Contributed By CHSH Cerha Hempel Spiegelfeld Hlawati
In 2018, the Austrian Constitutional Court (Verfassungsgerichtshof) subjected the Minority Shareholders Squeeze-Out Act (Gesellschafter-Ausschlussgesetz) to close scrutiny. A former minority shareholder of an Austrian limited liability company (GmbH) argued that his rights with respect to property had been infringed by various sections of the Squeeze-Out Act. After an oral hearing, the Austrian Constitutional Court rejected the complaint and ruled that the relevant sections of the Squeeze-Out Act do not violate rights with respect to property because the provisions reasonably weigh the competing interests of the majority shareholder and those of the minority shareholder.
The Supreme Court (Oberster Gerichtshof) held in connection with the sale of the whole business of an Austrian limited liability company, by way of analogous application of the Austrian Stock Corporation Act, Section 237, that the approval of the general meeting is obligatory in such cases or else the sale and purchase agreement is void. In its decision, the Court missed the opportunity to clarify its view on the Holzmüller decisions of the German Federal Court of Justice and left open whether an approval of the general meeting by a majority of three quarters of the votes cast is sufficient or whether unanimity is required.
Cartel and Competition Law Amendment Act 2017
The Amendment Act introduced numerous changes, especially relating to the private enforcement of actions for damages for infringements of competition law based on the EU Directive on Antitrust Damages Actions (Directive 2014/104/EU), but it also introduced a host of innovations in other areas as well.
On the basis of the Directive on Antitrust Damages Actions, the Austrian legislator introduced the possibility for civil courts to order the disclosure of evidence and/or impose sanctions for any failure to disclose evidence. This provision may prove to be of considerable significance in future, especially when quantifying the amount of damages to which the injured party may be entitled. A disclosure order requires precise justification, both setting out the facts and evidence in the possession of the person subject to the order and adequately supporting the plausibility of the action for damages. It is, strictly speaking, even possible to request the disclosure of evidence in files held by courts or public authorities. However, this does not apply to leniency applications or settlement submissions, as the attractiveness of leniency programmes and settlement decisions should not be jeopardised by disclosure requirements that are too extensive in scope. In addition, claims for damages for competition violations become time-barred after five instead of three years, and an additional threshold has applied under Austrian merger control law since 1 November 2017. For further information regarding the additional threshold, see 2.4 Antitrust Regulations, above.
Austrian Stock Exchange Act 2018
The new version of the Austrian Stock Exchange Act 2018 (Börsegesetz 2018), based on the Markets in Financial Instruments Directive II (Directive 2014/65/EU) can surely be seen as a significant legal development for listed companies. Due to the absence of a provision that allowed for a voluntary withdrawal from the Official Market of the Vienna Stock Exchange, a withdrawal was only possible by way of universal succession. The new Austrian Stock Exchange Act, which entered into force on 3 January 2018, now includes such a provision. However, it remains to be seen whether this will lead to several companies leaving the Vienna Stock Exchange, thus making the Austrian stock market less attractive to investors.
Introduction of new market segments to the Vienna Stock Exchange
As part of a new initiative for small- and medium-sized stock companies, the new Austrian Stock Exchange Act facilitates access to the capital market. The Vienna Stock Exchange introduced two new market segments to the Third Market, the so-called 'Direct Market' and 'Direct Market Plus' segments, thus replacing the 'Mid Market' market segment. A listing on either of the two new market segments does not require a capital market prospectus. Also, no minimum market capitalisation requirements and no requirements for placement volume have to be met.
The starting date for trading on the Direct Market and the Direct Market Plus was set to be 21 January 2019. It remains to be seen how the new market segments will evolve.
Equality Act for Women and Men in Supervisory Boards
On 1 January 2018, the Equality Act for Women and Men in Supervisory Boards (Gleichstellungsgesetz von Frauen und Männern im Aufsichtsrat) entered into force. The Act applies to listed companies (Austrian stock corporations and Societas Europaea) as well as to companies (Austrian limited liability companies and co-operatives) which permanently employ more than 1,000 people if the supervisory board of those companies consists of six shareholders' representatives and at least 20% of the workforce are male/female. The Act introduced a minimum quota of 30% of women/men as members of a supervisory board. Nonetheless, the Act contains a few loopholes that allow the provisions of the Act to be circumvented.
By and large, the Act can be seen as a step towards increasing the visibility of women in the supervisory boards of Austrian companies.
Austrian Beneficial Owner Register Act
As part of the transposition of the fourth Anti-Money Laundering Directive (Directive (EU) 2015/849), the Austrian Beneficial Owner Register Act (Wirtschaftliche Eigentümer Registergesetz) entered into force on 15 January 2018. All legal entities pursuant to Section 1 para 2 of the Act were required to register their beneficial owners by 16 August 2018. If, however, the respective legal entity becomes aware of any change of or relating to its beneficial owners, a change notification must be filed within four weeks. This notification requirement can be disregarded in the context of the closing of an M&A transaction where a change of beneficial owner(s) occurs.
Fifth Anti-Money Laundering Directive
The fifth Anti-Money Laundering Directive (Directive (EU) 2018/843) was published on 19 June 2018 in the Official Journal of the European Union. The provisions of the Directive include inter alia the extension of the scope to auditors, external accountants, tax advisers, as well as estate agents, art dealers and intermediaries (whereas transactions with a value of less than EUR10,000 remain excluded from the scope of the Directive), the public accessibility of specific information contained in the Beneficial Owner Register, and the establishment of a centralised bank accounts register.
Furthermore, each EU member state is required to issue and maintain an up-to-date list of politically exposed persons (PEPs). The Commission has the task of consolidating these lists from Member States into a single list, which must be made accessible to the public. As a result, significant amendments to the relevant Austrian laws are to be expected.
In addition to the new version of the Austrian Stock Exchange Act, a new section has been added to the Austrian Takeover Act, which entered into force on 3 January 2018. This newly introduced section regulates offers for delisting securities from the Official Market of the Vienna Stock Exchange.
Pursuant to the Takeover Act, delisting offers are subject to the provisions governing mandatory offers in accordance with the derogations set out in the new Section 27e of the Act. Offer documentation must expressly indicate that the offer is a delisting offer. The delisting offer can be combined with a voluntary takeover offer to acquire a controlling interest or with a mandatory takeover offer.
The consideration offered under the delisting offer will be subject to two additional price floors. The consideration has to reach at least: