The Corporate Law Amendment Act 2023 essentially brings two major changes to corporate law. In addition to the modification of GmbH law, a completely new form of company will also be introduced - the flexible corporation ("FlexCo" or "FlexKapG"). The latter is intended to be particularly attractive for innovative start-ups and offer significant simplifications when founding a company.
What are benefits of the flexible corporation?
The FlexKapG is essentially based on the Austrian Limited Liability Companies Act, while it provides for more structuring options in some areas to offer greater flexibility. This is to increase the attractiveness of Austria as a business location.
§7 FlexKapGG, for example, represents a formal simplification, according to which it is sufficient for a valid written resolution to be passed if all shareholders with voting rights are given the opportunity to vote in writing. A statutory minimum quorum is therefore no longer required.
In addition, the transfer of shares is also facilitated, which - unlike in the case of a GmbH - does not require a notarial deed, but can also be carried out by way of notarial or legal private deeds. This should also make the transfer of shares more cost-effective.
The creation of the possibility of issuing so-called "company value shares" (§ 9 FlexKapGG) forms the core of the law. These are intended to enable employees to participate in the company on fair terms. These shares - which do not include voting rights at the general meeting - grant participation in the balance sheet profit and liquidation proceeds and are characterized above all by their simple transfer options (written form alone is sufficient).
Worth mentioning is the co-sale right of the enterprise value shareholders pursuant to § 10 FlexKapGG if the company founders sell the majority of their shares.
The issue of enterprise value shares is not limited to employees of the company, but must be regulated in the statute of association and is limited to 25% of the share capital.
The statutory minimum share capital is to be reduced to EUR 10,000, of which at least half (EUR 5,000) must be paid when the company is founded. As a result of the significant reduction in the minimum share capital, it will no longer be possible to make use of the formation privilege (§10b GmbHG) in future and will be replaced by the "FlexCo" or "FlexKapG".
In addition to these significant simplifications, "stricter" regulations are also provided for in some cases in contrast to GmbH (Limiteds). § 6 FlexKapGG stipulates the mandatory appointment of a supervisory board if the company is to be regarded as at least a medium-sized company within the meaning of §221 (2) UGB (Austrian Corporate Code) and is therefore subject to an audit.
Pursuant to § 25 FlexKapGG, the possibility of converting a GmbH (Austrian Limited) into a FlexKapG (or vice versa) is also created. Overall, such a conversion is advisable as the FlexKapG offers significantly more structuring options.
Changes to GmbHG (Austrian Limited Liability Companies Act)
The reduction of the minimum share capital from EUR 35,000 to EUR 10,000 is one of the most significant changes to the GmbHG. This replaces the founding privilege due to a lack of need.
As a result, there are also changes in tax and social security law. Accordingly, the minimum corporation tax is to be reduced to EUR 125 per quarter from 01.01.2024. There will also be income tax benefits due to a deferral of taxation of employee shareholdings under contribution law (ASVG).
According to the current draft bill, the Corporate Law Amendment Act 2023 would have come into force on November 1, 2023. The review period ended on 7.7.2023. However, it remains to be seen when and in what form the Company Law Amendment Act 2023 will actually come into force.