Friday, October 26, 2018, 00:42
The Hungarian Parliament has adopted new rules on the absolute acreage advance assurance (“REIT”), acknowledging the enactment of added such entities. Between 2011 and 2017, the abstraction of REITs did not alive up to expectations in Hungary, so the legislators accept absitively to affluence some rules that seemed too arduous for investors in the Hungarian market.
In 2017, the administrator set alternating added favorable taxation acceding and conditions, and additionally simpler rules of foundation and operation (for example, the abridgement of the minimum registered basic claim from HUF 10 billion to HUF 5 billion). This change action has now connected with (i) the description of the activities of a REIT, (ii) the addendum of the ambit of the issuable classes of shares, and (iii) the alignment of the rules of the REIT Act on the allotment pay-out with the Hungarian Civil Code.
Based on the REIT Act, REITs in Hungary may be set up as a appropriate anatomy of association listed on the banal barter (i.e. accessible companies bound by shares). REITS accept to accommodated assorted appropriate requirements and they charge to be registered with the accordant anthology of the Hungarian Tax and Custom Administration (“HTCA”). As allotment of the appropriate requirements, the companies may alone be affianced in activities that authorize as accustomed activities (e.g. activities of captivation companies, acquirement and auction of own absolute estate, acreage management). The administrator has now antiseptic that REITs and their SPVs or subsidiaries may appoint in absolute acreage development activities, however, they may not accompany absolute architecture activities (i.e. a REIT is acceptable to access into a architecture acceding with a contractor, but not as a contractor). This change enables REITs to participate in the alignment of absolute acreage development projects.
Before the contempo amendment, REITs were accustomed to affair alone accustomed shares and agent shares. From now on, REITs may additionally affair alternative shares, except for allotment alternative shares and voting alternative shares with veto right. Allotment alternative shares may not be issued by REITs anymore, and the beforehand achievability to affair such agent shares is additionally no best available. However, the alteration provides an befalling to affair voting alternative shares (without veto right), ensuring the capital investors’ ascendancy over the aggregation and accretion the chargeless float of the shares.
The above accoutrement set a austere obligation for REITs: a REIT had to pay out a dividend, agnate to at atomic the accepted allotment (as authentic by the REIT Act) aural 15 trading canicule afterward the approval of the banking statements. If the funds accessible for allotment administration were lower than the accepted bulk of the dividend, at atomic 90% of the disposable funds charge accept been paid out to the investors. This aphorism bound the shareholders’ abandon of best and additionally aseptic investors from the enactment of a REIT.
The alteration takes into application the shareholders’ abandon of best set out in the Hungarian Civil Code. The new rules still accommodate that the administration charge accomplish a angle about the accepted allotment but the shareholders’ affair may adjudge not to pay a dividend, or to pay a altered bulk of dividend. Besides that, the alteration aligns the REIT Act with the Hungarian Civil Code in affiliation to the allotment pay-out, as it additionally provides an befalling to REITs to anatomy a assets for new projects or transactions. In accordance with bazaar practice, the borderline for the allotment pay-out afflicted to 30 canicule from the approval of the anniversary banking address by the shareholders’ meeting.
The abstraction of the REIT has not become boundless to date because of the crushing requirements. After the alteration in 2017, a cardinal of absolute acreage companies accept appear their ambition to be adapted into a REIT. The HTCA has already registered Graphisoft Park as a REIT, and additionally Budapesti Ingatlan Hasznosítási és Fejlesztési Nyrt. and Appeninn Vagyonkezelő Captivation Nyrt. as a adapted absolute acreage advance basic company. The enactment of added new REITs is accepted to chase the accelerating changes of the REIT Act.
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