If the parties in a prospective acquisition try to realise the acquisition in the course of an asset deal, certain issues need to be considered. Hungarian law does not recognise the concept of the sale of a business unit (Teilbetrieb) as such. The sale of a business is possible only through a sale of the assets and the transfer of contracts and employees of the business unit.
The transfer of the assets may be realised by an asset sale and purchase agreement. A detailed schedule of the asset transfer must be attached to the agreement. Generally, contracts may be transferred by a contract that combines the assignment of rights and receivables and the assumption of obligations, both of which are regulated in the Hungarian Civil Code. In this regard the contractual parties of the seller must consent to the transfer of contracts.
If the seller owns real properties that will also be transferred to the purchaser, the payment of a 10% real property transfer tax needs to be considered. However, no stamp duty is payable on the documents transferring the assets in Hungary.
Any authorisation granted by state authorities is not transferable to a third person, so the third person (purchaser) must apply for a new licence and meet the criteria required. This issue could be important with respect to the timeframe of the transaction, since the receipt of such approvals might also require a certain amount of time.
Moreover, labour issues need to be taken into account in the course of the prospective asset deal. Hungary has fully implemented the provisions of Council Directive 2001/23/EC of March 12 2001 on the introduction of member state laws safeguarding employees' rights in the transfer of undertakings, businesses or parts of undertakings or businesses. The Hungarian legislator provides for even more stringent provisions than the Council Directive, whereby the seller shall be jointly and severally liable for any liabilities towards the transferred employees relating to the time before the transfer, for one year after the date of transfer. The seller shall be guarantor (Bürge) for all liabilities towards the transferred employee arising from a unilateral termination of employment by the purchaser, based on reasons connected with the employer's operation (restructuring), if the termination is communicated to the employee within one year of the transfer; and for the termination by the employer of a definite term of employment before the expiry of that term, by paying the employee's average salary for the remaining term of employment for a maximum one year.
In the course of the asset deal, the seller and the purchaser are obliged to inform the trade unions or the works council (or workers' representative), or – if neither exist – the committee of employees, about the key facts of the deal, such as the reasons for the transfer, and its legal, economic and social consequences. Additionally to this obligation, the seller and purchaser must initiate a consultation with the bodies representing employees regarding any other planned measures affecting employees. Lastly, the labour conditions that the purchaser provides for the transferred employees must be in line with collective bargaining agreements, unless the bargaining agreements are more advantageous than those of the seller.