AUSTRIA Law and Practice Contributed by: Markus Fellner, Stefan Sallat and Florian Henöckl, Fellner Wratzfeld & Partner Rechtsanwälte GmbH
ment and construction risks and political risks. In addi- tion, from a commercial perspective, the repayment and/or credit risks need to be taken into account. 8.3 Governing Law In terms of governing law, there are no specific rules as compared to “normal” financing transactions. Therefore, there is a certain degree of flexibility as to the governing law for the lending arrangement proper. For security arrangements, it is customary to agree on the applicability of Austrian law. 8.4 Foreign Ownership Legal entities registered in the EU/EEA are free to own real property in Austria. Other entities need an official approval to be able to buy real property in Austria. The acquisition of real property by foreign nationals and entities is governed in Foreign National’s Property Acquisition Act of each federal state. For example, in Vienna, a legal entity registered in Austria but owned by nationals of third countries by more than 50% of shares is considered a foreign entity and thus requires an official approval for buying real property. 8.5 Structuring Deals The main issues to be considered when structuring a project finance transaction include both legal and non-legal considerations comprising: • the technical design, development and construc- tion of the project; • risks involved in its (factual) operation; • any political risks (which, apart from surprising changes of legislation, are largely absent in Aus- tria); • the risk of disputes; and • the overall credit and repayment risk from a com- mercial perspective. Risk mitigation is typically effected by way of conduct- ing due diligence covering the requisite areas (legal, financial, technical, environmental, etc). The legal forms of preference for project companies in Austria are the GmbH or the GmbH & Co KG. The principal difference between these is the direct attri- bution of profits and losses to limited partners (ie, tax transparency of the GmbH & Co KG). Also, it must
be noted that a GmbH provides great flexibility from a corporate law perspective in that majority require- ments and composition of corporate bodies are large- ly flexible and rights of direction to the management of a project company are statutory. 8.6 Common Financing Sources and Typical Structures In Austria, the classic bank or savings bank loan is the most widely used form of financing. In the case of a loan, a distinction must be made between an investment loan and an operating resource loan. The investment loan is granted to finance property, plant and equipment (eg, buildings, machinery, vehicles and office furniture), the working capital loan to pre-finance the purchase of raw materials, goods or suppliers. For the refinancing of exports, Austrian companies can resort to a number of instruments. Flexible mech- anisms are available (eg, commercial financing with the principal bank, framework credit or export financ- ing procedure by the Oesterreichische Kontrollbank (OeKB), or soft loans for selected markets). Further sources of financing are equity investments or participation in companies as well as (subordinated) shareholder loans. Private business angels or profes- sional venture capitalists can also be considered as investors. The issuance of bonds constitutes another alterna- tive to bank debt financing for projects; in Austrian practice, however, this has been rare, likely in view of the typically (small) size of projects (by international standards) and capital markets financing being nor- mally taken out by sponsors/operators on a corporate (but not project) level. 8.7 Natural Resources Austrian law does not provide for general restrictions on the export or import of natural resources to or from Austria. Exceptions may apply, however, in specific areas, such as under environmental protection laws (in particular, if such resources qualify as waste), arms control, restrictions on the export of products quali- fying for “dual use” or, if applicable, sanctions with respect to specific jurisdictions (eg, currently Iran and Russia).
26 CHAMBERS.COM
Powered by FlippingBook