[ESTABLISHING A BUSINESS ENTITY IN AUSTRIA]
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ESTABLISHING A BUSINESS ENTITY IN AUSTRIA 1. Introduction In principle any national citizen or foreign national is allowed to establish a business in Austria. A company is defined as a partnership of at least two persons (exceptions for limited liability companies and joint-stock companies), founded by a legal transaction, who want to achieve a certain purpose through organized cooperation. While one person is sufficient to establish a l imited company ( Kapitalgesellschaft ), at least two persons are necessary to form a partnership entity ( Personengesellschaft ). A business operated by a single natural person with full personal liability (i.e. without any further partners or shareholders) is referred to as a sole proprietorship ( Einzelunternehmen ). If foreign business owners choose to establish a subsidiary in form of a limited company in Austria it is important to mention that the establishment is legally independent from the parent company meaning that the foreign parent company does not bear direct and unlimited liability for the subsidiary ’s obligations. The corporate forms typically chosen for such subsidiaries are the limited liability company ( GmbH ) and the joint-stock company ( AG ). Additionally, there is the European Company ( SE ), which is seldom used, as well as the Flexible Kapitalgesellschaft ( FlexCo ), which is quite new. With regard to partnership entities, the general partnership ( OG ) and the limited partnership ( KG ) may be used. Another option to choose is the so-called GmbH & Co KG , which is a hybrid form of a limited company and a partnership entity that combines the characteristics of each of those two.
2. Types of business entities Austrian company law offers a limited number of possible corporate forms, which are conclusively regulated by law. No further company forms may be created (however, companies incorporated in a Member State of the EU or EEA must be recognized as such in Austria). The most important Austrian company forms are: • Limited liability company or Gesellschaft mit beschränkter Haftung ( GmbH ) • Flexible Kapitalgesellschaft ( FlexKapG ) or Flexible Company ( FlexCo )
Joint-stock
company
or
•
Aktiengesellschaft ( AG )
European
Company
or
Societas
•
Europaea ( SE )
General
Partnership
or
Offene
•
Gesellschaft ( OG )
Limited
partnership
or
•
Kommanditgesellschaft ( KG )
• Branch offices of foreign companies or Zweigniederlassung 2.1 Limited liability company (GmbH) The limited liability company or Gesellschaft mit beschränkter Haftung ( GmbH ) is an incorporated entity and is among the most popular legal forms for business enterprises in Austria. Its legal identity is independent of that of its shareholders. As a general rule, the shareholders of a limited liability company do not bear any personal liability towards the company’s creditors for the company’s obligations (“principle of separation”). The shareholders of a GmbH are only personally liable for unpaid share capital, or in the case of malevolence of the shareholder. A GmbH is set up by one or more shareholders, who may be individuals, corporations and
ILN Corporate Group – Establishing a Business Entity Series
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