[ESTABLISHING A BUSINESS ENTITY IN AUSTRIA]
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non-residents, Austrian and foreign citizens, as well as foreign corporations. The contract between two or more founders of a limited liability company is called Articles of Association ( Gesellschaftsvertrag ). In case of a sole-shareholder company, the articles are referred to as Declaration of Establishment ( Errichtungserklärung ). Both documents must be certified by a notary public by means of a notarial deed. The Gesellschaft mit beschränkter Haftung ( GmbH ) comes into legal existence upon its registration in the Commercial Register ( Firmenbuch ). The minimum share capital of a limited liability company is EUR 35,000. At least half of the share capital (EUR 17,500) must be paid in cash (exception: continuation of an enterprise and contributions in kind). If the founders make use of the so-called Formation Privilege ( Gründungsprivilegierung ), only EUR 5,000 must be paid in cash at the time of formation. Additionally, the shareholders are personally liable for another EUR 5,000 during the first ten years after the “privileged formation” of a GmbH has been registered in the Commercial Register ( Firmenbuch ). The Formation Privilege ( Gründungsprivilegierung ) ends after ten years at the latest but can also be discontinued voluntarily at an earlier point in time. The requirements for this step are that the Articles of Association are amended accordingly and that the statutory minimum deposit requirements (usually at least EUR 17,500 in cash) are met. Since the transfer of shares in a GmbH is more difficult (a notarial deed is required) than that of stock in a stock company ( AG ) the GmbH is less suitable if a widespread ownership or the frequent transfer of shares is desired.
2.2 Joint-stock company (AG) The joint-stock or Aktiengesellschaft ( AG ) is similar to the Gesellschaft mit beschränkter Haftung ( GmbH ) and the second legal form of a limited company in Austria. The Aktiengesellschaft ( AG ) is an independent legal entity and possesses rights and obligations of its own. The shareholders of an AG are only personally liable for unpaid share capital, or in the case of malevolence of the shareholder. In comparison to the GmbH , the establishment of a joint-stock company is more complicated and more expensive. company An AG may be set up by one or more natural persons or legal entities. In the case of a sole founder, it is required to register the sole- shareholder’s name in the Commercial Register ( Firmenbuch ). The Articles of Association must be certified by a public notary by means of a notarial deed. The formation procedure is subject to stricter formal requirements compared to the GmbH . The minimum stock capital of an Aktiengesellschaft ( AG ) is EUR 70,000. At least one quarter of said amount must be paid in during the company’s formation. The AG comes into legal existence upon its registration in the Commercial Register ( Firmenbuch ). In comparison to the GmbH, the AG is structured after a so-called dualistic model. This means that the General Meeting ( Hauptversammlung ) appoints a Supervisory Board ( Aufsichtsrat ) with at least 3 members and the Supervisory Board appoints the Board of Directors ( Vorstand ). The directors are appointed for a maximum term of 5 years but may be reappointed after their term has ended. Unlike the managing directors of a GmbH , members of
ILN Corporate Group – Establishing a Business Entity Series
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