EU Mobility Directive Implemented in Austria

May 19, 2023 Benn-Ibler Rechtsanwälte

Directive (EU) 2019/2121 (Mobility Directive) is about to be implemented in Austria and will result in more legal certainty in cross-border restructurings.

To date, only cross-border mergers were regulated by law in Austria under the EC Merger Regulation. A cross-border transfer of a company’s registered business seat was also possible according to case law on the freedom of establishment, but not cross-border divisions. The new Austrian EU-Umgründungsgesetz (EU Restructuring Act, hereinafter EU-UmgrG), which will form the core of the new Austrian Gesellschaftsrechtliches Mobilitätsgesetz (Corporate Mobility Act), provides legal regulations for all three types of restructurings (mergers, conversions, divisions), making a distinction between inward and outward restructuring.

Executive and supervisory board members are liable to the company under Section 41 of the Austrian Aktiengesetz (Stock Corporation Act). However, they are also liable to the shareholders for damage suffered by the latter as a result of a cross-border restructuring unless they prove that they observed their duty of care under Section 5 EU-UmgrG.

Cross-border mergers correspond to the previous ‘cross-border transfer of registered office’. This involves the conversion of a capital company which has its registered office in a Member State and is subject to the law of that Member State (exit Member State) into a capital company subject to the law of another Member State (accession Member State) with a simultaneous transfer of the registered office.

Abuse control will be introduced under Section 21 (7) EU-UmgrG. Commercial Register Courts shall refrain from registering a conversion if the conversion might serve abusive purposes such as to circumvent employee rights, social security payments, tax obligations, claims by other creditors, or for criminal purposes. In the absence of any specific indications, however, the court can generally assume that there is no abuse.

As far as cross-border divisions are concerned, the new law allows cross-border divisions for the purpose of new formations, divisions for the purpose of new formations, and spin-offs (i.e., transfer of part of the assets to a subsidiary to be newly formed). Cross-border divisions for incorporation, on the other hand, are not provided for.

The new regulations are to come into force on 1 August 2023.

2028 BlgNR XXVII. GP - Government Bill (26.04.2023)