Austria: The 2009 Stock Corporation Amendment Act - The New Share Register

This article was originally published in the schoenherr roadmap`10 - if you would like to receive a complimentary copy of this publication, please visit: http://www.schoenherr.eu/roadmap.

Some things never change, do they? In fact, they do. The 2009 Stock Corporation Amendment Act (Aktienrechtsänderungsgesetz; AktRÄG) has not only implemented a number of important changes to the provisions of the Stock Corporation Act (Aktiengesetz; AktG) governing shareholders' meetings of Austrian Stock Corporations. In addition, new rules governing the share register (Aktienbuch) have been introduced. The AktRÄG entered into force on 1 August 2009.

Who is affected?

A share register must be kept by all Austrian stock corporations that have issued registered shares (Namensaktien) or interim certificates (Zwischenscheine). It is the obligation of the company's management board (Vorstand) to ensure that a share register is kept and that entries are being duly made if and when required.

A share register can be kept both in paper form and electronically.

What needs to be registered?

Until now, the name of the shareholder, its occupation and its place of residence needed to be recorded in the share register. In addition, the number and type of shares held by a shareholder had to be registered.

The AktRÄG now sets forth that the (company) name, the address for services and the date of birth (in case of individuals), respectively the register and registration number (in case of entities) need to be registered. Furthermore, the number of shares or, in case of par-value shares, their nominal value, must be entered into the register.

The registration process

The management board makes changes to the share register upon application and submission of proof of a transfer of shares by a shareholder. Generally, both the transferor and the transferee may file for an amendment of the share register. However, if the transferee is registered at the same time as the deletion of the transferor is entered into the register, the transferee's consent will be required and evidence of such consent will need to be provided.

No particular form requirements apply to notifications for changes.

Deletion of wrongly made entries

In the past, the prevailing position in Austria was that a company could not register a new shareholder on the basis of its own assessment that an entry was wrongly made. The only exceptions generally accepted were corrections of obvious mistakes and typos.

Thus, what must be seen as one of the core changes under the AktRÄG is the introduction of a procedure that allows a company to actively seek the deletion of an en- try in the share register. The new rules implemented under the AktRÄG are closely modelled on the relevant provisions of the German Stock Corporation Act, which is helpful in interpreting the new rules.

A deletion of an entry by the company is permissibly if the entry was "wrongly" made. An entry is generally deemed to have been "wrongly" made if:

  1. the entry does not correctly reflect the underlying legal situation at the time when the entry was made; or
  2. despite being correct in substance, the correct procedure was not followed when the entry was made.

As regards obvious mistakes (including typos), the position remains unchanged. These may be corrected by the company without the need to follow the new deletion procedure.

If an entry was "wrongly" made, the management board is under an obligation to initiate the deletion procedure. The company must notify all "involved parties" of its intention to delete the entry. This intended consequence must be made clear in the notice. Adequate time must be given to allow for the filing of an objection.

Anybody whose rights may be affected by a deletion is deemed to be an "involved party". In any case, however, the currently registered shareholder, as well as their immediate and earlier predecessors (as long as they may still be held liable for shareholder contributions under applicable law) must be notified.

The objection period must be sufficiently long to allow all involved parties to asses the situation, obtain counsel and react. It is argued that a period of less than one month will only be justifiable in exceptional circumstances. On the other hand, a period of 30 days appears to be generally sufficient, unless the matter is unusually complex.

In the absence of an objection, the company may proceed to delete the entry upon expiry of the objection period. In case of an objection, the objection will need to be overcome by voluntary withdrawal or by seeking court redress. No grounds need to be given in the objection letter.

Effects of a deletion

Deletion of an entry results in termination of the effects of a registration in the share register, in particular of the presumption that the registered person or entity is a shareholder. The immediate predecessor is registered as a shareholder again.

The effects of a deletion are not, however, retroactive. This means that corporate measures implemented under participation of the now deleted shareholder (e.g. shareholder resolutions) remain valid.

The 2009 Stock Corporation Amendment Act has introduced a number of important changes to the provisions governing the share register. One of the changes relates to the information that needs to be registered. Furthermore, the procedure for changes to registrations as a consequence of share transfers has been simplified. Finally, a new procedure has been introduced that allows companies to delete wrongly made entries.

This article was originally published in the schoenherr roadmap`10 - if you would like to receive a complimentary copy of this publication, please visit: http://www.schoenherr.eu/roadmap.

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.

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