Liability For Violation Of Capital Maintenance Rules

Executive Summary:

Austrian capital maintenance rules are strict and comprehensive. Under recent case law, even outside legal counsel can be held liable by the client (or a later insolvency receiver) if they fail to prevent the violation of Austrian capital maintenance rules by their client. Where the sole shareholder is also the sole managing director, this can put both client and counsel in a difficult position.

Austrian capital maintenance rules provide comprehensive protection of all company assets

Austrian capital maintenance rules for corporations (stock corporations or Aktiengesellschaften and companies with limited liability or GmbHs) are among the strictest in Europe. Unlike German corporate law, which only protects specified, statutory, capital (Stammkapital or Grundkapital), Austrian capital maintenance rules protect all assets of the corporation. An Austrian corporation may not make any payments, or in any way use company assets, for the benefit of