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Corporate Governance GLOBAL PRACTICE GUIDE AUSTRIA Definitive global law guides offering comparative analysis from top ranked lawyers ContributingLAW AND PRACTICE: Editor p.2 DaleContributed Cendali by SchönherrKingZhong & Lun Spalding Rechtsanwälte Law Firm GmbH KirklandThe ‘Law & Practice’Ellis LLP sections provide easily accessible information on navigating the legal system when conducting business in the jurisdic- Corporatetion. Leading lawyers explain local law and practice at key transactional stages and for crucial aspects of doing business. GovernanceTRENDS AND DEVELOPMENTS: p.<?> Contributed by Hogan Lovells (CIS) The ‘Trends & Developments’ sections give an overview of current trends and developments in local legal markets. Leading lawyers ana- Austria lyse particular trends or provide a broader discussion of key develop- Schönherr Rechtsanwälte GmbHments in the jurisdiction. chambers.com AUSTRIA LAW AND PracticE Law and Practice Contributed by Schönherr Rechtsanwälte GmbH Contents 1. Introduction p.4 5. Shareholders p.11 1.1 Forms of Corporate/Business Organisations p.4 5.1 Relationship Between Companies and 1.2 Sources of Corporate Governance Shareholders p.11 Requirements p.5 5.2 Role of Shareholders in Company 1.3 Corporate Governance Requirements for Management p.11 Publicly Traded Companies p.6 5.3 Shareholder Meetings p.11 2. Corporate Governance Framework p.6 5.4 Shareholder Claims p.13 2.1 Key Rules and Requirements p.6 5.5 Disclosure by Shareholders in Publicly Traded Companies p.13 2.2 Current Issues and Developments p.6 6. Corporate Reporting and Other Disclosures p.13 3. Management of the Company p.6 6.1 Financial Reporting p.13 3.1 Bodies or Functions Involved in Governance and Management p.6 6.2 Disclosure of Corporate Governance Arrangements p.14 3.2 Types of Decisions Made by Governing Bodies p.7 6.3 Companies Registry Filings p.14 3.3 Decision-making Processes p.7 7. Audit, Risk and Internal Controls p.14 4. Directors and Officers p.8 7.1 External Auditors p.14 4.1 Board Structure p.8 7.2 Management Risk and Internal Controls p.14 4.2 Roles of Board Members p.8 4.3 Board Composition Requirements/ Recommendations p.8 4.4 Appointment and Removal of Directors/ Officers p.8 4.5 Independence of Directors and Conflicts of Interest p.9 4.6 Legal Duties of Directors/Officers p.9 4.7 Responsibility/Accountability of Directors p.9 4.8 Breach of Directors’ Duties p.9 4.9 Other Bases for Claims/Enforcement Against Directors/Officers p.10 4.10 Approvals and Restrictions Concerning Payments to Directors/Officers p.10 4.11 Disclosure of Payments to Directors/Officers p.10 2 LAW AND PracticE AUSTRIA Schöenherr Rechtsanwälte GmbH is a leading full-service joint ventures as well as complex corporate and commercial law firm in Central and Eastern Europe. About 300 profes- matters. Dedicated teams within the practice group focus sionals service national and international clients from 14 on restructuring and insolvency. Recent work highlights in- offices and four country desks in Austria, Belgium/EU and clude advising BUWOG AG as the target company in the throughout the entire CEE region. The firm’s corporate/ voluntary public takeover bid of VONOVIA SE, Advent M&A team throughout the region advises on national and International on the acquisition of GE’s Distributed Power cross-border transactions, including public and private business in Austria and Hungary, and Playtika Ltd. on the M&A transactions, private equity and venture capital trans- acquisition of Supertreat GmbH, the developer of the mo- actions, auction sales, privatisations, strategic alliances and bile game ‘Solitaire – Grand Harvest’. Authors Roman Perner is a partner at Schoenherr Christopher Jünger is an associate with with more than 15 years of experience Schoenherr since 2017, specialising in specialising in corporate and tax law. The M&A and corporate law. He advises on focus of his practice is cross-border and general Austrian corporate law aspects, domestic corporate reorganisations, cross-border and domestic corporate especially in the financial industry. He acts reorganisations and M&A transactions. frequently for clients in Austria as well as in the CEE Christopher holds degrees in business law from the Vienna region. Roman holds degrees in Law (University of University of Economics and Business (LL.B. 2013, LL.M. Vienna) as well as in Business Administration (Vienna 2016). He publishes on corporate law with a focus on the University of Economics and Business). He publishes requirements for the identification and disclosure of regularly on corporate law matters and is a lecturer at the ultimate beneficial ownership, and regularly lectures at the Vienna University of Economics and Business as well as at Vienna University of Economics and Business as well as at the University of Applied Sciences in Vienna. the University of Applied Sciences in Vienna. Manuel Ritt-Huemer has been an attorney at law with Schoenherr since 2012, specialising in M&A and corporate law. He regularly advises clients across various industries on complex corporate reorganisations/restructurings, corporate litigation as well as M&A transactions in both Austria and CEE. He also has experience in financial restructuring and non-performing loan transactions. Manuel holds degrees in Law (University of Vienna) as well as in International Business Administration and Finance & Accounting (Vienna University of Economics and Business). He regularly publishes articles on corporate and commercial law. 3 AUSTRIA LAW AND PracticE 1. Introduction Societas Europaea (SE) A so-called ‘European Company’ or ‘Societas Europaea’ (SE) 1.1 Forms of Corporate/Business Organisations is a type of joint-stock corporation regulated by EU law. The principal forms of corporate/business organisations in The minimum capital of an SE is EUR120,000. The organi- Austria are described below. sational structure is more flexible than that of an Austrian AG, as the board can be organised following a single-tier Limited Liability Company (Gesellschaft mit beschränk- or a two-tier system. The shares of an SE may be listed on a ter Haftung (GmbH)) stock exchange. The limited liability company (GmbH) is one of the most popular forms of business organisations in Austria. It can An SE is incorporated in one EU member state and may be established by one or more individuals as well as by legal have branches in other member states. The fact that an SE entities, resident or non-resident, Austrian or foreign citi- can operate more easily under a single legal entity facilitates zens. Shareholder liabilities are restricted to their subscribed cross-border transactions; the ability to move freely within share capital. Generally, the minimum share capital of a the EU also has the benefit of permitting companies to move GmbH is EUR35,000. their headquarters with a minimum of formalities. The capital contribution of each shareholder must be at Partnerships (Personengesellschaften) least EUR70; non-cash contributions are also possible. Each A partnership (Personengesellschaft) can be established by shareholder can only hold one share in a GmbH. at least two parties agreeing on a certain legal objective. In general, the partnership agreement does not need to be in A GmbH is legally established when it is registered with the written or notarised form, but written contracts are com- companies register (Firmenbuch), a procedure which pri- mon. There are different types of partnerships, as follows. marily requires the preceding notarisation of the articles of association (Gesellschaftsvertrag). General partnership (OG) A general partnership can be established for any legal pur- At least one managing director is needed and is appointed pose by at least two shareholders, individuals or legal entities. by the shareholders. The shareholders are personally, directly and jointly liable without limitation for any debts of the company, extending Under certain circumstances, a supervisory board consisting to their entire private assets. The OG must be registered in of at least three board members must also be appointed (eg, the companies register to be established. Every shareholder if the share capital exceeds EUR70,000 and there are more is individually authorised to manage and represent the OG than 50 shareholders, if the average number of employees (except as agreed otherwise between the shareholders). exceeds 300, etc). Limited partnership (KG) A supervisory board may also be established voluntarily. A limited partnership consists of at least two partners, at least one limited partner (Kommanditist) and at least one general Joint-Stock Corporation (Aktiengesellschaft) partner (Komplementär). The general partner has unlimited A joint-stock corporation (Aktiengesellschaft (AG)) can be liability for the partnership’s debts like a shareholder of an established by one or more shareholders. The minimum OG, whereas the limited partner is liable only up to their share capital is EUR70,000. Contributions in kind are also contractually agreed amount of liability which is registered possible. Shareholders may be individuals or companies. The in the companies register (Haftsumme). The power of rep- liability is restricted to the equity capital subscribed by each resentation and management of the KG only applies to the member. The AG comes into legal existence at the time of its general partner(s), whereas the limited partner is generally registration in the companies register. The shares of an AG excluded from the management of the partnership. may be listed on a stock exchange. The share capital can be divided either in par-value or non-par-value shares. Each A quite common legal form of an Austrian business organi- par-value share must have at least a nominal value of EUR1 sation is a hybrid between a limited partnership and a private or a multiple of it. The structure of an AG consists of an limited company, the so-called ‘GmbH & Co KG’, whereby executive board (Vorstand), appointed by a non-executive, the general partner is a limited liability company (GmbH).
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