Pre-Emptive Rights On Shares Unenforceable In Insolvency Proceedings?

Shareholders of Austrian limited liability companies usually want to have influence over whom they are associated with. That's why shareholders often agree on a pre-emptive right (Aufgriffsrecht) to purchase existing shares in certain cases, e.g. in case of insolvency proceedings against a shareholder. However, according to the recent case law of the Regional Court of Linz on limited liability companies, pre-emptive rights to purchase the shares of an insolvent shareholder are invalid and unenforceable.

Know your co-shareholders

There are many ways to prevent shareholders from selling and transferring their shares to third parties without the consent or knowledge of the co-shareholders. Shareholders typically do not want to find themselves in a situation where an unknown person becomes a co-shareholder or even has certain majority rights.