Company & Commercial, Austria updates

Managers under trade law: how will Constitutional Court rule?
  • Austria
  • January 15 2018

The Higher Administrative Court recently requested that the Constitutional Court repeal Section 39(2) of the Trade Act, as it infringes fundamental rights guaranteed by the Constitution. Austrian legal practitioners are already eagerly awaiting this judgment, which is expected to be issued during 2018.

Beneficial Ownership Register to be introduced in Austria
  • 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
  • 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
  • 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
  • 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
  • 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
  • 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
  • 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
  • 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.

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