On Friday, 22 March 2013, a draft new law (Gesellschaftsrechts-Änderungsgesetz 2013 – GesRÄG 2013) was revealed by Minister of Justice Beatrix Karl and Minister of Economy Reinhold Mitterlehner. The GesRÄG 2013, which is expected to come into force on 1 July 2013, aims at facilitating the establishment of an Austrian limited liability company (Gesellschaft mit beschränkter Haftung – GmbH). This article provides a summary of the draft.
Introduction
In a series of landmark decisions, the European Court of Justice (ECJ) has provided for the cross-border mobility of companies within the EU. Fearing the competition of foreign legal entities, many European countries have consequently reformed their corporate laws. The proposed GesRÄG 2013 will finally draw a line – at least temporarily – under the respective discussion in Austria. The new law intends to make establishing a GmbH easier and cheaper.
Minimum share capital
First of all, the minimum share capital will be reduced from EUR 35,000 to EUR 10,000. Out of the share capital to be paid in cash, an amount of at least EUR 5,000 has to be paid when establishing the company.
Corporate income tax
The minimum corporate income tax (Mindest-Körperschaftsteuer) depends on the minimum share capital. Thus, the reduction of the minimum share capital will automatically lead to a reduction in the minimum corporate income tax from currently EUR 1,750 to EUR 500 per year.
Attorney’s and notary’s fees
Both attorney's and notary's fees in connection with the registration of a GmbH are based on the share capital of the company. As a consequence, the reduced minimum share capital will bring along with it lower attorney's and notary's fees. In addition, the establishment of GmbH fulfilling the requirements of the Start-up Funding Law (Neugründungsförderungsgesetz) will become cheaper.
Publication in official gazette
The registration of the newly established company in the commercial register will no longer have to be published in Austria’s official gazette (Amtsblatt zur Wiener Zeitung). The publication in the freely accessible edict database (Ediktsdatei) will be sufficient.
Miscellaneous
According to the new law, the managing directors will be obliged to convene a shareholders’ meeting in case the equity ratio (Eigenkapitalquote; § 23 URG) drops below 8% and the expected time for the repayment of debts (fiktive Schuldentilgungsdauer; § 24 URG) exceeds 15 years.
Finally, a remarkable amendment will be made to the Insolvency Statute (Insolvenzordnung): according to the draft, if a shareholder holds more than 50% of a corporation’s share capital, that shareholder is obliged to apply for the commencement of bankruptcy proceedings if the legal requirements are met and the corporation has no statutory representative (organschaftlicher Vertreter).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.