AUSTRIA Law and Practice Contributed by: Markus Fellner, Stefan Sallat and Florian Henöckl, Fellner Wratzfeld & Partner Rechtsanwälte GmbH
MLI (Multilateral Instrument), there are no changes in this respect. Due to the introduction of comprehensive cross-bor- der information undertakings among authorities, the withholding tax legislation is not applicable from the end of 2016 onwards. As regards proceeds of a claim under a guarantee or the proceeds of enforcing security, there is gener- ally also no requirement imposed by Austrian law to deduct or withhold tax. Security rights over shares are the most common security instrument in certain types of financing trans- actions under Austrian law. Perfection and enforce- ment vary among the different types of legal forms, of which the limited liability company ( Gesellschaft mit beschränkter Haftung or GmbH) is by far the most common. GmbH Security rights over GmbH shares are typically created in the form of a pledge. While the (full title) transfer in a GmbH share requires the form of (an Austrian) notarial deed, this does not apply to a share pledge which is therefore done only in written form. In order to facili- tate enforcement, alongside the GmbH share pledge agreement, the pledgor typically grants a (notarised) power of attorney authorising the pledgee to sell and transfer the shares on their behalf and a (written) vot- ing power of attorney (which will normally only be used in case of default). The perfection of a GmbH share pledge requires the notification of the company; while separate confirmation letters (counter-signed or with confirmation of receipt) were common in the past, in intra-group scenarios, the company frequently co- signs the share pledge agreement proper in order to document proper notification (and perfection). AG Since shares in joint-stock corporations ( Aktienge- sellschaft or AG) are typically certificated as secu- 5. Guarantees and Security 5.1 Assets and Forms of Security Shares
rities (which is legally prohibited regarding GmbH shares), the major difference between a GmbH and an AG share pledge are the perfection requirements. The AG share pledge agreement (as is the case with the GmbH) requires no specific form and is therefore customarily drawn up in simple written form. As a basic rule, the perfection of in rem security over movables (such as certificated securities) requires that the pledgee obtains direct or indirect posses- sion (which may be mediated by a third party, such as an account bank, but not the pledgor). Only shares in stock-exchange listed companies (or companies envisaging such admission) and shares traded on a multilateral trading facility (MTF) may be certificated in bearer form; this is effected through a global share certificate and the shares then being introduced into an electronic clearing system. In that case, a pledge may be created by transferring the shares to the pledgee’s securities deposit account or blocking the pledgor’s account in the pledgee’s favour. Registered shares which are certificated (in physical form) must be transferred to the pledge; shares that are not cer- tificated may only be pledged in accordance with the rules on assignments (ie, notification of the company). Partnerships Pledges over shares in partnerships – both limited partnerships ( Kommanditgesellschaft or KG) and unlimited partnerships ( Offene Gesellschaft or OG) – do not require a specific form and are therefore com- monly drawn up in writing and perfected through noti- fication of the company. Transfer restrictions Companies’ articles of association frequently provide for transfer restrictions that may include a share- holder consent/resolution requirement for the pledge or a transfer of shares/interest in those companies. In order to avoid risks (such as unenforceability or delays during enforcement) it is advisable to have such requirements removed from the articles or to obtain the requisite consent in advance. Enforcement Austrian law provides for court-conducted enforce- ment proceedings unless there is a specific contrac- tual enforcement arrangement in place between the
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