After a six-year legislative process, the Austrian Parliament has enacted the Substitution of Equity Act (Eigenkapitalersatz-Gesetz (EKEG)), which will come into force on January 1 2004. The Act deals with the concept of a shareholder loan that replaces equity and is treated as equity (Eigenkapitalersatz) when a company is in financial crisis - a peculiarity of German and Austrian corporate law. In the absence of explicit statutory provisions, the Austrian Supreme Court (Oberster Gerichtshof (OGH)) has so far applied a modified approach of German law principles to shareholder loans substituting equity (eigenkapitalersetzende Gesellschafterdarlehen).
January 01 2004