Economy
PwC Newsflash - Hungary's new Lobbying Act
The new Lobbying Act (Act XLIX of 2006 on Lobbying) will take effect on 1 September 2006. It aims to regulate longstanding issues associated with the impact of interest group activities on public governance. The drafting of the Act received widespread attention, highlighting the importance of the otherwise short document. The stated objective of the Act is to strengthen public confidence in the executive and legislative branches of government by making the activities of interest groups transparent.
The Act will apply to contract lobbying and will not cover non-profit advocacy groups or negotiation mechanisms that are regulated by other legislation.
Under the definition of the Lobbying Act, lobbying is an activity performed on a for-profit basis in order to influence government policy or legislation. Government policy and legislation includes decisions made in matters that fall within the jurisdiction of the Hungarian Parliament, the Hungarian government, local authorities, public agencies and public officials, and the agencies and persons under their management.
Under the Act, lobbying can be carried out by natural persons, legal entities and unincorporated entities that are listed in the relevant register kept by the lobby registration office.
A person can be entered in the register of lobbyists if he/she:
• has legal capacity to act;
• does not have a criminal record;
• holds a degree from an institution of higher education; and
• has not been removed from the register.
A legal entity or unincorporated entity can be entered in the register of lobbying organisations if it:
• has been duly established in accordance with the rules applicable to it;
• has a member or employee who is a registered lobbyist;
• has filed all the necessary information together with its registration application;
• has not been removed from the register.
Persons who work for government or other public administration agencies, and officials of political parties, public organisations, public foundations or companies with majority state ownership may not be acting members of a lobbying organisation, contracted to a lobbying organisation or accept any benefits from such an organisation. If a close relative of such a person is engaged in lobbying activities, the relevant government or public administration agency must be informed.
Lobbyists will be deregistered if they violate the regulations of the Lobbying Act.
Lobbyists will be required to disclose the name and objective of their client to decision-makers, and inform their client about the legal constraints applicable to them. Lobbyists may not use insider information or represent competing interests, and will be required to reject an engagement if the client's objectives are unethical or illegal. Lobbyists may not use dishonest means to acquire information.
Lobbyists may not provide any benefits to public officials, either directly or as an intermediary. The definition of benefit does not include corporate entertainment worth no more than 10% of the minimum wage as in effect from time to time, which can be provided once in connection with an engagement. Lobbyists may not lobby agencies where a close relative is in a senior position.
Lobbyists may request an opportunity to make a presentation on their views to decision-makers, such as a Parliamentary committee or a committee of a local authority. Granting such a request can be mandatory under certain circumstances. Lobbyists may also request personal meetings with legislators and other officials, but this will be at the discretion of the legislator or official. Public officials will be required to prepare a memo of their contact with a lobbyist.
Lobbyists will be required to file detailed quarterly reports on their activities with the lobby registration office. The report will have to list the details of the lobbyist's clients, the government agencies contacted, the decisions involved and the objectives of the lobbyist's activities.
Government agencies will also be required to report their contact with lobbyists to the lobby registration office on a quarterly basis.
Persons or entities that carry out lobbying activities without being duly registered as lobbyists are subject to a fine of up to HUF 10 million. The cap applies to a single violation, and multiple violations will be subject to multiple fines.
A person or entity who is fined may not be entered in the lobbyist register for one year, while repeat offenders will not be registered for two years.
The national government is responsible for drafting the regulations concerning the lobbyist registration office, but these regulations have yet to be prepared.
The Act will apply to contract lobbying and will not cover non-profit advocacy groups or negotiation mechanisms that are regulated by other legislation.
Under the definition of the Lobbying Act, lobbying is an activity performed on a for-profit basis in order to influence government policy or legislation. Government policy and legislation includes decisions made in matters that fall within the jurisdiction of the Hungarian Parliament, the Hungarian government, local authorities, public agencies and public officials, and the agencies and persons under their management.
Under the Act, lobbying can be carried out by natural persons, legal entities and unincorporated entities that are listed in the relevant register kept by the lobby registration office.
A person can be entered in the register of lobbyists if he/she:
• has legal capacity to act;
• does not have a criminal record;
• holds a degree from an institution of higher education; and
• has not been removed from the register.
A legal entity or unincorporated entity can be entered in the register of lobbying organisations if it:
• has been duly established in accordance with the rules applicable to it;
• has a member or employee who is a registered lobbyist;
• has filed all the necessary information together with its registration application;
• has not been removed from the register.
Persons who work for government or other public administration agencies, and officials of political parties, public organisations, public foundations or companies with majority state ownership may not be acting members of a lobbying organisation, contracted to a lobbying organisation or accept any benefits from such an organisation. If a close relative of such a person is engaged in lobbying activities, the relevant government or public administration agency must be informed.
Lobbyists will be deregistered if they violate the regulations of the Lobbying Act.
Lobbyists will be required to disclose the name and objective of their client to decision-makers, and inform their client about the legal constraints applicable to them. Lobbyists may not use insider information or represent competing interests, and will be required to reject an engagement if the client's objectives are unethical or illegal. Lobbyists may not use dishonest means to acquire information.
Lobbyists may not provide any benefits to public officials, either directly or as an intermediary. The definition of benefit does not include corporate entertainment worth no more than 10% of the minimum wage as in effect from time to time, which can be provided once in connection with an engagement. Lobbyists may not lobby agencies where a close relative is in a senior position.
Lobbyists may request an opportunity to make a presentation on their views to decision-makers, such as a Parliamentary committee or a committee of a local authority. Granting such a request can be mandatory under certain circumstances. Lobbyists may also request personal meetings with legislators and other officials, but this will be at the discretion of the legislator or official. Public officials will be required to prepare a memo of their contact with a lobbyist.
Lobbyists will be required to file detailed quarterly reports on their activities with the lobby registration office. The report will have to list the details of the lobbyist's clients, the government agencies contacted, the decisions involved and the objectives of the lobbyist's activities.
Government agencies will also be required to report their contact with lobbyists to the lobby registration office on a quarterly basis.
Persons or entities that carry out lobbying activities without being duly registered as lobbyists are subject to a fine of up to HUF 10 million. The cap applies to a single violation, and multiple violations will be subject to multiple fines.
A person or entity who is fined may not be entered in the lobbyist register for one year, while repeat offenders will not be registered for two years.
The national government is responsible for drafting the regulations concerning the lobbyist registration office, but these regulations have yet to be prepared.
