Last Updated April 16, 2019

Law and Practice

Authors



CHSH Cerha Hempel Spiegelfeld Hlawati has 25 partners and 76 senior attorneys and associates in Austria; the firm also has offices in Belarus, Bulgaria, the Czech Republic, Hungary, Romania, and the Slovak Republic. The Corporate team is active for clients in the private M&A markets of Austria and CEE, representing strategic and private equity investors as well as their targets and/or management. It also advises on national and international cross-border mergers and reorganisations, specialising in developing and providing practical solutions to what can be extremely complex issues that often involve cross-border components. Due to the diversity of its clients, the team is particularly experienced in advising on public M&A, including takeover law and related disclosure requirements under stock exchange law.

In Austria, courts defer to the judgement of managing directors according to the business judgement rule, which applies to any business decisions of board members regardless of the business situation. In 2016, the business judgement rule was expressly incorporated into Austrian statutory law, although Austrian courts had applied similar principles before. The business judgement rule, as it is understood in Austria, establishes a 'safe harbour' with regard to decisions of board members, provided that:

  • a business decision is made;
  • the board members act free from conflicts of interest;
  • the decision is based on all information reasonably available; and
  • board members had justifiably believed that the decision was in the best interest of the company.

A board member acting within the scope of the business judgement rule will generally not be liable to the company, its shareholders or other stakeholders.

However, the business judgement rule will not help if the law explicitly sets up a more specific rule in certain situations. Violations of law, even if they were believed to be in the best interest of the company, cannot be justified under the business judgement rule. Under the Takeover Act, there exist such more specific rules that take precedence, eg, directors need to act in the interest of all shareholders as well as in the interest of the employees, creditors and the general public and generally need to stay objective.

CHSH Cerha Hempel Spiegelfeld Hlawati

Cerha Hempel Spiegelfeld Hlawati
Rechtsanwälte GmbH
Parkring 2
A-1010 Vienna

+43 1 514 35 0

+43 1 514 35 35

office@chsh.com www.chsh.com
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Authors



CHSH Cerha Hempel Spiegelfeld Hlawati has 25 partners and 76 senior attorneys and associates in Austria; the firm also has offices in Belarus, Bulgaria, the Czech Republic, Hungary, Romania, and the Slovak Republic. The Corporate team is active for clients in the private M&A markets of Austria and CEE, representing strategic and private equity investors as well as their targets and/or management. It also advises on national and international cross-border mergers and reorganisations, specialising in developing and providing practical solutions to what can be extremely complex issues that often involve cross-border components. Due to the diversity of its clients, the team is particularly experienced in advising on public M&A, including takeover law and related disclosure requirements under stock exchange law.

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