Category: Austria

On 15 December 2023, Austria’s National Council of the Parliament (lower house) adopted the Flexible Company Act (Flexible-Kapitalgesellschafts-Gesetz, FlexKapGG), which introduces a new company form, the “Flexible Company” (FlexCo) as of 1 January 2024.

As its name suggests, the FlexCo is all about being flexible and it addresses longstanding criticisms directed at Austria’s predominant corporate form, the limited liability company (GmbH). The GmbH has faced extensive criticism in the start-up world due to its perceived lack of flexibility and strict formal requirements. The FlexCo combines features from both the conventional GmbH and the stock corporation (AG) but also introduces some totally new concepts to Austrian corporate law, such as company value shares.

But what exactly does the FlexCo bring to the table? In this article, we will present the key characteristics of this new company form.

Reduced capital requirements

Key aspects

• Minimum share capital reduced to EUR 10,000 – this applies to the FlexCo and to the GmbH.
• Minimum initial contribution is EUR 5,000 – this applies to the FlexCo and to the GmbH.
• Minimum individual contribution is EUR 1 – this applies to the FlexCo only.

Circular shareholder resolutions

Key aspects

• Circular shareholder resolutions are possible without the consent of all shareholders.
• Circular resolutions are valid when all entitled shareholders can participate.
• Votes can be cast in text form, allowing for digital voting methods.

Split Voting

Key aspects

• Shareholders with multiple votes can engage in split voting, significant in trustee frameworks.

Fractional shares

Key aspects

• The FlexCo allows issuance of fractional shares, enabling diverse share classes with distinct rights.
• Simplification of share tracking, especially in trust structures.

Company value shares (CVS)

Key aspects

• Together with the FlexCo, a new share class is introduced.
• Designed for employee participation but also issuable to other stakeholders.
• Mandatory tag-along right for CVS holders in the event of a sale of a majority stake by founding shareholders.
• Up to 25 % of share capital can be issued as CVS.
• No voting rights, but veto right for certain corporate measures. CVS holders may attend shareholder meetings.
• Minimum nominal value of one cent.

Simplified transfer of ownership

Key aspects

• Notarial deed no longer required for share transfers and new share subscriptions.
• Private deed executed by attorney or notary can document share transfers and new share subscriptions.

Flexibility regarding capital measurements

Key aspects

• FlexCos can acquire and hold their own shares.
• Capital raising instruments resemble existing concepts at AGs, such as conditional capital and authorised capital.

Supervisory boards

Key aspects

• Lower threshold for establishing a mandatory supervisory board in a FlexCo.
• A supervisory board is mandatory if at least two of the following criteria are exceeded: (i) EUR 5m balance sheet total; (ii) EUR 10m turnover; or (iii) an average of 50 employees.

Conversion

Key aspect

• FlexCos can be easily converted into a GmbH or AG and vice versa.

Conclusion

For those who want it, the FlexCo brings flexibility by mixing the features of the Austrian Joint Stock Company (AG) and the Austrian Limited Liability Company (GmbH). Most features are not mandatory. Shareholders of a FlexCo still benefit from a lower share capital and reduced transfer formalities. As with any new law, however, there are legal uncertainties and room for interpretation.

The introduction of the FlexCo is a positive step for the Austrian start-up landscape toward greater flexibility and international competitiveness. Will the FlexCo be a gamechanger for entrepreneurs in Austria? Time will tell.

By Thomas Kulnigg, Partner, Niklas Kerschbaumer, Attorney at Law, and Dominik Tyrybon, Associate, Schoenherr

Former Wolf Theiss Partner Marcell Nemeth has joined DLA Piper’s Finance, Projects & Restructuring practice as a Partner in the firm’s Vienna office.

Prior to joining DLA Piper, Nemeth spent almost nine years with Wolf Theiss. Before that, he spent two years with UniCredit Bank Austria Vienna as Vice President in the Corporate & Investment Banking department. Earlier, he spent three years as a Partner with Pinsent Masons, ten years with Allen & Overy, and four and a half years with Shearman & Sterling as an Associate.

“We welcome Marcell to DLA Piper,” DLA Piper Austria Managing Partner Christoph Mager said. “His extensive knowledge will help us to further expand and broaden our FPR practice in Austria, and across our global footprint, helping the firm to realize its growth strategy.”

“I look forward to contributing to the further strategic development and growth of the Vienna FPR Group,” Nemeth added. “Together, we will provide our clients with the best possible support and continue DLA Piper’s success story.”

Wolf Theiss, working with Ropes & Gray, has advised drug development contract research organization QPS Holdings on the full sale of its QPS Neuropharmacology business unit to Scantox. Dorda, working with Denmark’s Accura, advised Scantox.

The transaction was signed on November 29, 2023.

QPS is a good laboratory practice/good clinical practice-compliant contract research organization delivering discovery, preclinical, and clinical drug development services. Since 1995, it has expanded to over 1,200 employees in the US, Europe, India, and Asia.

Scantox is a Nordic pre-clinical good laboratory practice-accredited contract research organization. Its focus lies in pharmacology and regulatory toxicology. The company is headquartered in Denmark with one domestic subsidiary and three additional subsidiaries in Sweden. Founded in 1977, Scantox is currently owned by Impilo, a Nordic healthcare investment company.

After the sale is complete, QPS will retain the European clinical division including the service capabilities in Austria, the Czech Republic, and Croatia, where QPS has a long history of conducting late-phase clinical trials in neurodegenerative diseases, oncology, and various rare diseases.

“The sale of QPS Neuropharmacology is a natural transition in the development of QPS as a full-service, global CRO focused on preclinical, bioanalysis, and clinical research operational services,” QPS Holdings President and CEO Ben Chien commented. “We believe that the neuropharmacology unit will be strengthened and continue to grow as part of the Scantox organization.”

The Wolf Theiss team included Partners Clara Gordon, Niklas Schmidt, Guenter Bauer, Kurt Retter, and Matthias Unterrieder, Counsels Doris Buxbaum and Paulina Pomorski, Consultant Karin Spindler-Simader, Senior Associates Magdalena Ziembicka and Dominik Engel, and Associates Julia Male, Sophie Weber, and Pascal Gstoettner.

Editor’s Note: After this article was published, Dorda announced the composition of its team advising Scantox Denmark. The firm’s team included Partners Andreas Mayr, Christoph Brogyanyi, and Francine Brogyanyi, Principal Associates Patricia Backhausen and Florina Thenmayer, and Associates Isabel Maurer and Philipp Fedan.

Binder Groesswang has advised fire, flame, and gas safety solution provider the Consilium Safety Group on its full acquisition of Radicos Technologies from the company’s founders and financial investors.

The transaction closed on November 17, 2023.

“The acquisition of Radicos Technologies is intended in particular to ensure the improvement of safety standards on cargo ships and to further expand Consilium Safety Group’s product portfolio in the field of safety technologies,” the firm reported.

Radicos Technologies is an industrial internet-of-things producer for linear detection such as heat, gas, and vibration.

The Consilium Safety Group is a solution provider of fire, flame, and gas safety technologies for the marine, energy, transport, and building sectors. It is based in Gothenburg, Sweden, has more than 55 offices, and employs 900 people.

The Binder Groesswang team included Partners Thomas Schirmer, Angelika Pallwein-Prettner, Regina Kroell, and Clemens Willvonseder, Counsel Hellmut Buchroithner, Senior Associates Mona Holzgruber, Sabine Apfl-Trompete, Anian Gruber, and Mathias Drescher, and Associates Florian Hoellebauer and Larissa Wagner.

E+H, working alongside Latham & Watkins, has advised Carlyle investment firm on its majority investment in GBTEC Software and its affiliates.

GBTEC is a provider of software for business process management and governance, risk, and compliance.

According to E+H, “GBTEC’s founder and CEO Gregor Greinke remains the largest single private shareholder and CEO of GBTEC.”

The E+H team included Partners Dominik Juster, Judith Feldner, Peter Winkler, Stefan Jeitler, and Karolin Andreewitch-Wallner, Attorney at Law Titus Kahr, and Associates Bernhard Walter, Johann Witt-Doerring, Marcel Neuhauser, and Lorenz Bogensberger.

E+H did not respond to our inquiry on the matter.

CMS has advised Nordic private equity fund Alder Investment III on the acquisition of a majority stake in Austrian food industry optical sorting company Insort. Herbst Kinsky reportedly advised the sellers.

The Alder Investment III fund focuses on the development of environmentally sustainable companies.

According to CMS, Insort is a maker of high-tech imaging solutions for the food industry, used for the optical sorting of food products. Founded in 2011, Insort GmbH focuses on the development, production, and marketing of digital sorting and control systems based on its “proprietary Chemical Imaging Technology. CIT is a hyperspectral imaging technology designed for maximum performance, which enables the classification of food products based on their chemical composition and is used in-line and in real time.” The company currently employs around 60 people at three locations in Austria, the US, and Canada.

The CMS team included Partners Peter Huber, Sibylle Novak, Daniela Kroemer, Marlene Wimmer-Nistelberger, and Dieter Zandler, Senior Associates Marco Selenic, Thomas Aspalter, Jia Schulz-Cao, and Vanessa Horaceck, and Associates Livia Landskron and Shima Babanzadeh.

Editor’s Note: After this article was published, Herbst Kinsky confirmed it had advised the shareholders of Insort on the sale of a majority participation to Alder. The firm’s team included Partners Christoph Wildmoser and Sonja Hebenstreit, Attorneys-at-Law Alexander Lotz and Christoph Ludvik, and Trainee Attorneys Elisabeth Fitzek and Julia Hubmayer.

Baker McKenzie has successfully represented Google before the Court of Justice of the European Union in challenging the Austrian Communication Platforms Act, which it describes as “far-reaching content moderation legislation” aiming to regulate “large online platforms established in other EU member states.”

Austria adopted the Communication Platforms Act in December 2020. “In light of a highly critical assessment of the European Commission concerning the compatibility of the legislation with EU law, a number of information society service providers (ISSPs), including Google, requested declaratory decisions from the Austrian regulatory authority on the applicability of the legislation. When the authority confirmed its applicability, these decisions were appealed through the courts up to the Austrian Administrative Supreme Court, which referred the matter to the CJEU for a preliminary ruling,” Baker McKenzie reported.

According to the firm, on November 9, 2023, the Court of Justice of the European Union held that “an EU member state may not subject an ISSP established in another EU member state to general and abstract regulatory measures that deviate from measures of the member state in which the ISSP is established (C‑376/22). In doing so, it declared the Austrian Communication Platforms Act and, by implication, many other national online platform regulations, inapplicable to Ireland-based ISSPs.”

“For the first time, the CJEU has established that the country-of-origin principle under the E-Commerce Directive broadly bars member states from regulating ISSPs established in other member states. Due to the supremacy of EU law, the country-of-origin principle, as now interpreted by the highest European court, automatically renders contravening national legislation inapplicable,” the firm announced.

The Baker McKenzie team included Partner Lukas Feiler, Counsels Maximilian Raschhofer and Michaela Petsche, and Associates Alexander Hofmann, Silvia Grohmann, and Tim Robben.

Schoenherr has advised EHL Immobilien on the sale of the entire stake in EHL Immobilien Management to PMV Holding, a member of the IMV Immobilien Management Group.

According to Schoenherr, “EHL Immobilien is a real estate service provider specializing in commercial, investment, and residential real estate. It is one of the leading real estate companies in Austria in all major market segments, particularly the letting of offices (approximately 49,000 square meters in 2022) and the brokerage of apartments (approximately 1,850 residential units for rent, sale, or investment in 2022), which is provided by its subsidiaries.”

Based in Vienna, the IMV Immobilien Management Group is a private property management provider in Austria managing a portfolio of residential, office, and commercial properties with around 3.5 million square meters of usable space.

The Schoenherr team included Partner Robert Bachner, Attorneys at Law Daniel Wadl, Alfred Amann, and Gabriel Ebner, and Associate Alexandra Jelinek.

Schoenherr did not respond to our inquiry on the matter.

Wolf Theiss has advised the ALSO Group technology provider on its acquisition of Austrian Apple specialist the Target Group.

The transaction remains contingent on regulatory approval.

According to Wolf Theiss, “Target was founded 47 years ago and is the market leader for Apple products in Austria. As an authorized service provider, Target also provides its customers with various additional offers. With the acquisition of Apple specialist Target, ALSO becomes one of the market leaders in Austria.”

The ALSO Group is a technology provider for the ICT sector. It is currently active in 30 European countries and, through partners, in a total of 144 countries worldwide.

The Wolf Theiss team included Partners Sarah Wared and Guenter Bauer, Senior Associate Lukas Ploesch, and Associates Sophie Weber and Martin Laschan.

Schindler Attorneys, working with Finland-based Avance, has advised Triton on its acquisition of Caverion. Reportedly, Moalem Weitemeyer, Dentons, and Vinge advised on the transaction as well.

Triton is a European investment company founded in 1997. It specializes in medium-sized businesses and focuses on companies that offer goods and services in the services, healthcare, consumer goods, and industry sectors. 

Caverion is a Finland-based provider of sustainable installation and service solutions for building technology systems. It employs around 15,000 people, mainly in the Nordic countries and in the DACH region. 

The Schindler Attorneys team included Partners Clemens Philipp Schindler and Philippe Kiehl.