What is the main source of law authorizing this entity form?

Austrian Act on Limited Liability Companies ("GmbH Gesetz").

Give a brief summary of the entity form:

Does the entity possess separate legal personality?

The GmbH has legal personality.

(Maximum) period of existence

No maximum period of existence; usually the GmbH is incorporated for an indefinite period, but a limited period may be included in the articles of association.

Governing document(s)

The GmbH is governed by its articles of association.

Liability of incorporators / shareholders

The shareholders in general are not personally liable for the liabilities of the company. Exceptions exist with regard to the payment of the shareholders’ own capital contribution and a joint liability for the contribution of the other shareholders, the refund of the contribution and in case of gross undercapitalisation in case of insolvency.

(Governing) bodies

Governing bodies are: the shareholders' meeting ("Generalversammlung") , the shareholders' meeting ("Generalversammlung") , and the supervisory board ("Aufsichtsrat") (voluntary; legally required under certain conditions).

Other particularities

N/A

Can this type of entity be involved in international transactions and restructurings (e.g. cross border mergers, asset acquisitions, equity acquisitions, etc.)?

The acquisition of assets, equity, etc. abroad is possible without limitation.

International restructurings are possible pursuant to specific legislation (mergers within the EU) or pursuant to jurisdiction of the European Court of Justice (e.g. crossborder relocations with change of legal form).

Can this type of entity be publicly listed or held?

No.

Can this type of entity be used for a non-profit or charitable organization?

Yes.

Give a brief summary of the process of incorporation, formation, or organization, including:

Main documents required

Main documents are the:

• articles of association;
• appointment of at least one managing director; and
• documents for the registration at the Austrian Commercial Register (" Firmenbuch").

Involvement of notary, company register, governmental authorities

The articles of association need to be signed in the form of an Austrian notarial deed;

The GmbH must be registered with the Austrian Commercial Register ("Firmenbuch") but already comes into existence upon execution of the articles of association (notarial deed) – the filing needs to be notarially certified; and

Possibility of a simplified foundation without the requirement of a notary if (i) there is only one incorporator who must be a natural person and who is at the same time appointed as sole managing director of the company and (ii) the share capital is exactly EUR 35,000.

Timing (estimate)

Incorporation takes between a few days and a few weeks, particularly depending on the complexity of the shareholder structure and the workload of the Commercial Register.

Main costs, including registration and similar fees (excluding legal fees)

The main costs are the lawyers/notaries fees. The registration fee is about EUR 400.

Is a description of the anticipated business or purpose of the entity required for incorporation, formation or organization?

The corporate objects / purpose must be stated in the articles of association.

Minimum number of incorporators / shareholders and residency requirements

Minimum of one shareholder, no residency requirements.

Minimum number of directors (or other applicable officers) and residency requirements

Minimum of one managing director, no residency requirements.

Minimum share capital, or equivalent, and payment requirements (including opening a bank account)

Minimum share capital of EUR 35,000, whereby at least 50% needs to be paid up in cash upon foundation. Contribution in kind is possible.

Company may opt for the foundation privilege, pursuant to which a privileged share capital of not less than EUR 10,000 is created of which at least 50% needs to be paid up in cash upon foundation. Within 10 years from foundation the foundation privilege needs to be quit, whereby at least 50% of the stated share capital (of at least EUR 35,000) needs to be paid up.

Is the physical presence of incorporators / directors required in the jurisdiction for incorporation, formation or organization?

Shareholders need to be either physically present or represented by PoA, which has to be notarially certified and, in case, legalized.

Managing director(s) need to sign the registration application in notarially certified form, no representation possible. Legally it is possible that the managing directors sign abroad (in front of a foreign notary to certify the signature).

Is a tax identification number, or equivalent, required? If so, how is it obtained?

Tax identification number will be provided by tax authorities on registration. VAT-ID will be provided by tax authorities on request.

What is the title of the applicable company registry?

Commercial Register ("Firmenbuch").

What types of information must be filed at the (company) register, and which of them will it be publicly available, e.g.:

The following information must be filed at the Commercial Register and is publicly available:

• Name of the company.
• Legal form.
• Registered office and the business address relevant for deliveries.
• A short description of the branch of business.
• Share capital (foundation privilege, in case).
• Effective date of annual financial statements.
• Articles of association.
• Managing directors and their representation power.
• Further representatives (authorized signatories; " Prokuristen"), if any.
• Names of shareholders and their capital contributions.
• Insolvency proceedings.
• Liquidation.

In addition, ultimate beneficial owners of Austrian legal entities (with some exceptions) must be registered with the Austrian UBO Register (" Register der wirtschaftlichen Eigentümer ") according to the provisions of the Austrian UBO Register Act (" Wirtschaftliche Eigentümer Register Gesetz – WiEReG "). Each company is obliged to identify and verify its ultimate beneficial owners and report the requested data to the register.

What is the title of the executive body and its members? What are their main duties, tasks and responsibilities?

Managing director(s) are (solely or jointly) representing the company. Managing directors are responsible for all matters and obliged to act diligently and in the interests of the company in accordance with the objects as provided in the articles.

How are the members of the executive body appointed, dismissed and replaced?

Managing directors are appointed by shareholders' resolution (in a shareholders' meeting or by way of written resolution) or directly in the articles of association. They may be dismissed by shareholders' resolution.

Is it possible to appoint corporate directors or must all directors be natural persons?

No.

Is there a requirement to have non-executive directors? How are they appointed, dismissed and replaced? Do non-executive directors serve on a separate body (two-tier structure) or can a one-tier board (with executive and non-executives) be appointed, or is some alternate structure used?

It is possible to voluntarily appoint a supervisory board (" Aufsichtsrat "). However, that does not change the responsibility of the managing director(s). Depending on the number of employees, a supervisory board (including employee representatives) may be mandatory.

What is the title of the body of owners / shareholders / members, and what are the main tasks / responsibilities / powers of that body?

The shareholders' meeting (" Generalversammlung ") (consisting of all shareholders) has all rights and responsibilities provided to it by law and the articles of association and which are not imposed upon the managing directors or other bodies within the company. The main rights concern amending the articles, appointment and dismissing of managing directors, adoption of the financial statements, profit distributions, measures regarding the share capital (e.g. capital increases/reductions) and liquidation of the company.

The shareholder’s meeting has the right to instruct the managing directors, but has no representation rights.

What are the majority and quorum requirements for decisions by the shareholders? Can they be varied or changed?

In general, resolutions can be passed with simple majority (50+1 votes).

Some measures require higher majorities (e.g. 75% for the amendment of the articles of association). Different majorities may be stipulated in the articles of association.

Any special governance regimes (e.g. depending on size, being listed at a stock exchange, or other criteria)?

Mandatory supervisory board ("Aufsichtsrat ") depending on number of employees (critical from 300 onwards).

What are the periodic accounting obligations incumbent upon the entity? To whom must those accounts be submitted?

Annual financial statements need to be set up by the managing directors, in case of mandatory audit requirements, audited, and approved by the shareholders' meeting (within eight months after the end of the fiscal year). The financial statements must be filed with the Commercial Register.

Is the entity permitted to determine its own financial year?

Yes, to be determined in the articles of association.

Is the entity subject to any statutory (external) auditor obligations?

Depending on the balance sheet total, turnover and number of employees.

Requirements to appoint other persons (officers, secretary, internal auditor / accountants). If so, what are their functions? Are there any residency requirements?

In order to carry out a trade ("Gewerbe "), the company needs to appoint a manager pursuant to trade law (" Gewerberechtlicher Geschäftsführer "). The manager is responsible for ensuring compliance with the applicable trade law provisions as well as the proper professional conduct of business.

Citizenship requirements: Austria, EEA signatory states, Switzerland, other third countries with residence permit.

Residency requirements: Austria, Switzerland or any EEA signatory state.

 

What is the title designated for 'ownership interests' (e.g. shares, quota, interests, membership)?

Shares (" Geschäftsanteile ").

Are different classes of ownership interests possible? If so, what are some examples of different classes?

Not legally regulated, but can be determined on a contractual basis (e.g. preferred shares, share participation rights).

What documentation is required for the transfer of ownership interests?

Share purchase/transfer agreement to be executed in the form of a notarial deed.

Are there any additional formal requirements required for the transfer of ownership (notary, approvals, stamping, filings, corporate records)?

Approval by the shareholder’s meeting might be stipulated in the articles of association.

SPA to be signed in the form of a notarial deed, otherwise the share transfer is void.

The share transfer needs to be filed with the Commercial Register, however the registration is just for information purposes but has no impact on the legal effectiveness of the share transfer.

Are there any applicable stamp duties imposed when transferring ownership interests?

No.

How are shares issued? (including information on payment obligations, registration requirements)

New shares are issued by way of capital increase, which requires a resolution by the shareholders' meeting and the execution of a subscription declaration by the acquirer of the new shares.

Effectiveness of the capital increase upon registration with the Commercial Register. No physical issuance of shares.

Further information on equity contributions, e.g., non-cash payments on shares, (share premium) contributions without issuances of shares, can partially paid shares/ownership interests be permitted and what are the restrictions on them?

Contributions in kind are possible.

Shareholders’ contributions into the capital reserves are possible without issuing shares.

Any requirements with respect to share cancellation, share repurchase and other capital reductions

Share cancellations and repurchases are not possible.

Share capital can be decreased by formal proceedings.

Any requirements with respect to distributions to shareholders?

Shareholders shall only have a claim to the balance sheet profit based on the financial statements. Any other usage of a company’s capital for the benefit of shareholders is prohibited unless:

• payment from the company occurs within the scope of a properly authorized capital reduction; or
• payment from or other performance of the company is made based on an agreement between the company and its shareholders that satisfies the third party’s arm’s length principle.

Can the owners or shareholders adopt a restrictive or governing agreement among themselves such as a Shareholders Agreement?

Yes.

Which are the typical annual maintenance costs of maintaining the existence and legal good standing of such an entity (excluding legal fees)?

Main costs arise for the preparation of the annual financial statements. Costs for filings are negligible.

What are the general corporate tax rates? (Specify if there is a national versus local distinction).

For 2021: corporate tax (" Körperschaftssteuer ") of 25% on profits, whereby a 'minimum corporate tax' of 5 per cent of the statutory minimum share capital of EUR 35,000, a total therefore of EUR 1,750, is to be paid per calendar year.

Summary of any specific matters, e.g. recent or prospective major legal developments

Currently Austria is working on the implementation of a new (additional) legal entity form that offers more flexibility than the existing GmbH and AG, especially for start-up companies.