Hungary: problems with the security trustee regulation?
The fact that the Hungarian legal system has now at last also recognised the concept of trust has been widely praised. The new Hungarian Civil Code, which entered into force on 15 March 2014, regulates the trust generally and also provides specific rules to the security trustee structure.
In international financings, if a syndicate of banks provides funds to the debtor, it is usually the security trustee that, being a member of the syndicate, holds in trust the security interest(s) established over the assets of the debtor on behalf of the other syndicate members.
At first glance, Hungary’s security trustee concept appears to function very similarly to the widely known concept that is generally utilised in international financings. Undoubtedly, such similarity was also intended to be achieved. Pursuant to the new Hungarian Civil Code, the security holders may appoint in the security document or otherwise in writing any person or entity, either among themselves or an unrelated third party, as security trustee. Such appointment must be registered with the registry in which the security interest is registered. Accordingly, only the trustee will be registered as the holder of the security interest…
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As of 13 August 2014, the amendments and supplements to the Insolvency Act are in force, published in the Official Gazette of RS no. 83/2014.
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