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Establishing a Business Entity in Australia

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Establishing a Business Entity in Australia Fall 19 INTERNATIONAL LAWYERS NETWORK BRAUNEIS KLAUSER PRÄNDL ESTABLISHING A BUSINESS ENTITY IN AUSTRIA ILN CORPORATE GROUP [ESTABLISHING A BUSINESS ENTITY IN AUSTRIA] 2 This guide offers an overview of legal aspects of establishing an entity and conducting business in the requisite jurisdictions. It is meant as an introduction to these market places and does not offer specific legal advice. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship, or its equivalent in the requisite jurisdiction. Neither the International Lawyers Network or its employees, nor any of the contributing law firms or their partners or employees accepts any liability for anything contained in this guide or to any reader who relies on its content. Before concrete actions or decisions are taken, the reader should seek specific legal advice. The contributing member firms of the International Lawyers Network can advise in relation to questions regarding this guide in their respective jurisdictions and look forward to assisting. Please do not, however, share any confidential information with a member firm without first contacting that firm. This guide describes the law in force in the requisite jurisdictions at the dates of preparation. This may be some time ago and the reader should bear in mind that statutes, regulations and rules are subject to change. No duty to update information is assumed by the ILN, its member firms, or the authors of this guide. The information in this guide may be considered legal advertising. Each contributing law firm is the owner of the copyright in its contribution. All rights reserved. ILN Corporate Group – Establishing a Business Entity Series [ESTABLISHING A BUSINESS ENTITY IN AUSTRIA] 3 ESTABLISHING A BUSINESS ENTITY IN AUSTRIA entity that combines characteristics of each of “Establishing a Business Entity in those two. Austria” Dr. Andreas Bauer 2. Types of business entities Partner Austrian company law offers a limited number Brauneis Klauser Prändl – Vienna of possible corporate forms, which are conclusively regulated by law. No further 1. Introduction company forms may be created (however, companies incorporated in a Member State of In principle any national citizen or foreign the EU or EEA must be recognized as such in national is allowed to establish a business in Austria). The most important Austrian company Austria. A company is defined as a partnership forms are: of at least two persons (exceptions for limited liability companies and joint-stock companies), • Limited liability company or Gesellschaft founded by a legal transaction, who want to mit beschränkter Haftung (GmbH) achieve a certain purpose through organized • Joint-stock company or cooperation. While one person is sufficient to Aktiengesellschaft (AG) establish a limited company (Kapitalgesellschaft), at least two persons are • European Company or Societas necessary to form a partnership entity Europaea (SE) (Personengesellschaft). A business operated by • General Partnership or Offene a single natural person with full personal Gesellschaft (OG) liability (i.e. without any further partners or • shareholders) is referred to as a sole Limited partnership or proprietorship (Einzelunternehmen). Kommanditgesellschaft (KG) If foreign business owners choose to establish a • Branch offices of foreign companies or subsidiary in form of a limited company in Zweigniederlassung Austria it is important to mention that the 2.1 Limited liability company (GmbH) establishment is legally independent from the The limited liability company or Gesellschaft parent company meaning that the foreign mit beschränkter Haftung (GmbH) is an parent company does not bear direct and incorporated entity and is among the most unlimited liability for the subsidiary’s popular legal forms for business enterprises obligations. The corporate forms typically in Austria. Its legal identity is independent of chosen for such subsidiaries are the limited that of its shareholders. As a general rule, liability company (GmbH) and the joint-stock the shareholders of a limited liability company (AG). Additionally, there is the company do not bear any personal liability European Company (SE), which is seldom used. towards the company’s creditors for the With regard to partnership entities, the general company’s obligations (“principle of partnership (OG) and the limited partnership separation”). The shareholders of a GmbH (KG) may be used. Another option to choose is are only personally liable for unpaid share the so-called GmbH & Co KG, which is a hybrid capital, or in the case of malevolence of the form of a limited company and a partnership shareholder. ILN Corporate Group – Establishing a Business Entity Series [ESTABLISHING A BUSINESS ENTITY IN AUSTRIA] 4 A GmbH is set up by one or more frequent transfer of shares is desired. shareholders, who may be individuals, 2.2 Joint-stock company (AG) corporations and partnerships, residents and non-residents, Austrian and foreign citizens, The joint-stock company or as well as foreign corporations. Aktiengesellschaft (AG) is similar to the Gesellschaft mit beschränkter Haftung The contract between two or more founders (GmbH) and the second legal form of a of a limited liability company is called limited company in Austria. The Articles of Association (Gesellschaftsvertrag). Aktiengesellschaft (AG) is an independent In case of a sole-shareholder company, the legal entity and possesses rights and articles are referred to as Declaration of obligations of its own. The shareholders of Establishment (Errichtungserklärung). Both an AG are only personally liable for unpaid documents must be certified by a notary share capital, or in the case of malevolence public by means of a notarial deed. The of the shareholder. Gesellschaft mit beschränkter Haftung (GmbH) comes into legal existence upon its In comparison to the GmbH, the registration in the Commercial Register establishment of a joint-stock company is (Firmenbuch). The minimum share capital of more complicated and more expensive. a limited liability company is EUR 35,000. At An AG may be set up by one or more least half of the share capital (EUR 17,500) natural persons or legal entities. In the case must be paid in cash (exception: of a sole founder it is required to register continuation of an enterprise and the sole- shareholder’s name in the contributions in kind). If the founders make Commercial Register (Firmenbuch). The use of the so-called Formation Privilege Articles of Association must be certified by (Gründungsprivilegierung), only EUR 5,000 a public notary by means of a notarial must be paid in cash at the time of deed. The formation procedure is subject to formation. Additionally, the shareholders are stricter formal requirements compared to personally liable for another EUR 5,000 the GmbH. The minimum stock capital of an during the first ten years after the Aktiengesellschaft (AG) is EUR 70,000. At “privileged formation” of a GmbH has been least one quarter of said amount must be registered in the Commercial Register paid in during the company’s formation. The (Firmenbuch). The Formation Privilege AG comes into legal existence upon its (Gründungsprivilegierung) ends after ten registration in the Commercial Register years at the latest but can also be (Firmenbuch). discontinued voluntarily at an earlier point in time. The requirements for this step are In comparison to the GmbH, the AG is that the Articles of Association are amended structured after a so-called dualistic model. accordingly and that the statutory minimum This means that the General Meeting deposit requirements (usually at least EUR (Hauptversammlung) appoints a Supervisory 17,500 in cash) are met. Since the transfer of Board (Aufsichtsrat) with at least 3 shares in a GmbH is more difficult (a notarial members and the Supervisory Board deed is required) than that of stock in a appoints the Board of Directors (Vorstand). stock company (AG) the GmbH is less The directors are appointed for a maximum suitable if a widespread ownership or the term of 5 years but may be reappointed after their term has ended. Contrary to the ILN Corporate Group – Establishing a Business Entity Series [ESTABLISHING A BUSINESS ENTITY IN AUSTRIA] 5 managing directors of a GmbH, members of 2.5 Limited Partnership (KG) the Board of Directors (Vorstand) of a joint- 2.5.1 General information stock company (AG) are not subject to instructions by the General Meeting or the The limited partnership or Kommandit- Supervisory Board in their normal course of gesellschaft (KG) is a partnership entity business. consisting of at least two physical persons or legal entities, similar to the The most significant advantage of the Offene Gesellschaft (OG). The major Aktiengesellschaft (AG) compared to the difference towards the OG is the liability GmbH is the easier transferability of of its members, because not all the company shares and their tradability on the partners bear full and unlimited liability stock market. for the partnership’s obligations. At least 2.3 Entities under European Law (SE) one partner (“general partner”) is The European Company or Societas Europea required to bear unlimited liability for (SE), the European Cooperative Society (SCE) the partnership’s obligations while the and the European Economic Interest remaining partner/s (“limited partner”) Grouping (EEIG) are also business entities is/are only liable up to the amount of which may be incorporated under Austrian their capital contributions registered in law but are seldom used. the Commercial Register (Firmenbuch). 2.4 General Partnership (OG) 2.5.2 GmbH & Co KG The general partnership or Offene The GmbH & Co KG is a hybrid form of Gesellschaft (OG) is an association of at the limited liability company (GmbH) and the limited partnership (KG) in which least two physical persons or legal entities. Each of the partners in a general partnership the sole personally liable general partner bears personal, unlimited, direct and joint is a limited liability company (GmbH). In a liability for all the partnership’s obligations.
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