Treasury Shares – Austrian Takeover Law Aspects

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. Treasury shares proportionally impact the shareholding quota of all shareholders and the calculation of the various control thresholds under the Austrian Takeover Act. For this and other reasons, treasury shares may not be an adequate means to defend against a hostile takeover. A 2010 ruling of the Austrian Takeover Commission relating to Telekom Austria AG highlights the issue.

The financial crisis caused generally lower stock prices. Furthermore, cost discipline, disposals of non-core businesses, and restraint of industrial companies in costly M&A transactions (resulting from increased risk awareness of boards and uncertainties in the valuations of potential targets) have left industrial companies with substantial