The Legal 500

Holders of bearer shares of Austrian joint-stock companies are not registered in any public register whereas registered shares must state the shareholders´ name. The Financial Action Task Force (FATF) on Money Laundering criticised in its report of 1 December 2009 the lack of transparency in connection with the holding of bearer shares in Austrian joint-stock companies.

On 12 September 2012, the European Commission ("EC") published its proposal for a single supervisory mechanism ("SSM") which covers the granting of far reaching supervi-sory powers to the European Central Bank ("ECB") over the Eurozone credit institutions starting 1 January 2013. In addition, the EC has submitted proposals for a single rulebook on capital requirements, harmonized deposit protection schemes and a single European recovery and resolution framework, all aiming at full implementation of an integrated banking union.

Post financial crisis, many listed companies used their excess liquidity to invest in treasury shares. In addition to corporate law aspects, listed companies and shareholders of listed companies must be aware of implications under Austrian takeover law.

The Act on Procedures for the Enforcement or Remission of the Shareholders' Liability for the Obligations of Deleted Companies (hereinafter: ZPUOOD; Official Gazette of the Republic of Slovenia 87/2011) which came into force on 17 November 2011 redefined the liability of shareholders for claims against companies deleted without liquidation. 

According to article 11 of Poland’s Bankruptcy and reorganisation law as of 28 February 2003 (Journal of laws 2009, No. 175, position 1361, as amended), a debtor who is a legal person (including, in particular, a limited liability company) is considered to be insolvent when the value of its liabilities exceeds the value of its assets, even if the debtor continues to pay its liabilities (balance sheet insolvency).

bankruptcy post Amendment to the Slovak Bankruptcy Act

As of January 1, 2012, the Slovak Act on Bankruptcy and Restructuring (Act No. 7/2005 Coll.) has been amended to introduce a statutory subordination of claims of related credi-tors (Section 95(3) of the Slovak Bankruptcy Act).  

On 31 January 2012, the Financial Market Authority (FMA) amended the compliance regulation (Amendment to the Emittenten-Compliance-Verordnung 2007, ECV 2007) introducing the concept of „compliance-relevant information“. The new concept not only includes inside information but also captures any information which may be “confidential and price-sensitive”. By extending the scope of the EVC 2007, the FMA aims at ensuring that the compliance regime under the ECV 2007 kicks in at the earliest stage possible.

One of the primary objectives of the reformed Austrian Insolvency Act ("IO"), which entered into force on 1 July 2010, has been to increase the number of successful corporate reorganisations and to facilitate the continuation of business operations during financial crises. After the initiation of insolvency proceedings, the creditors of an insolvent debtor shall not be entitled to revoke or terminate contracts that are essential for continuing the debtor’s business operations.

Right to review of Share Exchange Ratio and Cash Payments
Pursuant to Sec 225c of the Austrian Stock Corporation Act (AktG), shareholders may file an application for a review of the share exchange ratio determined or the cash compensation, if any, paid in the course of a merger if either of these were not adequate. However, so far, only (a) shareholder(s) who (at least taken together as a group of shareholders) held a minimum stake of 1 % or a participation in a nominal value of EUR 70,000 in at least one of the companies involved in the merger had the right to file such application.

Under Section 91 of the Stock Exchange Act, persons that directly or indirectly acquire or sell the sh ares of an issuer whose shares are admitted to trading on a regulated European Economic Area (EEA) market must immediately (or no more than two trading days later) inform the Austrian Financial Market Authority, the exchange operating company and the issuer of the share of voting rights held after the completion of the acquisition or sale if their proportion of voting rights reaches, exceeds or falls below 5%, 10%, 15%, 20%, 25%, 30%, 35%, 40%, 45%, 50%, 75% or 90%.

The competence to issue "payment orders" was shifted from the Hungarian courts to the public notaries approximately one year ago. At the same time, the possibility was introduced to request payment orders by email with digital signatures. As a consequence of these changes, in the first half of 2011, the public notaries have issued more than 310,000 payment orders.

On 15 April 2011 the Moldovan Parliament passed the Act No. 73/2011 (Act No. 73) on amending certain legal acts, among which the Act No. 1134/1997 on Joint-Stock Companies (JSC Act).

The new act imposes statutory obligations on undertakings which fail to make payments on time, even for payments due before 16 March 2011.

The economic crisis presents a real-life test for the Slovenian insolvency legislation, unequalled in its young history. Numerous insolvency proceedings against Slovene companies have revealed several serious flaws of the Insolvency Act and forced the legislator into continuous amendments.    

Czech Republic: A Surprising Decision to Prohibit Profit Distribution based on Audited Fi-nancial Statements older than Six Months

Recent amendments to the Enforcement Procedure and the Interim Protection Act facilitate repayment in enforcement proceedings.

While in other jurisdictions creditors of an insolvent company may swap their debts into equity, creditors in Austria are still confronted with a “take it or leave it” approach as to the proposed quota payment to unsecured creditors. The recent insolvencies of large Austrian companies show the inadequacy of Austrian insolvency law in that respect

In a recent decision , the Independent Finance Board Innsbruck (Unabhängiger Finanzsenat) questions a well-established practice for reducing taxes related to real estate transactions. Until the Highest Administrative Court (Verwaltungsgerichtshof) issues a final decision (not expected for at least two years), parties to real estate transactions will not have legal certainty and will need to act with caution when drafting agreements.

On 24 November 2009, the Ukrainian government introduced a number of limitations to minimise the consequences of the global financial crisis. The lifting of these limitations should signal to potential investors that Ukraine feels confident about the future of its economic and financial system.

The general legal framework of existing Bulgarian insolvency law covers the core features recognised by the international insolvency community and takes account of EC Regula-tions and Directives. On the other hand, it does not always achieve the proper balance between the need to address the debtor’s financial difficulty as efficiently as possible and the interests of the creditors

In continental Europe businesses are still highly dependent on commercial lending. While some of them have tapped the debt and equity capital markets, the reluctance of com-mercial banks to finance CAPEX or R&D absent a very strong balance sheet has left a vacuum. But the financing needs may not justify a public rights offering. In such cases, a contingent equity facility may be the answer.

According to estimates by the Polish Bank Association, 75.9% of banks in Poland use outsourcing and a further 13.8% plan to commission certain activities to external enti-ties. Current legal conditions in Poland make it difficult for banks to use outsourcing. From this year on, the possibility of using such services became even more complicated.

Special Protection of For-eign Investors Involved in Dispute Resolutions

Czech Republic: New Regulation on Financial Collateral Law

The Romanian legal framework on insolvency procedure has been consistently improved following the enactment of Insolvency Law no. 85 (Law 85), which entered into force on 21 July 2006.

In a series of recent decisions, the European Court of Justice (ECJ) held that national provisions laying down a general prohibition on sales with bonuses are precluded under the Unfair Commercial Practices Directive.  The respective Austrian provision has been found as precluded by the Directive.

Financial instruments for reducing foreign exchange risk are available but have rarely been used…until recently. The National Bank of Serbia has taken a series of actions to promote the use of financial derivates, and for the first time is loosening up its typically restrictive, formal approach.

Recent rulings by the Austrian Takeover Commission (TC) reflect a case by case ap-proach to acting in concert situations and changes in shareholder arrangements.

On October 20 2010 insolvency proceedings were opened against A-TEC Industries AG, the Austrian holding company of industrial group A-TEC. With outstanding debt of around €650 million (including contingent claims), this insolvency is set to be the third-largest insolvency in Austria to date. Claims included around €300 million of bond debt (two convertible bonds and a corporate bond) issued by the company.

In autumn 2010 the draft of the amended Austrian Banking Act (Bankwesengesetz; BWG) announced restrictions of the variable remuneration policy of credit institutions, irrespective of general rules of civil and employment law.

Together with adopting the 2011 budget the Austrian legislator amended a variety of laws and regulations. One amendment concerns the penalties for not disclosing the annual financial statements with the companies' register (Firmenbuch), which are considerably tightened. Until 28 February 2011,so far missed disclosures may be made without triggering the new penalties…

According to the Austrian Commercial Code (Unternehmensgesetzbuch - UGB), managing directors (Geschäftsführer / Vorstandsmitglieder) of Austrian corporations (Kapitalgesell-schaften) are obliged to file the corporation's (audited) financial statements (Jahresab-schluss und Lagebericht, if applicable) with the competent Austrian Commercial Register (Firmenbuch) within 9 months after the respective balance sheet date (cp. Art 277 para 1 UGB).

Country Q&A Austria: What are the most common forms of security taken in relation to immovable and movable property? Are any specific formalities required for the creation of security by companies?

As in many other jurisdictions, the Austrian government was forced to react quickly to the financial crisis in the autumn of 2008. Providing support to banks was a central component of the legislative measures on financial market stabilisation that were adopted in late October 2008. After the joint declaration on the concerted European action plan on October 12 2008, the Austrian government promptly the next day announced a package of measures intended to be taken. One week later the Austrian parliament adopted the implementing legislation on financial market stabilisation which went into effect in large part on October 27 2008. The European Commission state aid approval of the Austrian financial market stabilisation measures was communicated on December 10 2008 and extended to the end of this year by a decision rendered on June 30 2009.

Austrian law distinguishes between composition proceedings in accordance with the Composition Code (Ausgleichsordnung-AO) and bankruptcy proceedings in accordance with the Bankruptcy Code (Konkursordnung-KO).

Bankruptcy proceedings have to be opened if the debtor is unable to pay. In particular, inability to pay must be assumed if the debtor suspends payments. Inability to pay does not require that creditors are actively seeking payment.

Bankruptcy proceedings are also opened in the event of overindebtedness in relation to commercial companies if no personally liable partner is a natural person, in relation to the assets of legal entities and in relation to the estates of deceased persons.

On 13 October 2008 the Austrian government announced coordinated stability measures for the financial markets following the joint declaration on the concerted European action plan of the euro area countries last Sunday. The stability measures approved on Monday by the Austrian cabinet (Ministerrat) aim at protecting banks and insurance companies swiftly and decisively from the possibly serious effects of the international financial crisis.

On 13 October 2008 the Austrian government announced coordinated stability measures for the financial markets following the joint declaration on the concerted European action plan of the euro area countries on 12 October 2008.

Der Standard, Wirtschaft & Recht, Ausgabe vom 19.11.2008

From 1 June 2008 onwards, significant changes to the Vienna Stock Exchange's rules have to be respected by market participants listed in the premium segment of the Vienna Stock Exchange (VSE).

Foreign direct investment can be a key factor in a country's ability to achieve economic development, increase employment or increase exports. Attracting foreign investment is of special importance for countries like Bosnia and Herzegovina (BiH), whose transition from a socialist economy to a market economy has been disrupted by conflict. With awareness of this need, BiH is constantly trying to improve its business climate to attract foreign investors.

Effective as of July 1 2008, the Czech Republic has transposed into its national legislation Directive 2004/39/EC on markets in financial instruments (Mifid) and Directive 2006/73/EC, implementing Mifid as regards organisational requirements and operating conditions for investment firms and defined terms for the purposes of Mifid. The transposition has been effected mainly by way of a complex amendment of the Capital Markets Act. The amendment was promulgated on June 30 2008 (only one day before its effective date), with a delay against the deadline of January 31 2007 for the transposition of Mifid into national legislation. The respective provisions of the national legislation should have been applicable as of November 1 2007.