The current pandemic has a strong impact on many areas of law and leads to various restrictions. Thus, the current situation also has major implications for corporate law. Based on the by now five COVID-19 Acts (COVID-19-Gesetze) there have been the following important changes of corporate provisions:
- Shareholders’ meetings and board member meetings without physical presence
The holding of meetings requiring physical presence is currently avoidable in most cases due to legal provisions (e.g. obligation to observe a minimum distance, prohibition of presence of more than five people in one location).
The Austrian legislator has now issued a provision which provides for facilitation for various meetings provided for by law. Section 1 para. 1 COVID-19 Corporate Law Act (COVID-19-GesG) stipulates that shareholders’ meetings and members of executive bodies can also be held without the physical presence of the participants. Thus, for example, annual general shareholders’ meeting (Hauptversammlungen), general meetings of limited liability companies (Generalversammlungen von Gesellschaften mit beschränkter Haftung), supervisory board meetings (Aufsichtsratsitzungen), foundation board meetings (Stiftungsratsitzungen) or general meetings of cooperatives (Generalversammlungen von Genossenschaften) can now be held virtually via video conference.
For stock corporations it was already possible that shareholder can participate at the general annual shareholders’ meeting (Hauptversammlung) without physical presence (e.g. via video conference of electronic remote voting processes), however the meeting still had to be held at a certain location in Austria. Pursuant to the new COVID-19 Corporate Law Act stock corporations can now hold their shareholders’ meetings without physical presence of the shareholders.
The exact requirements for these so-called "virtual meetings" have now been regulated in the BMJ decree (Corporate COVID-19 Decree- COVID-19-GesV), announced on 8 April 2020 and extended on 28 December 2020 until the end of 2021.
The decree stipulates that a virtual meeting is basically a type of two-way acoustic and optical connection in real time (i.e. videoconference with video and audio connection) in which all participants can speak and vote. If some, but a maximum of half, of the participants do not have, cannot use or do not want to use the necessary technical means for an acoustic and optical connection, it is sufficient for these participants to establish a purely acoustic (e.g. telephone) connection. In the convocation, the convening body must specify in detail which organisational and technical requirements exist for participation.
The general annual shareholders' meeting of a stock corporation differs from other meetings primarily in the typically larger group of participants, which makes the implementation of a conventional video conference only suitable to a limited extent. Therefore, it is sufficient for these meetings if shareholders can only follow the general meeting visually and acoustically, but are not able to speak or vote directly. However, shareholders must be given the opportunity to speak and vote by other means during the meeting (for example, that questions are transmitted electronically to the company within a certain time window during the meeting and the chairman reads them out).
If the general annual shareholders' meeting of a listed company, a company whose shares are traded via a multilateral trading system or a company with more than 50 shareholders is transferred, it may (but does not have to) be provided, in derogation from the provisions just outlined, that the filing of a motion for a resolution, the casting of votes and the raising of an objection in the virtual general annual shareholders' meeting may only be carried out by a special voting proxy (Stimmrechtsvertreter) (at least four suitable persons independent of the company).
With the Fourth COVID-19 Act (4. COVID-19-Gesetz) these legal facilitations for meetings will no longer be limited to the duration of legal measures to prevent the spreaing of COVID-19, but are now generally permitted until the end of 2020.
- Postponement of the time limits for meetings as set out in the respective articles of association (Gesellschaftsvertrag)
Another important change is the statutory authorization to postpone deadlines or dates for certain meetings that are set out in the respective articles of association (this includes statutes and deeds of foundations [Stiftungsurkunde]). This provision clarifies that meetings of each legal structure as mentioned in Section 1 para. 1 COVID-19 Corporate Law Act can also be held at a later time this year (2020). The decision, if a meeting is possible or appropriate, taking into account the forms of holding the meeting pursuant to Section 1 COVID-19 Corporate Law Act (i.e. no physical presence of the shareholders), is at the discretion of the organ responsible for convening the respective meeting.
In addition, as a further simplification it was regulated in Sections 104 para. 1 Austrian Stock Corporation Act (Aktiengesetz - AktG), 27a Cooperative Act (Genossenschaftsgesetz - GenG) and 35 para. 1 (1) Act regarding Companies with limited liability (Gesetz über Gesellschaften mit beschränkter Haftung - GmbHG) that the shareholders’ meetings must be held within the first twelve months of the financial year of the respective company instead of before in the first eight months of the financial year.
- Special provisions regarding the supervisory board (Aufsichtsrat)
Since the end of April 2020, meetings of the supervisory board (Aufsichtsratssitzungen)- if necessary without the physical presence of the participants pursuant to § 1 COVID-19 GesG and the corresponding decree- can and must be held quarterly again.
Therefore, apart from the possibility of purely virtual meetings, there are no longer any special regulations.
- Prolongation of deadline for the submission of the annual accounts (Jahresabschluss)
The deadline for submitting the annual accounts (Jahresabschluss) was prolongated from nine to twelve months after reporting date (Bilanzstichtag). The annual accounts as well as the management report (Lagebericht) and all documents to be disclosed at the same time (e.g. separate non-financial report or consolidated annual accounts [Konzernabschluss]) are to be submitted twelve months after reporting date (Bilanzstichtag) at the latest. Correspondingly, the preparation period (Aufstellungsfrist) for the annual accounts has been extended from five months to nine months, which also applies to companies that are not corporations (Nicht-Kapitalgesellschaften).
These changes are to be applied to documents of accounting (Rechnungslegung), for which the deadline for the preparation (Aufstellung) pursuant to Section 222 para. 1 Austrian Company Code (Unternehmensgesetzbuch - UGB) has not yet expired on 16 March 2020. The provision will expire at the end of 31 December 2021 and shall be applied for the last time to documents of accounting for balance sheet dates prior to 1 January 2021.
- Restrictions on profit distributions and bonuses
In the BMF decree announced on 8 April 2020, it was specified in more detail which conditions have to be met before financial aid measures can be granted (granting of direct subsidies and repayable advances, assumption of liability for the company, granting of direct loans in the form of bridging loans).
Beneficiaries are companies which (i) have their registered office or permanent establishment in Austria and (ii) carry out a significant operational activity in Austria. Excluded are supervised legal entities in the financial sector as well as companies that were already in financial difficulties within the meaning of the EU Commission's "Block Exemption Regulation" on 31 December 2019 or, in the case of a different financial year, on the balance sheet date ending before 31 December 2019. In addition, the company must not be in insolvency proceedings at the time of application, unless reorganisation proceedings have been opened in accordance with the Austrian Insolvency Code (Insolvenzordnung - IO).
The applicant is required to undertake, among other things, to ensure that the compensation paid to the owner of the company or to the company's executive bodies, employees and significant vicarious agents is not inappropriate and that no unreasonable remuneration, remuneration components or other unreasonable benefits are paid to them. In particular, no bonuses are to be paid to members of the management board / managing directors in 2020 that exceed 50% of the previous year's bonuses. Furthermore, withdrawals by the owner of the company or the distribution of profits to owners must be adjusted to the economic circumstances. For the period from March 16, 2020 to March 16, 2021 there is a ban on dividends and profit distribution:
No reserves may be released to increase the balance sheet profit and the liquidity obtained from the financial measure is not to be used (i) to pay profit distributions, (ii) to buy back own shares and (iii) to pay bonuses to management board members / managing directors.
After 16 March 2021, a "moderate" dividend and profit payment policy must be followed until 31 December 2021.