Hungary in process of amending its corporate criminal liability regime

Hungary is now reshaping its corporate criminal liability regime after adopting amendments to the Corporate Criminal Code on 11 June 2025 that changed the conditions and framework for criminal law measures for legal entities.

Corporate criminal liability is one of the most dynamically evolving areas of modern criminal law, requiring that balance must be struck between enabling effective action against corporate misconduct and protecting businesses from excessive sanctions or unpredictable enforcement.

Given the complexity of corporate criminal law, the 11 June amendment introduces extensive changes to the existing regime, driven both by international harmonisation obligations and practical needs. Its main objectives are to clarify the rules, provide greater flexibility in actions against legal persons, encourage law enforcement to involve corporate actors in investigations where appropriate, and promote a preventive approach centred on internal control systems and proportionate sanctions.

Below is an overview of the key topics of the comprehensive amendment:

1. Extension of scope and redefinition of subject matter

The amendment begins by clarifying the personal scope of the Corporate Criminal Code. From 2026, foreign corporations may also be subject to criminal sanctions, provided the underlying offence falls within the scope of the Hungarian Criminal Code (e.g. it was committed in Hungary, or by a Hungarian national abroad). This aligns Hungarian law with Directive (EU) 2024/1226, which mandates an effective national legal response to cross-border crime.

Another important innovation is the extension of liability to legal successors and to organisations established after the offence, which have assumed the financial or organisational structure resulting from it.

2. Re-regulation of conditions for applying corporate criminal measures

The amendment replaces the current provisions with a more detailed and interpretive framework. Although officially labelled a "technical" revision, a key change is that the commission of an intentional offence is no longer a prerequisite for applying corporate criminal measures. In theory, sanctions can now be imposed if a corporation benefits financially from an offence or if company resources were used, even if the offence was committed negligently.

Corporate liability may also arise if a company executive “was unaware, through negligence, that a criminal offence was being prepared or committed by a member or employee and failed to act to prevent it.”

Corruption offences are singled out as a basis for corporate sanctions, potentially increasing corporate exposure in cases involving employee misconduct. Since authorities will be obligated to consider extending investigations to corporate entities in each criminal case, a significant rise in proceedings against companies is expected.

Another notable change is that individuals who assume executive or representative roles after the commission of the offence will also be considered representatives for liability purposes, which extends corporate accountability across changes in leadership.

3. Sanctioning system: new principles and considerations

The amendment fundamentally revises the sanctioning framework. Under the new rules, sanctions (e.g. dissolution, restriction of activities, fines) may be imposed independently of establishing the liability of a natural person and can now be applied in separate proceedings rather than merely as ancillary measures.

The amendment also clarifies the criteria that courts must consider when determining penalties. These include: the seriousness and nature of the offence, the presence or absence of internal control systems, cooperation with authorities, damage remediation efforts, and the introduction of preventive measures.

Importantly, sanctions may be waived if they are deemed “no longer necessary for the purpose of the measure,” particularly where other authorities (e.g. tax authorities) have already imposed penalties for the same act.

4. Financial penalties: proportionality to annual turnover

The amendment overhauls how financial penalties are calculated. Fines will be linked to the legal person’s turnover in the financial year preceding the offence. For serious crimes, the penalty may amount to up to 5% of turnover. This seeks to avoid the disconnect between fines and a company’s financial reality, ensuring that penalties are neither excessively lenient nor overly punitive.

5. More flexible activity restrictions and sequestration measures

Under the current law, criminal proceedings can result in broad operational restrictions for a legal entity without clear justification. The amendment refines this by limiting restrictions only to the extent necessary to restore lawful business operations.

It also introduces more precise criteria for asset sequestration. This is a welcome change, as the current system often results in sequestration up to the maximum possible fine, potentially crippling the company’s ability to function.

6. Settlement options: a new path to preventive compliance

A separate chapter is devoted to settlement (akin to a corporate plea bargain). If the legal entity acknowledges its liability and undertakes corrective actions (e.g. compensation, internal reorganisation, a compliance programme, or paying a negotiated fine) the court is bound by the plea agreement and may not impose harsher penalties.

If the corporation’s representative is also under prosecution, their admission of guilt becomes a precondition for the settlement.

7. Retroactive application

If the new rules allow for more lenient measures, they may be applied retroactively. Furthermore, if a notification was made to a court of registration before the amendment’s entry into force, the authorities must review its necessity and revoke related actions if the new legal criteria are no longer met.

8. Concluding remarks: assessment and perspectives

The amendment moves beyond a binary model of liability and adopts a more nuanced legislative approach that reflects corporate realities. It allows for the effective sanctioning of serious misconduct while encouraging responsible corporate behaviour and the implementation of internal controls. It also prevents unjustified exclusion of companies from economic activity due to criminal proceedings.

The introduction of structured settlement procedures and the possibility of plea arrangements are particularly notable, embedding modern criminal policy concepts, such as acknowledgment of wrongdoing and reparative justice, into Hungarian law.

Considering these developments, it would be prudent for businesses, especially larger enterprises, to reevaluate their compliance programmes, risk management systems, and governance structures. Going forward, a culture of preventive compliance may not be only a competitive advantage, but a legal necessity.

For more information on changes to Hungary’s Corporate Criminal Code, contact your CMS client partner or these CMS experts.

The article was co-authored by Martin Kócsó.