Foreign Investment in Hungary

Foundation of New Companies or Acquisition of Shares in Existing Foreign Investment in Hungary The Hungarian Act on Foreign Investment specifies that investments by non-residents enjoy full legal protection and security. Foundation of New Companies or Acquisition of Shares in Existing Companies by Foreign Investors Foreign individuals and legal entities may found new companies or acquire shares in existing companies in Hungary. Wholly or partly owned foreign companies can operate in all business areas. Where the chosen activity requires a permit (e.g., for banking activity) the same rules apply regardless of whether the owners of the entity are residents in Hungary or abroad.

Four types of business associations may be established under the Companies Act Unlimited Partnership (Közkereseti Társaság – Kkt.) Limited Partnership (Betéti Társaság – Bt.) Limited Liability Company (Korlátolt Felelősségű Társaság – Kft.) Company Limited by Shares (Részvénytársaság – Rt.); In practice, most foreign investors are likely to form or take a financial interest in a limited liability company (Kft.) a company limited by shares (Rt.) These legal entity forms correspond to the company forms most commonly used by businesses in the European Union.

Limited Liability Company (Kft Limited Liability Company (Kft.) The Limited Liability Company is a very popular form of company for small or medium-sized businesses in Europe. The Hungarian Kft. form is very close to the German and Austrian GmbH (Gesellschaft mit beschränkter Haftung) and similar to the British Ltd (private company limited by shares). It is possible to establish a single-owner Kft. The Kft. form is the most common company form for wholly-owned subsidiaries. Company Limited by Shares (Rt.) A company limited by shares is the other popular corporate form for medium-sized or larger companies all over Europe. The Hungarian Rt. is very similar in form to the German and Austrian AG (Aktiengesellschaft) and similar to the British PLC (Public Limited Company).

Property Investments by Foreign Investors Possible Forms of Investment Working Permission As a general rule foreign persons can usually be employed in Hungary only if they hold a valid work permit and stay visa or residence permit. Property Investments by Foreign Investors Interest in property investment in Hungary has grown sharply in recent years. Possible Forms of Investment Use of a Hungarian subsidiary of a foreign company. Use of a Hungarian branch office of a foreign company. Direct investment by foreign individuals.

Three examples of international co-operation Spar Commerce Audi Manufacturing Erste Banking

SPAR in Hungary SPAR Hungary Ltd has actively been involved in the development of retailing and wholesaling in Hungary since 1991. At the end of 2007, SPAR had total retail sales of ?1.13 billion and a market share in this highly competitive market of 10%. Store numbers totalled 204 and included 29 INTERSPAR hypermarkets and 20 large format EUROSPAR supermarkets.

Total selling area Sq Mtrs Average store size Sq Mtrs Key Figures In 2007, SPAR worldwide had retail sales of €27 billion from 13.510 outlets in 33 countries. Figures per country: Country Retail sales 2007 in € 000's Retail store numbers Total selling area Sq Mtrs Average store size Sq Mtrs Austria 4,500,170 1417 993,272 701 Italy 3,931,358 1950 853,291 438 U.K. 3,471,976 2557 365,600 143 S. Africa 2,911,680 772 745,224 965 Ireland 1,278,146 471 121,484 258 Norway 1,266,537 324 169,756 524 Spain 1,242,179 1617 422,934 262 Hungary 1,126,608 204 258,688 1,268 France 930,582 908 230,248 254 Total 27,217,567 13,510 5,659,190 419

Audi in Hungary AUDI HUNGARIA MOTOR Ltd. was established in Győr in 1993. Subsidiary company with 1 million euros of equity capital of AUDI AG. AUDI HUNGARIA MOTOR Ltd. produces almost all the range of AUDI engines. They also make engines for Volkswagen, Seat and Skoda.

Audi in Hungary Audi TT Coupé has been assembled in Győr since 1998. TT Roadster sports cars came out in 1999.

Audi in Hungary Employees: about 5000 They produce more than 1.8 million engines a year, and assemble about 55 thousand vehicles.

Foreign employees in Hungary

Erste Bank ERSTE BANK HUNGARY NYRT. is member of the Erste Bank Group; its mother institution is the Erste Bank Group AG - a well-known name on the Central-European banking market with a 180 years history in Austria. The Austrian Erste Group entered the Hungarian market by purchasing the state-owned Mezőbank in 1997. Since its renaming to Erste Bank Hungary Rt. on 1 October 1998, the bank has provided full-range financial services for its retail and corporate customers.

Erste Bank Facts in Hungary Costumers: 900,000 Branches: 196 ATMs: 388 POS terminals: 1700 Annual turnover: 2,500 billion HUF

Pápa Horváth Attila Prokoly István Tamás Kata Schimmer Renáta Katavics Júlia Léránt Dóra Nagy Zsófia February 2008