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The qualification and background of the shareholders of regulated financial services providers (such as credit institutions, insurance undertakings and investment firms), their commercial and strategic aims and the quality and source of the funds available to them for acquisition or for injection into an Austrian regulated institution has always been of interest for supervisors.

With a view to putting potential acquirers on an equal footing by harmonizing procedural aspects and substantive criteria, the European Commission, following up on previous attempts of convergence made by the CEBS (the banking sector Level 3 Committee) and CEIOPS (the insurance sector Level 3 Committee), has drawn up a new directive intended to uniformly cover the regulatory aspects of M&A transactions in the banking, insurance and investment firm sectors. Austrian implementing legislation entered into force on 1 April 2009.

EU framework

Based on ECOFIN considerations, the European Commission mandated CEBS and CEIPOS with calls for technical advice in 2005. It became obvious that the focus of the work on the EU level lay with the precise determination of criteria as to what would constitute the sound and prudent management of a credit institution/ insurance undertaking. Other areas of interest included the mutual recognition of decisions taken by EU supervisory authorities, the thresholds triggering notification/supervisory action and enhanced transparency in circumstances where authorities chose to formally oppose the proposed acquisition. CEBS proposed a set of substantive criteria that appeared well known from established supervisory practice (fit and proper test), but was more reluctant about automatic mutual recognition, changing the thresholds or the publication of negative decisions (refusals). Further legislative action was characterised by an extension of the new framework to the banking, insurance and investment firm sectors and by joint participation of the 3L3 Committees in the decision making process.

Directive 2007/44/EC (amending Directives 2006/48/EC, 2004/39/EC, 92/49/EC, 2002/83/EC and 2005/68/EC) entered into force on 21 September 2007. Whereas according to ECOFIN, the Banking Advisory Committee and the Commission, the new framework had been intended to prevent supervisory rules from having an impact on cross-border consolidation and to eliminate obstacles1, Directive 2007/44/EC eventually provided for a longer assessment period (changing from 3 months to 60 working days, subject to further extension) and led to the adoption of a 3L3 Guideline that served as the basis for a long and detailed list of documents and information to be provided by acquirers2.

New Austrian legal framework – Key facts and considerations

Extended statutory assessment period

The statutory assessment period has been extended to up to 60 working days (subject to further extension if information was found to be incomplete) as from having acknowledged receipt of the notification and required information in writing.

As the assessment period will not be triggered until the Austrian Financial Market Authority (FMA) has confirmed the formal completeness of the notification and required information, acquirers should be prepared for a rather lengthy period of information and document gathering before the administrative procedure formally starts. It can be seen in practice that this puts unnecessary timing pressure on all parties involved (including supervisors) because supervisors are not in a position to formally examine the notification before the notification and all documents required have been submitted. And acquirers may notice that existing timing constraints in respect of the envisaged M&A transaction have been aggravated by the lengthy information gathering stage.

Information from the acquirer

The documents/information evidencing that the influence exercised by the acquirer will not operate to the detriment of the sound and prudent management of the Austrian credit institution/insurance undertaking/investment firm are mentioned in a list provided under a regulation adopted by the FMA. Certain exemptions apply to authorized and supervised EEA institutions.

The list is long and requires acquirers to present detailed information. Where acquirers intend to change the business model or strategy of the target institution, detailed commercial and financial information will have to be presented. Whereas gathering information is a time-consuming exercise in general, the list also requires acquirers to present certain information that might be considered delicate under certain circumstances (income statement of natural persons, income tax statements of natural persons, agreements executed in view of the proposed transaction, source of funds). All documents/information must be in the German language; however, the FMA may (partially) waive such requirement. More formal submissions (such as the articles of association or declarations to be made in respect of any criminal record) should be expected to be submitted as German originals or as a certified German translation. In general, and in a less formalised context, English language documents tend to be widely accepted.

From a legislative point of view, the statutory provision according to which the FMA adopted the detailed list of documents/information by way of a regulation refers to the 3L3 framework agreed upon by supervisors3 (which, by its very nature, is not legally binding).

Mandatory waiting period?

Whereas Austrian legislation itself does not contain explicit provisions to the effect that the statutory assessment would have to be understood as a mandatory waiting period, the explanatory materials of the Austrian legislator indicate such approach4. Whereas the consequences are not entirely clear (in particular, as to automatic suspension of voting rights), it now seems fair to say that, in the absence of official guidance from the FMA, relevant shareholdings in Austrian credit institutions/ insurance undertakings/investment firms should not be effectively held until the assessment period has elapsed or until the FMA has issued a decree that it will not oppose the proposed structure.

This has led to additional work for supervisors (and additional challenge in terms of timing), because an informal statement to the effect that the FMA will not oppose the proposed transaction (as was common practice before 1 April 2009) might not provide acquirers with sufficient legal certainty.

Finally, the 33% threshold has been changed to 30% of the share capital/voting rights of the target institution.

New Austrian legal framework – Aspects of administrative procedure

The statutory assessment period and its procedural specifications are a rare example of procedural legal provisions set forth by Community law. This is also true of the fact that the acquisition shall be deemed approved if the competent authority does not oppose in writing until the end of the assessment period5. From an Austrian administrative law perspective it remains unclear whether the new procedure should be regarded as a notification procedure (Anzeigeverfahren) triggered by a notification (Anzeige) or a genuine approval procedure (Bewilligungsverfahren) triggered by an application (Antrag). If the new framework was construed so that it would not allow the acquirer to proceed with the transfer of the shareholding concerned until the assessment period has elapsed, or until the FMA has issued a decree saying that it will not oppose the proposed structure (see above), then it is fairly characterised as an approval procedure which, by contrast to other approval procedures, provides for an alternative type of administrative ruling (Erledigung), i.e. waiting for the assessment procedure to elapse.

Under the relevant Austrian statutes, however, the term approval is still avoided in this context. Again, this makes it easier to assert that the effective transfer of the relevant shareholdings is not unlawful even before the assessment period has elapsed or the FMA has issued a decree that it will not oppose the proposed structure.

Acquirers and supervisors are left with additional work and, notwithstanding issues as to substance, close co-operation between the parties can help to minimise the burden on both sides. However, it remains doubtful that the new framework will achieve the objective of more rapid, transparent and foreseeable supervisory action.

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


1 European Commission, Call for Technical Advice from CEBS of 18 January 2005.

2 New Articles 15b (Directives 92/49/EEC; 2002/83/EC), 10b (Directive 2004/39/EC), 19a (Directives 2005/68/EC; 2006/48/EC).

3 3L3 Guidelines for the Prudential Assessment of Acquisitions and Increases in Holdings in the Financial Sector Required by Directive 2007/44/EC.

4 EBRV 45 BlgNR 24. GP 7 (credit institutions), 12 (investment firms) and 18 (insurance undertakings).

5 § 20a para 2 Austrian Banking Act; § 11a para 2 Austrian Securities Supervision Act 2007; § 11b para 2 Austrian Insurance Supervision Act.

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.