Corporate law in Austria: evolutionary changes

Competitiveness with other jurisdictions

One of the primary catalysts for the recent changes in Austrian corporate law has been the need to enhance the country's competitiveness on the global stage, particularly for investors. As jurisdictions must offer attractive legal frameworks to entice corporations to establish and maintain their operations within their borders, Austria has introduced a new corporate form, the "Flexible Company" (FlexCo). Primarily aimed at start-ups, it offers more flexibility with regard to shares, decision-making and capital measures. The introduction of the FlexCo is undoubtedly the biggest evolution in Austrian company law in a long time and is particularly important for law firms.

Influence of EU law

Another significant driver of recent changes in Austrian corporate law has been the influence of EU law. In implementing the EU Mobility Directive ((EU) 2019/2121), Austria has adopted the EU Reorganisation Act, providing a legal basis for cross-border conversions, divisions and mergers within the EU. Austria has also adopted the Corporate Digitalisation Act 2023, introducing grounds for disqualification for managing directors of limited liability companies or management board members of joint-stock companies.

Impact of COVID-19

The COVID-19 pandemic has also played a pivotal role in shaping recent changes. In response to the pandemic, Austria introduced reforms to facilitate remote shareholder meetings. Adopted in July 2023, the Virtual Shareholder Meeting Act permits limited liability companies and joint-stock companies to hold shareholder meetings in various formats, including virtual meetings via videoconference or hybrid meetings. To legally conduct virtual or hybrid shareholder meetings in the future, the articles of association must include a provision authorising them.

Evolution, not revolution

While the outlined changes to Austrian corporate law are significant, they do not constitute a wholesale revolution. Instead, they are a series of evolutionary steps that build upon the existing legal framework. These reforms are designed to modernise and enhance the current system, ensuring continuity and stability while addressing the evolving needs of businesses in a rapidly changing world.

As Austria embarks on this new chapter in its corporate law history, it is important to recognise that this is not the end of the evolution. New laws must be shaped by practice and case law, as some rules remain ambiguous and unclear. Legal practitioners, businesses and courts will need to collaborate closely to interpret and apply these changes effectively. Furthermore, more new laws are on the horizon as Austria continues to adapt to emerging trends and challenges in the corporate world. The journey of corporate law reform in Austria is ongoing, and the latest developments are just the beginning of a dynamic and transformative process.

authors: Gabriel Ebner, Roland Misic