The stock market's flexibility is its greatest selling point for publicly traded companies, as it allows a fast flow of capital while still enabling majority shareholders to implement fundamental corporate changes should they wish to exit the market. However, even with all of this flexibility, shares may not always be free of other encumbrances, and the sale of such shares may be opposed by interested parties or even refused to be recognised as a genuine sale by the Trade Registry.
The Control of Accounting Act recently entered into force. Its purpose is to ensure that financial reporting published by entities whose equity or debt securities are admitted to trading on a regulated market in Austria is compliant with national and international accounting standards. To this end, the act vests the Financial Market Authority with the power to audit such financial information.
In light of its findings during on-site audits of issuers' compliance organisations, the Austrian Financial Market Authority has amended the 2007 Compliance Regulation for Issuers and published a circular providing practical guidelines for issuers on the implementation of efficient compliance organisations.
When insolvency proceedings were opened against A-TEC Industries AG, claims were made for around €300 million of bond debt issued by the company. The insolvency court appointed three trustees to represent the bondholders and their collective interests against the company. This restraint of bondholders' rights caused uproar among the mainly international institutional investor base.
In the event of a public offer of securities, in order for the securities to be offered legally to investors, a prospectus must be prepared, approved by the competent authority and published. However, pursuant to Article 4 of the EU Prospectus Directive, the obligation to publish a prospectus does not apply if securities are offered, allotted or to be allotted in connection with a merger, provided that equivalent documents are available.
Only a few months after the Supreme Court issued a landmark ruling concerning the invalidity of prevalent and customary clauses included in terms and conditions of Austrian law-governed bond issues regarding consumer bondholders, a new Supreme Court ruling has extended some of the court's legal views to the terms and conditions of profit participation certificates.
Many treasury departments of Austrian companies trade in securities or other financial instruments for their own account to raise income from financial assets. However, in light of a recent landmark ruling of the Austrian Administrative Supreme Court, such conduct is critical and may require companies to obtain a banking licence in Austria.
In a recent landmark ruling the Austrian Supreme Court of Justice held that some prevalent and customary clauses included in terms and conditions of Austrian law-governed bond issues are illicit with regard to consumer bondholders. The decision ended a lawsuit for injunctive relief between the Consumer Protection Association and the issuer of a corporate bond initiated in 2007.
Effective from January 1 2010, the statutory rules on redemption of participation capital have been further revised to reflect changed circumstances in the banking sector - in particular, to ease redemption of participation capital issued under the Austrian financial market stability scheme.
Previously, short selling was addressed only in the context of market manipulation and under the Vienna Stock Exchange trading rules. However, in light of the global financial crisis, the government has introduced measures to mitigate the effects on the Austrian economy by providing stability to the financial market.
Trying to rely on governmental support to increase a bank's Tier I ratio while keeping state influence to a minimum? Austrian credit institutions recently rediscovered the benefits of participation capital when it comes to increasing their Core Tier I ratio and enhancing their risk-bearing capacity.
The Stock Exchange Act has been amended to enable the Financial Market Authority (FMA) to prohibit or restrict short selling for up to three months. The FMA has also published a circular on the obligation to report suspicious transactions that may qualify as market manipulation or illegal insider trading, in particular in respect of short selling.
The current turmoil in the international financial markets and its impact on domestic regulated markets have led to calls for the EU securities regulators to take action. In Austria, the government has announced its intention to amend the Stock Exchange Act in order to create a legal framework for an outright prohibition on short selling, even if only on a temporary basis.
From June 1 2008 significant changes to the Vienna Stock Exchange’s rules must be respected by market participants listed in its premium segment. Changes to the regime were apparently fuelled by recent criticism of the lack of satisfactory investor information regarding certain foreign issuers listed on the prime market.
The Ministry of Finance recently introduced a draft bill on the amendment of certain provisions of the Investment Funds Act. One reason for the amendment is the implementation of EU Directive 2007/16/EC, which provides for certain uniform definitions relating to undertakings for collective investment in transferable securities.
Austria's implementation of the EU Prospectus Directive has raised uncertainty as to whether the exemption from the obligation to prepare and publish a prospectus for a small capital increase under the Stock Exchange Act is actually available in practice at all, as a prospectus may still be required under the Capital Markets Act.