Corporate Law Update
Requirement of an assignment offer to be in the form of a notarial deed
- The Austrian Supreme Court has repeatedly commented on the form required by section 76 (2) GmbHG (Austrian Limited Liability Company Act). Thereby, a notarial deed is also required for an agreement that is preliminary to the forming of a GmbH (limited liability company under Austrian law), or a future assignment of shares in a GmbH. This applies to both the undertaking (Verpflichtungsgeschäft) and the performance of rights (Verfügungsgeschäft). Agreements on the assignment of shares in a GmbH that are not in the required form are invalid.
- If the articles of association contain a pre-emption right obliging an assigning shareholder to submit an assignment offer to the co-shareholders, this must be done in the form of a notarial deed pursuant to section 76 (2) GmbHG, especially if a declaration of offer is required. Only if the articles of association clearly contain the terms and conditions of the pre-emption right it could be argued that an assignment offer in the form of a notarial deed was not required. However, this was not the case at hand. In this case, the articles of association were executed as a notarial deed and contained a pre-emption right providing that a shareholder “intending” to assign shares to a third party must first offer them to the other shareholders for purchase.
- The question of whether articles of association executed as a notarial deed can fulfill the deed requirement for a declaration of offer under other circumstances remains undecided.
See the full text of the decision OGH 25.11.2020, 6 Ob 198/20s (in German)
Approval requirements for transactions between a private foundation and a partnership under civil law (GesbR)
- Pursuant to section 17 (5) PSG (Austrian Private Foundation Act) and based on prevailing case law, transactions between a foundation and its board members require – if the foundation does not a have a supervisory board – the approval of all other board members and of the competent court. Approval shall only be granted if the transaction is in the best interest of the foundation. Section 17 (5) PSG not only applies if the board member acts in its own name (Insichgeschäft), but also if it is represented by other board members.
- Section 17 (5) PSG shall be applied per analogiam on transactions which are commercially comparable to transactions between the foundation and its board member. As a general partnership under civil law (GesbR) does not have legal personality including under consideration of the GesbR Reform Act, section 17 (5) applies directly if the foundation, represented by the board member, enters into an engagement letter with the partnership under civil law in which the board member is a partner.
In the case at hand, the foundation’s board member was partner in a law firm that was organized as partnership under civil law (GesbR) and that entered into an engagement letter with the foundation.
See the full text of the decision OGH 25.11.2020, 6 Ob 151/20d (in German)