Category: Austria

Schoenherr has advised ProPellets Austria on a dawn raid by the Austrian Federal Competition Authority and its subsequent investigation into the Austrian pellets market. 

ProPellets Austria is an association of the Austrian wood pellet industry.

According to Schoenherr, “the FCA announced that it will close the antitrust proceedings against ProPellets Austria without further proceedings.” 

The Schoenherr team included Partner Franz Urlesberger and Attorneys at Law Lisa Todeschini and Anna Visontai.

Herbst Kinsky has advised Leder & Schuh on the acquisition of certain assets of Salamander and Delka. Schindler Advised Salamander and Delka.

Leder & Schuh is an Austrian shoe retail chain. It sells shoes, bags, and accessories through the Humanic sales lines in Austria, Bulgaria, Croatia, Czech Republic, Germany, Hungary, Romania, Slovakia, and Slovenia and Shoe4You in Austria.

Salamander and Delka were also long-established shoe retailers in Austria. According to Herbst Kinsky, “they had to discontinue their business operations as part of the restructuring of their parent company.”

The Herbst Kinsky team included Attorneys at Law Wolfgang Schwackhoefer, Sonja Hebenstreit, and Valerie Mayer and Associate Laura Moser.

The Schindler team included Partners Christoph Urbanek and Philipp Spring, Senior Associates Isolde Klinger and Kevin Luiki, and Associate Sarah Maria Penker.

We can all think of names like Champagne or Feta cheese that are intrinsically linked to the geographical origin of a product and the know-how of its producers, often passed on over many generations.

While many of these Geographical Indications (short: GIs) concern wines, spirits, foodstuffs and other agricultural products, the qualities attributed to specific local skills and traditions can also relate to non-agricultural products, such as jewellery, cutlery, glass, porcelain, textiles, lace, natural stones, woodwork, or hides and skins. Previously, the EU’s GI protection scheme did not cover craft and industrial products. This will now change when the EU regulation on GIs for craft and industrial products enters into force on 16 November 2023 (applicable from 1 December 2025), meaning it will be possible also for “non-agri” GIs to be granted protection on an EU level.

A look down the EU’s GI protection lane

Efforts to harmonise GIs at the EU level have existed for decades and have resulted in a comprehensive set of rules for the protection of wines, spirits, foodstuffs and other agricultural products. Depending on a product’s connection to the designated area in terms of its raw materials, reputation and history, GIs may be protected as

• Protected Designations of Origin (“PDO”, for food and wines);
• Protected Geographical Indication (“PGI”, for food, wines, craft and industrial products); or
• Geographical Indication (“GI”, for spirit drinks).

Unlike the typical intellectual property rights, PDOs, PGIs and GIs are usually not reserved for one entity (although there are exceptions). Rather, GI protection as a whole is designed to protect a group of producers who comply with the requirements of the relevant geographical and production specifications.

Once registered, GI protection goes beyond preventing any use which may cause actionable detriment under trademark law. For example, registered names of GIs can also be defended against any misuse, imitation or evocation, even if the consumer is not misled about the origin of the products or services (e.g. by using the name in combination with expressions like “style” or “method”). As an illustrative example of the scope of protection: The CJEU stated that GI protection for Queso Manchego (La Mancha Cheese) could be infringed even if only the appearance of a product allowed a connection to the region concerned (in such case by showing indications, which – because such were famous for the Don Quixote de La Mancha tales – can be related to the La Mancha region).[1] Furthermore, GI protection also prevents any other false and misleading indication as to the provenance, origin, nature or essential qualities of the product or any other practice liable to mislead the consumer as to the true origin of the product.

What’s coming

Although existing EU rules already provide comprehensive protection of GIs for wines, spirits, foodstuffs and other agricultural products, the EU Commission is intent on modernising[2] and strengthening the existing system of GI protection even further. Most notably, it aims to introduce uniform registration procedures for GIs, to foster the role of producer groups and to allow and protect the use of product specifications that relate to sustainability. Moreover, there are plans to bring GI protection to the digital age, which include protection against bad faith registrations and use of GIs in the domain name system. But while these efforts at reform are worth following, the biggest milestone is the extension of the EU GI protection scheme to craft and industrial products.

The new milestone

So far, protection of non-agri GIs was left to the member states, which led to very different standards and means of protection throughout the single market. While some countries such as France implemented a sui generis protection scheme for craft and industrial products, producers in other member states had to rely on alternative protection mechanisms, such as unfair competition law or the registration of (collective) trademarks.

Following the new Regulation on GI protection for craft and industrial products[3], these different levels of protection will become obsolete.

Scope of non-agri GI protection

Under the new rules, which have been drafted in accordance with the existing provisions for wines, spirits, foodstuffs and other agricultural products, names of craft and industrial products will be eligible for sui generis GI protection, if

• the product originates in a specific place, region or country;
• its given quality, reputation or other characteristic is essentially attributable to its geographical origin; and
• at least one of the production steps of the product takes place in the defined geographical area.

Well-known examples of such product names include Murano glass, Donegal Tweed or Solingen knives. However, non-agri GIs of non-EEA countries may also be protected under the new framework, provided they meet the relevant requirements and are protected in their country of origin. Notably, in many third countries, a majority of GIs relate to non-agri products. Thus, the EU’s new protection scheme will have great significance also on an international level.

In addition to the scope of GI protection provided for agricultural products (see above), the new rules for craft and industrial products explicitly address domain names containing or consisting of the registered GI.

Registering non-agri GIs

In accordance with the objective of introducing a uniform protection scheme for non-agri GIs, the registration procedure will be harmonised as well. While the EUIPO will be the central registration office, the standard application procedure will have two phases, the first of which involves a national authority.

Applications are to be submitted with a designated national authority. These national authorities are further granted substantial powers as they are mandated with conducting a first assessment and opposition procedure, before ruling in favour or against the application on a national level.

If the outcome on a national level is positive, parties (producer groups or, in special cases, individual producers) will then be able to file either a complaint or an application at the EUIPO, which will conduct EU-wide opposition procedures and, in the end, issue the final decision. If an application for GI protection of a non-agri product name is successful, the name will be included in a publicly accessible electronic register of GIs.

In deviation from the standard procedure, it is also possible in certain cases to file a direct appeal to the EUIPO. This especially concerns countries that do not have GI protection frameworks given that there is little demand from local producers to register GIs.

In a nutshell

Building on existing rules and experiences, new EU legislation will extend the GI protection to craft and industrial products. In geographic terms, the scope of application goes beyond the EU member states, as the producers in non-member states will also be entitled to apply for a registration of their third country GIs.

By Anna Katharina Tipotsch, and Antonia Hirsch, Associates, Schoenherr

Herbst Kinsky has advised Refurbed on its Series C financing round totaling EUR 54 million from investors including Evli Growth Partners, C4 Ventures, All Iron Ventures, and Speedinvest.

According to Herbst Kinsky, “the green tech start-up has been operating an online marketplace for refurbished products since 2017. The current Series C round doubles the company’s valuation and the total investment since its foundation increases to around EUR 116 million. Refurbed plans to use the fresh capital to continue its expansion in Europe and further expand its market leadership in the industry.”

In 2021, Herbst Kinsky advised on Refurbed’s Series B round (reported by CEE Legal Matters on August 16, 2021).

The Herbst Kinsky team included Partner Florian Steinhart and Attorney at Law Leon Berg.

Herbst Kinsky did not respond to our inquiry on the matter.

A new legal company form and the reduction of the minimum share capital of limited liability companies is expected to make Austria more attractive in the international corporate landscape, particularly for start-ups and venture capital companies.

According to the current draft law, the so-called flexible company (FlexCo) is introduced as a new corporate legal form in Austria. In addition to a simplified internal decision-making process of the shareholders, the creation of so-called “company value shares” is intended to facilitate the corporate participation of employees as an alternative to former, merely obligatory (virtual), forms of participation. Along with this new legal company form, the minimum share capital for limited liability companies will be reduced to EUR 10,000. The new law was originally planned to enter into force on 1 November 2023 – new prospective date for entry into force is currently 1 January 2024.

The following briefly summarizes:

• key considerations of the new flexible company;

• changes to (ordinary) limited liability companies due to the reduction of the minimum share capital; as well as

• tax-related implications thereto.

1. Flexible Company

Provided that the applicable law for the new flexible company (the so-called “FlexKapGG“) does not contain any deviating provisions, the (already existing) provisions applicable to (normal) limited liability companies shall apply. The legislator describes the FlexCo as a hybrid form between a limited liability company (GmbH) and a stock corporation (Aktiengesellschaft), since the FlexCo provides for the possibility of holding own shares as well as certain flexible capital measures.

In detail:

Simplified raising of capital / lower participation quotas: Regarding the share capital of EUR 10,000 – the same now also applies to (ordinary) limited liability companies – only EUR 5,000 have to be paid in cash. The minimum share contribution by a shareholder is only EUR 1 (instead of EUR 70 as is the case for an (ordinary) limited liability company).

Simplified decision-making process / non-uniform voting: In contrast to the (ordinary) limited liability company, the articles of association of a FlexCo may foresee that consent from all shareholders is not required for a written (circular) resolution. Insofar as the articles of association provide for this option, a resolution is deemed valid if all shareholders entitled to vote can participate in the vote – but do not necessarily have to do so. Caution: Despite this simplification, a majority of the votes cast is not sufficient for a positive resolution, but rather at least half of all available votes are required (e.g. in the case of a simple majority requirement).

A shareholder with more than one vote may also exercise the voting right inconsistently (for example, if a share is partially held in a trust for a third party).

Simple transferability: For share transfers or takeover declarations in the context of capital increases, a private deed by a notary public or lawyer shall be sufficient for the fulfilment of formal requirements as an alternative to an Austrian notarial deed.

Company value shares: The actual core of the new company form lies in the creation of a new share class, namely the so-called “company value shares”. This new class of shares is based on the idea that, particularly in the case of start-ups, the opportunity for employees to participate should be facilitated, whereby such shares only grant limited shareholder rights but with reduced economic risk. This ultimately serves as an incentive or remuneration at a time when a start-up is in the development or growth phase, with the prospect or hope for a profitable sale (exit) in the future.

• Participation/Liability: Company value shares can be issued (but do not have to be issued to employees only) to the extent of a maximum of 25% of the share capital. The lowest permissible participation quota of a capital contribution is one cent. Capital contributions must be paid in full. In any case, there is no default liability and no obligation to make additional contributions.

• Shareholders’ rights: Company value shareholders are entitled to a share in the balance sheet profit and liquidation proceeds in proportion to their paid-in share capital contributions. Other shareholders’ rights are quite restricted. Apart from the right to information and inspection of the company’s books, shareholders (with a few exceptions) have no voting rights and no right to challenge or nullify shareholders’ resolutions. They are, however, entitled to participate in shareholders’ meetings and to be informed about written resolutions being passed.

• Formal requirements: For the takeover or transfer of a company value share, only a written form requirement is necessary; that is to say, in contrast to ordinary limited liability company shares, no Austrian notarial deed is required to ensure simple and cost-efficient transferability, especially in the context of vesting programs.

• Publication: Holders of a company value share will not be individually registered with the Companies’ Register. Only the total sum of the company value shares and the thereupon paid-in capital contribution will appear in the Companies’ Register. Instead, the managing director is required to keep a share register (similar to that of a stock corporation) for the company value shares in which the name, date of birth or registration number and capital contribution, along with the thereupon paid-in capital, are to be recorded. This information is to be kept by means of two lists, namely a list of names, only containing the names, dates of birth or registration numbers of the holders of company value shares, and a list of shares that contains the details of the individual capital contributions. Only the list of names is added to the publicly available documents, while the list of shares is to be filed with the Companies’ Register, but may only be inspected in cases of demonstrable legal interest.

• Tag-along-right: The articles of association of a FlexCo must (if company value shares are issued) provide for a tag-along-right for the company value shareholders in the event that the founding shareholders sell a majority of their shares to third parties. In such a case, the price to be offered to the company value shareholders must correspond to the price which the founding shareholders will receive. The following fundamental protection mechanism shall apply in favour of the company value shareholders: In cases of successive sales by the founding shareholders, where higher prices were achieved in previous sales compared to the currently intended sale, the company value shareholders must be offered a price corresponding to the weighted average of the higher prices in previous sales and the price for the currently intended sale.

• Information requirements for the protection of employees: Before taking over a company value share for the first time, an employee (this term includes salaried employees as well as freelancers) must be informed of the nature of a company value share and the material provisions of the articles of association. This information shall be provided in writing and must be delivered verifiably to the employee two weeks prior to the takeover/subscription of the company value share.

• Selling right: The articles of association shall determine to whom, and under which conditions, employees may sell their company value shares upon termination of their employment relationship. This shall ensure that employees may also terminate their corporate relationship when leaving the company.

• Conversion into ordinary shares: Company value shares may also be converted into ordinary shares. This, however, requires the approval of all the company value shareholders concerned.

Own shares: The acquisition of own shares is generally prohibited in (ordinary) limited liability companies, whereas the acquisition of own shares is possible in the FlexCo (similar to stock corporations); this, inter alia, is the case with company value shares, if a company buys-back such shares from employees or for the purpose of keeping shares in stock, prior to the planned issuance of employee shares. FlexCo’s own shares may not exceed one third of the share capital.

Issuance of par-value shares: The articles of association may allow shares to be divided into units of at least EUR 1. Each shareholder may hold multiple units of the same or different classes of shares. The reason being that, in the course of financing rounds, shares are oftentimes issued with different rights attached thereto and the official holding of such different share classes shall be facilitated by this new provision.

Flexible capital measures: Further, the FlexCo may use several flexible capital measures (otherwise only reserved for stock corporations), such as a contingent capital increase as well as authorized capital.

Conversion: The conversion of the FlexCo into an (ordinary) limited liability company or a stock corporation (and vice versa to a FlexCo) is permitted.

2. Reduction of the minimum share capital of (ordinary) limited liability companies to EUR 10,000

As the second important pillar of the amendment, the minimum share capital of (ordinary) limited liability companies is reduced from EUR 35,000 to EUR 10,000, of which only EUR 5,000 have to be paid in. This reduction obviously intends to facilitate the establishment of (ordinary) limited liability companies as well as FlexCos for cash-strapped start-ups and small and medium sized enterprises.

Under the so-called founding privilege, the establishment of an (ordinary) limited liability company with only EUR 10,000 had already been possible (of which only EUR 5,000 had to be paid in). However, this privilege ended/expired ten years after the company’s registration with the Companies’ Register, which in turn triggered the obligation to pay the (remaining) minimum share capital of an ordinary limited liability company. Due to the current reform of the Austrian Limited Liability Act, the minimum share capital will be reduced to EUR 10,000. With respect to companies established under the founding privilege, the former obligation to pay the difference to the prior minimum share capital shall no longer apply.

3. Tax-related implications

In connection with the reduction of the minimum share capital, the minimum corporate income tax will also be reduced. According to the current draft of the Start-Up Promotion Act, with effect as of 1 January 2024, the minimum corporate income tax for (ordinary) limited liability companies shall only be EUR 500 per year.

The introduction of the FlexCo is also accompanied by a tax novelty for start-ups with respect to employee-participation schemes. According to the draft law, a new tax scheme shall be applicable for any shares issued as of 1 January 2024, whereby taxation shall occur only after such a participation has been sold. This will prevent “dry income” as well as an immediate valuation upon the issuance of such shares. Another advantage is the application of a flat tax of 27,5% applicable to three quarters of the sale proceeds following the lapse of certain time periods (three years of employment and a five-year holding period). Benefits also apply to the municipal tax, the employer contribution and social security contributions.

In order to qualify as a start-up-participation, the following conditions need to be fulfilled:

• The participation must be granted with respect to the employer company;

• The participation must be granted within ten years of the company’s founding;

• The participation must be granted free of charge or at the nominal value;

• The employer must not (i) employ more than 100 employees, (ii) generate revenues exceeding EUR 40 million and (iii) be included in a consolidated financial statement (the latter also applies to the company’s shareholder holding a participation exceeding 25%);

• The employee must not already hold a participation equal to or exceeding 10%.

The participation may then only be sold with the consent of the employer. Apart from the sale of the shares, taxation also occurs if transfer restrictions are lifted, the 10% limit is exceeded, the employer is liquidated or the employee dies, in cases where the Austrian right of taxation is restricted or the employment relationship is terminated (except for company value shares, under certain requirements). The taxable value shall then be the shares’ fair market value.

By Doris Buxbaum, Counsel, and Karin Spindler-Simader, Consultant, Wolf Theiss

Cerha Hempel has advised Tech2People on an over EUR 800,000 capital increase.

Tech2People is a Viennese healthcare start-up.

According to Cerha Hempel, the capital increase has been initiated in order to expand Tech2People’s “neuro-, physio-, and ergotherapy services and to pursue its mission to improve the quality of life of people with neurological diseases and physical disabilities.”

Previously, in 2022, Cerha Hempel advised Tech2people on its EUR 3.7 million financing round (as reported by CEE Legal Matters on April 5, 2022).

The Cerha Hempel team included Partners Jakob Hartig and Heinrich Foglar-Deinhardstein and Associate Marcus Lusar.

Deloitte Legal has advised Immofinanz on its sale of office properties in Wienerberg, Vienna, to S Immo. Dorda reportedly advised Immofinanz as well. Schoenherr reportedly advised S Immo.

In total, the target assets comprise six properties with a rentable area of around 128,000 square meters and a project development with around 20,000 square meters, which will be completed in the summer of 2023.

Immofinanz is a commercial real-estate company based in Vienna. It focuses its activities on the retail and office segments and operates in the markets of Austria, Germany, the Czech Republic, Slovakia, Hungary, Romania, Poland, and the Adriatic region.

S Immo is a real estate investment company that invests in properties in Austria, Germany, and Central and Eastern Europe.

The Deloitte Legal team included Partners Gabriele Etzl and Andreas Jank.

Schoenherr, working with Kirkland & Ellis, has advised Davis-Standard on its acquisition of the Extrusion Technology Group from Dutch investor Nimbus. Allen & Overy reportedly advised Nimbus on the deal.

Founded in 1848 and headquartered in Pawcatuck, Connecticut, Davis-Standard operates in the design, development, distribution, and aftermarket servicing of extrusion and converting technology. It has manufacturing and technical facilities in the US, Canada, China, Germany, Finland, Switzerland, and the UK.

ETG operates in the global extrusion equipment and services sector. Its operations span Europe, the US, and Asia.

The Schoenherr team included Partners Maximilian Lang, Volker Weiss, Constantin Benes, and Christian Herbst, Counsels Teresa Waidmann and Evelin Hlina, Attorneys at Law Zurab Simonishvili, Alexander Pabst, and Nina Zafoschnig, and Associates Beatrix Schima and Markus Fasching.

Editor’s Note: After this article was published, Binder Groesswang announced it had worked with the Munich office of Allen & Overy to advise Nimbus on the sale of its Extrusion Technology Group to Davis-Standard. The firm’s team included Partners Florian Khol, Horst Lukanec, Ivo Rungg, Markus Uitz, Johannes Barbist, and Regina Kroell, Counsel Hellmut Buchroithner, Attorney Mathias Drescher, Lawyers Christoph Schober, Simona Shpilsky, and Sabine Apfl-Trompeter, and Trainee Lawyers Sung-Hyek Hong, Inka Essl, Gerald Sammer, Constantin Foissner, and Florian Defrancesco.

 

Dorda, working alongside Noerr’s German and Belgian offices, has advised the Alcmene Group on its acquisition of a 25% stake in German oil refinery Miro. Taylor Wessing Germany reportedly advised Miro shareholder Esso Deutschland on the sale.

Alcmene specializes in midstream oil and commodity trading. It is a wholly-owned division of the Liwathon Group. The Liwathon Group is a privately owned industrial investment holding company with offices in Estonia, the Bahamas, and the UK.

Miro Mineraloelraffinerie Oberrhein operates as a refinery for refining crude oil into petroleum products. It is located on the Rhine River in Karlsruhe, Germany.

According to Dorda, the Vienna-based Alcmene Group has “strategically enhanced its portfolio by securing a 25% stake in Miro Mineraloelraffinerie Oberrhein. This acquisition seamlessly aligns with the overarching investment strategy of Liwathon Group, the parent company of Alcmene, which boasts ownership of more than 2.1 million cubic meters of storage space across key terminals in Estonia and the Bahamas. Liwathon’s global presence in the energy sector is continually reinforced through its investment initiatives.”

The Dorda team included Partners Andreas Mayr, Christoph Brogyanyi, and Heinrich Kuehnert, Principal Associate Florian Nikolai, and Associates Philipp Fedan and Isabel Maurer.

Vavrovsky Heine Marth has successfully represented the Bodner Group in proceedings before Austria’s Constitutional Court regarding the development plan and building permit for the Quadrill urban development project in Linz, challenged as unconstitutional by one of the project’s neighbors.

With the Quadrill project, the Bodner Group is creating around 18,000 square meters of office space, 8,400 square meters of residential space, and 2,800 square meters of retail and restaurant space. According to the firm, “the eponymous 109-meter-high Quadrill Tower will be Austria’s tallest office and hotel building outside of Vienna. This means a skyline-defining construction project for the city of Linz and a booster for the Upper Austrian economy.”

“We are very happy for our client as the legality of the project has now also been confirmed by the highest court,” Vavrovsky Heine Marth Partner and Head of Linz Office Lisa Haslinger commented.

The Vavrovsky Heine Marth team was led by Haslinger.