Parliament approves bill on strategic companies

Deals

Hungary’s parliament approved a draft resolution classifying gas and electricity firms as strategic companies on Monday night. All parts of the original proposal were approved unanimously. A final vote on “lex MOL” will be held next week.

According to “lex MOL,” the sale of principal assets of a strategically important company will require approval by the highest body of the company, i.e. the owners. In a public purchase bid for a strategic company, the business plan must be submitted to the financial markets authority (PSZÁF) and must also be approved by the highest body of the company making the offer.

Management would be entitled to carry out certain measures, e.g. buy more treasury shares or raise equity, even after learning about a public bid. Such a case would not qualify as a violation of the rule banning such moves saying those could disturb the bid.

If the government happens to have a preference share in the given company, the so-called “breakthrough” rule allowing the company’s anyone acquiring more than 75% of its shares the ability modify the original Articles of Association cannot be applied. Moreover, no company, related firms, or anyone commissioned by the company would be allowed to make a new public bid within six months after the closure of a public bid.

“Although Parliament’s decision was widely expected in Hungary, the news might prompt few international investors to take profits today resulting in a slow-down of the MOL rally,” Péter Tordai of KBC commented. “In our view, OMV and the three allied funds are not enough to put real pressure on the highly resolute government and the management of MOL.” (portfolio.hu)

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