Contributed By CHSH Cerha Hempel Spiegelfeld Hlawati
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 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.