‘Flexible Capital Companies’: Austrian Company Law Newbies

Jun 9, 2023 Benn-Ibler Rechtsanwälte

The Austrian Federal Ministry of Justice has recently submitted for review its draft of the long-awaited Company Law Amendment Act 2023. Alongside changes to the law on limited liability companies (GmbH), the bill also contains a new legal structure designed specifically for start-ups, called ‘flexible capital companies.’

The changes in the GmbH Act (hereinafter GmbHG) remain manageable in number: The minimum share capital for a GmbH will be lowered from EUR 35,000 to EUR 10,000. At the same time, the formation privilege under Section 10b GmbHG will be abolished. Transitional provisions will be put in place for companies that have already been founded with privileges.

At the heart of the reform, however, are so-called flexible corporations or flexible companies. They will be abbreviated as ‘FlexKapG’ or ‘FlexCo.’ The English abbreviation ‘Co’ is legally acceptable. A FlexKapG is a kind of hybrid of a GmbH and a public limited company. The provisions of the GmbHG will apply subsidiarily.

The most striking difference to a GmbH consists of the new company value shares, which are intended to particularly promote employee participation. This form of participation in a company will include few shareholder rights, but on the other hand also constitutes an extremely low economic risk to the shareholders. For example, corporate value shareholders will have practically no voting rights and no rights of appeal (unless it concerns amendments to the rights of the corporate value shareholders). At the same time, however, shareholders have no default liability or obligation to make additional contributions. No notarial deed is required for acquisition and transfer; a simple written form is sufficient.

Co-sale rights are required for enterprise value shares: In the event that the founding shareholders sell a majority of their shares, they must guarantee that the purchasers will also offer to purchase their shares from the enterprise value shareholders on the same terms.

Enterprise value shares can be issued up to an amount of 25% of the company’s share capital.

The amendments are scheduled to come into force on 1 November 2023.

276/ME – XXVII. GP (07.07.2023)