Instruction on indicating the beneficial owner

Pursuant to Subpoint (kb) of the Point (k) of Section 62 (1) of the Public Procurement Act (PPA), bidders shall declare the beneficial owner in public procurement procedures in Hungary.

Subpoint (kb) of the Point (k) of Section 62 (1) of the PPA specifies the reason for exclusion as follows, in the presence of which the bidder’s tender shall be declared void.

“Companies which are not listed on any official stock exchange, which cannot identify their actual owner pursuant to Article 3 (38) (a), (b) and (d) of the Act LIII of 2017 on the Prevention and Combating of Money Laundering and Terrorist Financing”

Article 3 Section 38 of the referenced money laundering law (hereinafter: MLL) originally specifies the concept of the beneficial owner from point (a) to (f), though only points (a), (b) and (d) shall be relevant in public procurement procedures:

• (a) any natural person who owns or controls at least twenty-five per cent of the shares or voting rights in a legal person or an unincorporated organization directly or - by way of the means defined in Subsection (4) of Section 8:2 of Act V of 2013 on the Civil Code (hereinafter referred to as “Civil Code”) - indirectly, or who is able to exercise effective control over the legal person or unincorporated organization via other means, if that legal person or unincorporated organization is not listed on a regulated market and is subject to disclosure requirements consistent with Community legislation or subject to equivalent international standards,
• (b) any natural person who has a dominant influence in a legal person or unincorporated business association as defined in Subsection (2) of Section 8:2 of the Civil Code,
• ...
• (d) in the case of foundations:
  • (da) where the future beneficiaries have already been determined, the natural person who is the beneficiary of twenty-five per cent or more of the property of the foundation,
  • (db) where the individuals that benefit from the foundation have yet to be determined, the natural person in whose main interest the foundation is set up or operates, or
  • (dc) the natural person who exercises control in the management of the foundation or exercises control over at least twenty-five per cent of the property of a foundation, and/or who is authorized to represent the foundation,

According to the above mentioned, it can be said that a bidder in a public procurement procedure may declare not to have a beneficial owner pursuant to Points (a), (b) and (d) of Section 38 of Article 3 of the MLL (i.e. in default of such sort of an “actual” beneficial owner, no senior executive shall be entered as beneficial owner, but the proper action is that the bidder declares not having a beneficial owner according to Subpoints (a), (b) and (d) of Point 38 of Section 3 of the MLL.

In this regard let us point out that declaration “having no actual beneficial owner according to Points (a), (b) or (d) of Section 38 of Article 3 of the MLL” is conceptually not at all identical to declaration “cannot name actual beneficial owner according to Points (a), (b) or (d) of Section 38 of Article 3 of the MLL”. In this latter case, the bidder’s tender is void, in opposition to the first case that is a entirely legitimate, standard and valid declaration in the public procurement procedure.