Latest updates

EU Directive 2017/828 – cornerstone of increased shareholder engagement?
  • European Union
  • November 27 2017

EU Directive 2017/828, amending Directive 2007/36/EC as regards the encouragement of long-term shareholder engagement, was recently published. The directive provides several options for member states when transposing the directive into national law. Depending on how the respective national legislature make use of these options, there will be minor or major changes to the national law.

Beneficial Ownership Register to be introduced in Austria
Schoenherr Attorneys at Law
  • Austria
  • September 04 2017

Parliament recently passed a new law on the registration of beneficial owners of Austrian legal entities. After obtaining the necessary approval of the Austrian federal states, the law is expected to enter into force on January 15 2018. In disclosing the relevant information on beneficial owners, the register aims to detect and prevent money laundering, especially with regard to complex corporate structures, holding companies or private foundations and trusts.

Participation rights as alternative investment and equity financing instruments
Schoenherr Attorneys at Law
  • Austria
  • June 05 2017

The typical way to invest in an Austrian company is by way of a capital increase. However, there are formalities with respect to limited liability companies (LLCs) – the most popular legal form in Austria – that sometimes make investing in LLCs unattractive or burdensome. To eliminate the concerns associated with these transactions, Austrian law provides a suitable, but widely unknown, alternative investment instrument: participation rights.

Simplified procedure for foundation of standard LLCs
Schoenherr Attorneys at Law
  • Austria
  • May 29 2017

The Austrian Parliament recently passed an amendment to the law on limited liability companies (LLCs) aimed at simplifying the foundation of a special kind of LLC. The purpose of the changes – and the simplifications associated with them – have been hotly debated.

Further clarification on apparent authority
Schoenherr Attorneys at Law
  • Austria
  • March 20 2017

In a recent decision the Supreme Court held, in line with prior case law, that apparent authority requires the circumstances on which the assumption of authority is based to be induced by the principal, not by the representative. Although this is not new, the verdict has helped to clarify the boundaries of apparent authority. Certain key requirements must be met in order to establish apparent authority and thus allow the counterparty to rely on it.

Boost your start-up with an advisory board – points to consider
Schoenherr Attorneys at Law
  • Austria
  • March 13 2017

Most start-ups are founded by first-time founders directly after graduation, with the founding team typically consisting of no more than two members. Because of this, founders are often unequipped to deal with the business challenges that they will face. Founders thus often make mistakes, especially at the start. Having an advisory board with qualified and trusted members can help a start­-up to transform its potential into successes and create a foundation for sustainable development.

No-assignment clauses in Austrian contracts
Schoenherr Attorneys at Law
  • Austria
  • December 19 2016

The rationale behind no-assignment clauses is that they allow the rights, claims and receivables to remain with the parties that have negotiated and executed the underlying agreement, rather than allowing a counterparty to sell or otherwise transfer its claims to an unrelated party. In order to be effective, a no-assignment clause must have been expressly negotiated and agreed and, with due consideration of all circumstances, must not grossly disadvantage the creditor.

Brexit: consequences for Austrian limited companies
Schoenherr Attorneys at Law
  • Austria
  • September 12 2016

While there is substantial uncertainty surrounding the consequences of Brexit, it can be assumed that it will have far-reaching consequences for limited companies registered on the Austrian Commercial Register. In particular, the freedom of establishment principle will no longer apply to relationships between Austria and the United Kingdom, which will have a significant effect on existing limited companies in Austria.

Civil Code amendment considers special nature of shareholder agreements
Schoenherr Attorneys at Law
  • Austria
  • August 08 2016

The legislature recently responded to criticism regarding the 2014 amendment to the Civil Code by considering the special purpose of shareholder agreements and their qualification as undisclosed partnerships. The latest version of the Civil Code now includes an exemption for undisclosed partnerships. All shareholder agreements may once again contain a waiver of ordinary termination rights in line with common practice and the typical goals of these agreements.

Management and supervisory board liability under new business judgement rule
Schoenherr Attorneys at Law
  • Austria
  • June 13 2016

Modelled on the German Stock Corporation Act, a 2015 reform of the Austrian Criminal Code introduced a business judgement rule into the Austrian Stock Corporation Act and the Limited Liability Companies Act. The rule applies to management and supervisory board members and will change boards' decision-making processes – in particular, for complex, risky, far-reaching, resource-consuming and strategically important matters.

Consequences of Civil Code amendment for termination of shareholder agreements
Schoenherr Attorneys at Law
  • Austria
  • April 18 2016

A recent amendment to the Civil Code will have a dramatic effect on shareholder agreements, as shareholders of a company established for an indefinite term can no longer waive ordinary termination rights. As any party to a civil law partnership can now terminate the partnership, parties should either conclude a termination waiver for a fixed period or conclude the agreement for a fixed period (with renewal options).

Start-ups – common legal issues
Schoenherr Attorneys at Law
  • Austria
  • June 08 2015

Austria recently experienced a significant boom in its start-up sector and has since produced some major international players. That said, starting a business in Austria requires an understanding of the legal system, including common legal risks (eg, founder and shareholder liability), the requirements for founding a limited liability company, adhering to arm's-length principles and establishing exit scenarios.

Agreements on shareholder contributions are not subject to formal requirements
Schoenherr Attorneys at Law
  • Austria
  • March 02 2015

The Supreme Court recently held that agreements between shareholders on voluntary capital contributions to a company may be agreed outside the articles of association and are subject to no formal requirements. The decision ensures that shareholders of stock corporations and limited liability companies have flexibility when agreeing on capital contributions outside the articles of association.

Compliance management systems – Austrian standard and ISO guideline compared
Schoenherr Attorneys at Law
  • Austria
  • January 19 2015

Compliance presents many challenges for organisations. So far, compliance has not met the global standards which provide guidance on the implementation of compliance management systems (CMSs). In 2013 the Austrian Standards Institute released its own CMS standard, which provides guidance on the implementation of CMSs. This update compares the Austrian standard with the 2014 International Standardisation Organisation guideline.

Validity of payment of cash consideration to public limited liability company
Schoenherr Attorneys at Law
  • Austria
  • June 09 2014

The Supreme Court recently considered the validity of the payment of a cash consideration to a public limited liability company in the course of an increase in its stated capital. The ruling highlights that business transactions that have a substantive and temporal connection with a formal increase of the stated capital must be made under the disclosure and examination rules for contributions in kind.

Reductions in minimum share capital for limited liability companies abolished
Schoenherr Attorneys at Law
  • Austria
  • March 31 2014

Amendments to Austria's federal tax law – which, among other things, have revised the Limited Liability Companies Act – recently came into force. The minimum share capital of a limited liability company (GmbH) has been raised again to the former level of €35,000. Out of the share capital to be contributed in cash, at least €17,500 must once again be paid in when founding the GmbH.

Non-participating shareholders may not rely on attendance quorums
Schoenherr Attorneys at Law
  • Austria
  • January 20 2014

Pursuant to a recent Supreme Court decision, which confirms and clarifies earlier rulings, shareholders of an Austrian limited liability company that did not participate in a shareholders' meeting may not challenge shareholders' resolutions approved in such meeting on the grounds that attendance quorum requirements for holding a shareholders' meeting were not met.

New legislation increases opportunities for piercing corporate veil
Schoenherr Attorneys at Law
  • Austria
  • September 16 2013

The Insolvency Act has recently been amended to provide for an obligation on majority shareholders of insolvent Austrian or foreign capital companies to file for insolvency if the company no longer has at least one managing director. Non-compliance will result in the direct liability of the majority shareholder towards the company's creditors. The amendment thereby introduces a statutory basis for piercing the corporate veil.

Handle with care! Indirect shareholder contributions in corporate reorganisations
Schoenherr Attorneys at Law
  • Austria
  • May 28 2013

Considering the strict view taken by the tax courts in recent decisions regarding the capital contribution tax on indirect shareholder contributions effected before or during reorganisations, corporations would be well advised to take a cautious approach. To reduce the tax risk, solid commercial arguments that substantiate a predominant interest of the contributing indirect shareholder should be adequately recorded.

Court finds no need for 'adequate issue price' in capital increase case
Schoenherr Attorneys at Law
  • Austria
  • May 13 2013

The Supreme Court recently considered how a minority shareholder should react if the majority shareholder overrules it on a capital increase resolution that subsequently leads to the dilution of its holding. Under Supreme Court case law, (minority) shareholders are protected against a dilution of their participation following a capital increase if their statutory subscription rights are excluded.