The Insolvency Law Reform Act 1997 (1997 Act) contains amendments to Austrian corporate law, including statutory provisions to strengthen the supervisory board's control function in joint stock corporations (AG) and in limited liability companies (GmbH). The following reforms should more effectively prevent corporate insolvencies:
- extending the management board's reporting requirements vis-à-vis the supervisory board;
- limiting the number of supervisory board seats any member may hold;
- requiring consultation with a chartered accountant before the supervisory board resolves on the annual accounts;
- requiring at least four annual meetings of the supervisory board.
Other provisions concern the reduction of nominal capital in the restructuring of troubled corporations. They amend existing rules on AGs, and introduce similar rules for GmbHs. Before the 1997 Act, the nominal capital of AGs could be be reduced below the statutory minimum (Sch1 million /US$80,000), provided the reduction of capital was linked to a capital increase and the nominal capital after implementation of reduction of capital and capital increase reached at least the statutory minimum capital. Under the 1997 Act, the nominal capital of GmbHs may also be temporarily reduced below the statutory minimum (Sch500,000), provided its creditors are individually notified of the capital reduction.
A special procedure was introduced to give the investor more security in this respect. Investors were reluctant to transfer the relevant amount to a company account before the capital increase became effective. But the transfer was required by the Commercial Register for filing and registration. Under the new provisions, the transaction may be entered into the Commercial Register as soon as the subscriber transfers the relevant amount into a private bank account, provided the bank commits itself to put the amount at the disposal of the company on receiving proof that the transaction has been filed. The subscriber may not dispose of the amount held in the account before the end of the subscription period.
Finally, the statutory fees for registration with the Commercial Register have been amended. All registration fees are now set at a fixed rate. Previously, fees for the initial registration of corporations and for the registration of capital increases of corporations were set at a percentage of the nominal capital of the corporation or the new capital, respectively. The amendments followed concerns about the conformity of the existing system with Directive 69/335/EEC of July 17 1969. Registration fees from corporations with a high substantial nominal capital are now lower, as well as registrations of substantial capital increases. Motions for the repayment of fees for the initial registration of corporations and for the registration of capital increases of corporations between January 1 1995 (date of Austrian EU-accession), and October 1 1997 (coming into force of the Insolvency Reform Act 1997), may be filed with the court of registration based on the non-conformity of the previously variable fees with Directive 69/335/EEC of July 17 1969.
Peter Huber and Kurt Retter