies must also inform employees and their service partners in a clear and easily accessible manner about the availability and functioning of their internal whistleblowing system and the procedure for reporting abuse, in accordance with the Complaints Act.

In previous articles, we have discussed in detail who should operate the internal whistleblowing system and how. This article will look at what issues and suspected wrongdoing can be covered by it.

The Complaints Act is a laconic generalisation that any information about illegal or suspected illegal acts or omissions or other misconduct can be reported to the internal whistleblowing system.

It is essential that, in order to ensure the proper use of the system, businesses provide employees with detailed information and explanations, in a verifiable manner, as to the specific cases in which complaints and reports can be made in addition to the protection afforded to the whistleblower, in the context of the seemingly general wording of the Complaints Act.

The following non-exhaustive list of possible topics for notifications will help you to fulfil this obligation:

- criminal offences (corruption, fraud, embezzlement, unauthorised financial activity, money laundering, etc.)

-fraud, corruption, financial fraud, financial irregularities, etc,

-abuses in public procurement procedures,

-insider dealing or other illegal influence on the functioning of the market,

-breaches of consumer protection rules

-breaches of any rules of conduct protecting the public interest or overriding private interests,

-violation of the employer's internal rules,

-discriminatory conduct in relation to a candidate for a position, in violation of the principle of equal rights or equal treatment,

-breach of labour law, harassment,

-violation of human rights, equal opportunities or equal treatment,

-breach of health and safety obligations at work,

-pollution of the environment, breaches of environmental standards,

-breaches of international sanctions standards,

-data protection incidents, misuse of personal data

The above list is, of course, far from exhaustive, since the concise wording of the Act is precisely intended to allow complaints to be made in the event of any unlawfulness, and the Complaints Act does not define exclusively applicable subjects for this purpose.

Dr. György Zalavári LL.M.
Ecovis Zalavári Legal Hungary
Lawyer | Mediator | Corporate Law and Data Protection Specialist
gyorgy.zalavari@ecovis.hu

In the context of the recently issued Act XC of 2023 on the General Rules for the Entry and Residence of Third-Country Nationals, Dr. György Zalavári, attorney-at-law, has already analysed the conditions of the visitor investor visa in his previous blog post.

In this post, we will take a look at the most important conditions of the visiting investor residence permit.

A guest investor residence permit is a residence permit which entitles the holder to reside in Hungary and to pursue activities for consideration in accordance with the law, either independently or as a manager of a company, cooperative or other legal entity established for gainful purposes.

A family member of a third-country national who holds a residence permit for a foreign investor may enter and reside in Hungary, as defined by law.

A residence permit for the purpose of family reunification issued to the holder of a residence permit for the purpose of a visiting investor and the related residence permit for the purpose of family reunification entitle the holder to work for or under the direction of another person on the basis of his/her employment relationship for remuneration, and the third-country national is entitled to work in Hungary without any restriction.

A third-country national may be granted a residence permit as a guest investor,

a) whose entry and residence in Hungary is in the interest of the national economy in view of his/her investment in Hungary,

b) who fulfils the following conditions:

- holds a valid travel document,

- has a valid travel permit for the return or onward journey,

- he/she has a valid document proving the purpose of his/her entry and stay,

- has an accommodation or residence in Hungary,

- is not subject to expulsion or prohibition of entry and residence, or if his/her entry or residence does not endanger public policy, public security, national security or public health interests of Hungary,

- is not subject to an SIS alert,

and

c) who holds a valid visitor investor visa, or who is legally residing in Hungary as a third-country national without a visitor investor visa, and who can prove that they meet the following conditions:

- whose entry and residence in Hungary is in the interest of the national economy in view of their investment in Hungary,

- who declares that he has or intends to have at least one of the necessary investments,

- who certifies that he/she has an amount of money corresponding to at least one of the required investments, of legal origin, which must be available or transferable in Hungary,

- who submits a written commitment to undertake to make at least one of the necessary investments within three months of entering the territory of Hungary on the basis of a visitor investor visa.

For the purposes of the Act, the following investments shall be considered to be of national economic interest:

-the acquisition of units of at least EUR 250 000 issued by a real estate fund registered by the National Bank of Hungary,

-the acquisition of ownership of a residential property with a value of at least EUR 500 000, located in the geographical territory of Hungary and registered in the land register according to its parcel number, free of legal title, encumbrances and claims, not including the prohibition of alienation and encumbrance required by law, or

-making a financial donation of at least EUR 1 000 000 to a higher education institution maintained by a public trust with a public-service mission for the purpose of supporting educational, scientific research or artistic creation.

-The maximum period of validity of the residence permit for visiting investors is ten years, renewable for a maximum period of ten years for the same purpose only. The period of validity of a residence permit for visiting investors may exceed the period of validity of the applicant's travel document.

-The third-country national, when applying for the issue of a residence permit for a foreign investor, shall, within three months of his/her entry into the territory of Hungary, provide proof of having fulfilled the obligatory and committed investment via the electronic platform for the opening of aliens' files.

A third-country national who chooses to invest in a real estate fund must have held an investment certificate issued by a real estate fund complying with the legislation for at least five years.

With regard to the expected real estate investment, at the time of acquisition of ownership of the residential property by the third-country national, a prohibition on alienation and encumbrance of the residential property shall be registered in the Land Register for a period of 5 years from the date of conclusion of the sales contract and the property shall be owned for a period of 5 years only by (i) the third-country national or (ii) the third-country national and one or more family members of the third-country national who has applied for the residence permit.

Dr. György Zalavári LL.M.
Ecovis Zalavári Legal Hungary
Lawyer | Mediator | Corporate Law and Data Protection Specialist
gyorgy.zalavari@ecovis.hu