CEE Legal Matters

Category: Austria

  • Francine Brogyanyi Joins Management Committee at Dorda

    Francine Brogyanyi Joins Management Committee at Dorda

    Francine Brogyanyi has joined the Management Committee at Dorda, joining existing Managing Partners Martin Brodey and Axel Anderl.

    Brogyanyi, who specializes in Life Sciences, takes the place of outgoing Management Committee member Felix Horlsberger.

    According to Dorda, “in her new role, Francine Brogyanyi will continue to be responsible for the promotion of personnel and women at Dorda. Her commitment to women’s issues has led Dorda to set up a mentoring program for female employees in recent years. Among other things, she established the very popular fireside chat for Dorda lawyers, in which women are presented in top positions under the title “Role Models Wanted!” Another important concern of the successful lawyer, who is herself the head of the Life Sciences practice group at Dorda, is the promotion of young talent.

    Dorda Partner Axel Anderl expressed his enthusiasm for Brogyanyi’s new role. “Her achievements for the advancement of women were significant impulses in the development of our law firm. Francine Brogyanyi is also a role model for our young lawyers. She manages to balance the concerns of her clients and her family alike.”

    Martin Brodey commented as well: “The successful introduction and establishment of the next generation of lawyers is one of the core tasks of successful management. We can only guarantee the high quality of our legal work in the future. It is gratifying that the next generation is also intensively involved in our management tasks and is making a difference. Thus, we are closer to the following talent and can secure the season handover in the future.”    

  • BPV Huegel Achieves Squeeze-out Compensation Settlement for Constantia Flexibles

    BPV Huegel Achieves Squeeze-out Compensation Settlement for Constantia Flexibles

    BPV Huegel has advised Constantia Flexibles on a squeeze-out compensation settlement for minority shareholders of the formerly-listed Constantia Packaging AG. The settlement amount is almost EUR 50 million, and the deal closed last week.

    Following the squeeze-out of the CPAG group by One Equity Partners in 2010, the minority shareholders requested a review of the granted cash compensation. After five months of out-of-court negotiations, an agreement was reached with around 35 applicants and the court-appointed representative of the shareholders who did not file a motion for themselves. 

    Constantia Flexibles is the world’s third largest manufacturer of flexible packaging solutions, with around 8,300 employees at 38 locations in 16 countries.

    The bpv Huegel team was led by Partner Christoph Nauer and included Partner Kornelia Wittmann and Attorneys Daniel Reiter, Paul Pfeifenberger, and Nicolas Wolski.

    At Constantia, the proceedings and settlement negotiations were conducted by General Counsel Martin Schneeweiss and his team.

  • Admissibility of Stem Cell Therapy | Case Law Update Austria

    In a recent decision (Ra 2015/11/0113), the Austrian Supreme Administrative Court (VwGH) inter alia addressed the question whether the application of stem cell therapy violates Section 49 of the Austrian Act on the Medical Profession (Ärztegesetz, ArzteG), which requires physicians to treat patients “… in accordance with state of the art medical science and practice” and to at all times act in the best interest of the patients.

    The question arose in the context of (administrative) criminal proceedings against a doctor. The authority had claimed that the application of stem cell therapies for which no clinical trials had been conducted on a number of patients meant the use of an experimental medical therapy as part of regular clinical operations. The authority argued that the therapy lacked sufficient analysis of potential indications and contraindications and that there was no scientific basis on potential effects and side effects. There was also no scientific basis for the age bracket of patients on which the therapies could be applied.

    Medical treatment may go beyond established science

    In his counterarguments, the doctor focused on the fact that the authority did not establish a threat to a specific patient in any of the cases. While the treatments went beyond state of the art medical science, the limitations set forth by Section 49 ÄrzteG did not mean that only therapies for which clinical trials have been successfully conducted may be applied. The overriding principle was the obligation to always act in the patients’ best interest. This means that a physician enjoys therapeutic freedom, subject to the circumstances of the specific case and the overriding goal to improve a patient’s condition and do no harm. The stem cell therapies constituted (permissible) “individualised trials” (Heilversuche).

    The patients concerned had exhausted all conventional therapy options and – in line with the case law of the German Supreme Court (BGH) – the individualised treatment of a patient without scientifically proven benefit is acceptable if no other therapy is available.

    In its decision, the VwGH first made clear that the applicable Austrian regulations do not contain an absolute prohibition of stem cell therapy. It further determined what would constitute an “individualised trial”, namely departing from state of the art medical science in a specific case (rather than as part of a clinical research series) either because there is no medical standard or because the available medical standards are of no use.

    Patients also must receive clear and sufficient information about the novelty of the treatment and that the potential treatment may objectively be expected to offer a realistic and justifiable improvement of the patient’s condition. Finally, the VwGH ruled that the mere fact that a novel therapy was applied to more than only a small number of patients did not mean that it could not still constitute an “individualised trial”. To make such a determination would require individual analysis of each patient’s case, something the authority had not done.

    In summary, the VwGH thus gave the following practically relevant guidance:

    • It is permissible for a doctor and in accordance with Section 49 ArzteG to apply therapies which go beyond state of the art medical science.
    • Each individual treatment requires a cost/benefit analysis. A doctor remains in compliance with Section 49 ArzteG if a treatment (i) objectively is in the individual patient’s best interests and does not put the individual patient at risk, and (ii) no other (conventional) therapy is available.
    • It must be made crystal clear to the patient that the therapy has reached the limits of conventional treatment and what the potential risks are. The doctor must be sure that the patient understands the risks and consequences. 
    • The mere fact that a novel therapy is applied to more than only a very small number of patients does not automatically mean it cannot still constitute an “individualised trial”.

    By Florian Kusznier, Partner and Andreas Natterer, Partner Schoenherr

  • Schoenherr and DSC Advise on Acquisition of T-Center in Vienna

    Schoenherr and DSC Advise on Acquisition of T-Center in Vienna

    Schoenherr has advised South Korean investment fund KTB Investment & Securities and KTB Asset Management on the indirect acquisition of the T-Center, an office building in Vienna, from GENO Saturn Tower/T-Center Immobilienbeteiligungsholding GmbH & Co.OG and BEGO – ZWP GmbH. The sellers were advised by DSC Doralt Seist Csoklich Rechtsanwalte.

    The transaction involved the acquisition of 100% of the shares in Mm Liegenschaftsbesitz GmbH, which owns the T-Center office building. The terms of the transaction, which closed on April 1, 2019, were not disclosed.

    The Schoenherr team was led by Partner Michael Lagler and Attorney at Law Clemens Rainer and included Partners Roman Perner and Franz Urlesberger and Attorney at law Laurenz Schwitzer.

    The DSC team was led by Partner Wilfried Seist.

  • The Buzz in Austria with Martin Brodey of Dorda

    The Buzz in Austria with Martin Brodey of Dorda

    Dorda Partner Martin Brodey starts his provision of The Buzz in Austria by describing the market as very busy and reporting that “two things are blossoming in particular – transactions and litigation – which we see from practice as very strong.” He notes that “Austria is mainly oriented towards the export of highly specialized industrial products and the provision of high-skill services,” and that “this keeps business busy – transactions are stable and flourishing.”

    When asked which business sectors are most active, Brodey says that “the spotlight is on digitalization – it’s on everyone’s mind.” He reports that “special industry groups have been formed within Dorda to focus on M&A in the digital sector” and that other offices can be expected to do the same. He specifically underlines blockchain technology as a “new and interesting point – as it gets more of a hold on the markets, lawyers will need to figure out exactly what kind of an impact it may have on businesses and the services they offer.” He believes that “lawyers will have to follow this closely to be able to provide clients with the necessary legal advice.”

    However, a political crisis in the wake of the publication of a secret video depicting what Brodey describes as the “untenable statements” of two top politicians of the Freedom Party has taken hold of the Austrian system, and he reports that the scandal is “felt in all aspects of business.” According to him, “the current coalition has been terminated and the Freedom Party ministers are leaving office with an interim government in place,” with “all complex legislative processes put on hold until the elections are held in September or October.” He believes that “some legislative projects will continue under the interim government with experts but more significant topics, such as an administrative reform, will effectively be put on hold.” 

    “Regardless of the crisis, private business is not impacted and transactions are continuing at a steady pace, whatever the political constellation,” Brodey reports, but he concedes that “confidence in the Austrian political system will have to be restored nationally and internationally, which will take time.”

    Finally, Brodey says that the legal market itself is “more or less stable – there are not a lot of shifting between the firms.” He adds that there are no “moves of large lawyer teams” and that although “every now and then, a new firm gets set up,” it is of no large impact on the market overall.

  • Michael Horak Joins Binder Groesswang’s Vienna IP-IT Team as Counsel

    Michael Horak Joins Binder Groesswang’s Vienna IP-IT Team as Counsel

    Former Salomonowitz Horak Co-Founder Michael Horak will join Binder Groesswang’s Vienna office as Counsel on June 1, 2019.

    “With Michael Horak our team will be strengthened by a recognized expert in patent, trademark, and unfair competition law”, stated Binder Groesswang Partner Ivo Rungg, who leads the firm’s IP/IT team. “This enlargement of our practice group will enable us to further expand our market position.”

    Horak studied law at the Universities of Salzburg and La Rochelle before obtaining his PhD from the Universities of Salzburg and Munster. Horak also holds a Master’s degree from the London School of Economics and Political Science. Before joining Binder Groesswang he was an associate at Fiebinger Polak Leon & Partner and in 2005 joined Schoenherr. He co-founded Salomonowitz Horak in 2011.

  • Schoenherr and DSC Advise on KTB Investment & Securities Acquisition of Vienna’s T-Center

    Schoenherr and DSC Advise on KTB Investment & Securities Acquisition of Vienna’s T-Center

    Schoenherr has advised South Korean investment fund KTB Investment & Securities and its subsidiary KTB Asset Management on the acquisition of 100% of Liegenschaftsbesitz GmbH from GENO Saturn Tower/T-Center Immobilien beteiligungs holding GmbH & Co.OG and BEGO-ZWP GmbH. The sellers were advised by DSC Doralt Seist Csoklich.

    Liegenschaftsbesitz owns the T-Center office building, which was constructed in 2004, and which Schoenherr describes as a “landmark office building in Vienna for its remarkable design.” Core tenants of the T-Center include T-Mobile Austria and its Austrian subsidiaries. The building comprises 12 upper and five underground floors with leasable areas around 83,000 square meters.

    The transaction closed on April 1, 2019. 

    The Schoenherr team was led by Partner Michael Lagler and Attorney at law Clemens Rainer, supported by Partners Roman Perner and Franz Urlesberger and Attorney at law Laurenz Schwitzer. 

    The DSC Doralt Seist Csoklich team was led by Partner Wilfried Seist and Attorney Nina Mitterdorfer. In 2004 the firm advised GENO Saturn Tower/T-Center Immobilien beteiligungs holding GmbH & Co.OG and BEGO-ZWP GmbH on the acquisition of Liegenschaftsbesitz.

  • Transactions Under Political Scrutiny – A New FDI Regime in Austria

    Following the adoption of the new EU framework for screening of foreign direct investments (see Schoenherr Newsletter 13.03.2019), the Austrian government recently published a draft bill to amend the current rules on foreign direct investments (FDI) into Austria. This draft is currently under review and shall enter into force in summer 2019.

    I. Extensive (non-exclusive) list of areas covered under scope of new FDI rules

    Provided that a company operates within a sector relevant for “security or public order” such as defence, energy or telecommunication, the FDI regime currently applies irrespective of whether an acquisition is likely to have an impact on security or public order.

    Under the draft bill, a company will – in alignment with the EU’s new framework – be subject to the FDI regime if the acquisition of the company is likely to affect “security and public order”. When assessing whether “security and public order” are likely to be affected by a transaction, an extensive (non-exclusive) list of relevant areas provided under the new EU framework have also been introduced as areas of scope under the Austrian FDI regime:

    • critical infrastructure, whether physical or virtual, including energy, transport, water, health, communications, media, data processing or storage, aerospace, defence, electoral or financial infrastructure, and sensitive facilities, as well as land and real estate crucial for the use of such infrastructure;
    • supply of critical inputs, including energy or raw materials, as well as food security;
    • access to sensitive information, including personal data, or the ability to control such information;
    • the freedom and pluralism of the media.

    In addition to (EU) 2019/452, Austria also considers infrastructure and services relating to general-interest-services (Daseinsvorsorge) as critical.

    In determining whether a transaction is likely to affect security or public order, Austria will also consider in alignment with the new EU framework:

    • whether the foreign investor is directly or indirectly controlled by the government, including state bodies or armed forces, of a third country, including through ownership structure or significant funding;
    • whether the foreign investor has already been involved in activities affecting security or public order in a Member State;
    • whether there is a serious risk that the foreign investor engages in illegal or criminal activities.

    We expect that the extensive list of areas covered by the FDI regime without further materiality and relevance thresholds will lead to heavy debate in structuring M&A transactions when it comes to the question of whether the requirements for an FDI-filing are met.

    II. New 10% threshold for sensitive sectors

    Under the current FDI regime, the acquisition of less than 25% of shares in a company is not subject to an FDI review. Basically, this threshold will stay in place but will be lowered for certain companies that particularly conduct business in high tech, media and defence sectors. Businesses that inter alia operate critical infrastructure for information technology, develop software for critical infrastructure, operate cloud computing systems, are certified for producing telematic infrastructure, operate media platforms or produce certain defence-related components will be subject to a lower 10% threshold.

    Unfortunately, however, the reform of the FDI regime has not been used by the legislator to specify the rules for calculating the 25%/10% thresholds, e.g. by following rules in other (similar) areas such as merger control. Further, non-domestic (international) transactions may also be covered by the Austrian FDI regime in case the 10%/25% ownership threshold will indirectly be reached in an Austrian subsidiary active in a critical FDI regime area.

    III. FDI application by acquirer or target company

    The new FDI regime will not only oblige the acquirer but also the management of the Austrian target to file for FDI clearance if necessary. Although, it will be sufficient if either the target or the acquirer makes the FDI filing, it can be expected that the involvement of Austrian targets will lead to more cautious FDI assessments in the future as target management would be exposed to potential criminal prosecution if FDI rules are violated.

    IV. New FDI committee

    The Austrian government will set up a new FDI committee consisting of members from the finance ministry, the ministry for digitalisation and industry location, the chancellor’s office and the ministry of transportation. The FDI committee will be involved in each pending case and will issue recommendations to the minister of digitalisation and industry location who will then ultimately decide on each FDI clearance request.

    The draft bill does not foresee involvement of the FDI committee in the future EU cooperation and notification mechanism of FDI relevant transaction in other members states.

    V. Ex-officio review still in place

    The possibility for ex-officio reviews into transaction for an unlimited time remains unchanged. In case FDI rules are/were circumvented, the minister of digitalisation and industry location may issue a decree that FDI approval is/was required upon which the acquirer and/or the target will have to file for approval. In case approval is not granted, the transaction will subsequently qualify as null and void. Although the draft bill does, unfortunately, still not contain a “binding opinion” proceeding for legal certainty purposes, pre-alignment with the authority to discuss certain transaction structures is recommended.

    VI. Outlook

    Given in particular the new focus on high tech and data processing and since there are no materiality or relevance thresholds introduced for the covered areas, we expect a significant increase in FDI-filings in Austria for precautionary reasons.

    By Sascha Hodl, Partner, Partner and Sascha Schulz, Counsel Schoenherr

  • Wolf Theiss and Linklaters Advise Erste Group Bank on EUR 500 Million Low Risk Bond Issue

    Wolf Theiss and Linklaters Advise Erste Group Bank on EUR 500 Million Low Risk Bond Issue

    Wolf Theiss and Linklaters Frankfurt have advised Erste Group Bank AG on the issue of EUR 500 million Additional Tier 1 Notes. Rautner Attorneys at Law reportedly advised Joint Lead Managers BAML, Barclays, Erste, Goldmans, and UBS.

    On March 12, 2019, Erste Group Bank completed an issue of Additional Tier 1 Notes, which were rated BBB – low risk bonds -– by Standard & Poor’s. The bonds were issued at an issue price of 100% and placed with institutional investors. 

    According to Wolf Theiss, the Erste Group Bank was able to set the first rate of distribution at 5.125% per year in the course of the pricing. The Additional Tier 1 Notes are listed on the Official Market of the Vienna Stock Exchange.

    The Wolf Theiss team consisted of Partners Claus Schneider and Niklas Schmidt, Counsel Eva Stadler, and Associate Nikolaus Dinhof.

    The Linklaters team was led by Partner Peter Waltz.

  • Wolf Theiss Advises Erste Group Bank on EUR 500 Million Bond Issue

    Wolf Theiss Advises Erste Group Bank on EUR 500 Million Bond Issue

    Wolf Theiss has advised Erste Group Bank AG on the issue of EUR 500 million Eligible Liabilities Format Notes. Allen & Overy Frankfurt and Rautner Attorneys at Law reportedly advised the consortium of banks.

    The deal was signed on April 12, 2019 and closed on April 16, 2019. 

    According to Wolf Theiss, the Eligible Liabilities Format Notes, rated A by Fitch, A2 by Moody’s, and A by Standard & Poor’s, have a tenor of five years. The bonds were placed with institutional investors with a coupon of 0.375% per year. The Eligible Liabilities Format Notes will be eligible for the Minimum Requirement for Own Funds and Eligible Liabilities purposes and are listed on the Official Market of the Vienna Stock Exchange. 

    Wolf Theiss’s team consisted of Partners Claus Schneider and Niklas Schmidt, Counsel Eva Stadler, and Associate Nikolaus Dinhof.

    Editor’s Note: After this article was published Rautner confirmed that it had advised the consortium of banks – consisting of Landesbank Baden-Wurttemberg, Morgan Stanley, NATIXIS and Societe Generale – as joint lead managers on the successful bond issuance, which the firm described as “the first international benchmark transaction of non-preferred senior instruments – a new class of debt instruments introduced at European level – in Austria.”

    The bond – which was placed with institutional investors and listed in Official Trading on the Vienna Stock Exchange – is subject to German law with the exception of its status clause, which is governed by Austrian law.

    The Rautner team was led by Partner Walter Gapp.