AUSTRIA Law and Practice Contributed by: Clemens Hasenauer and Albert Birkner, CERHA HEMPEL
• Voluntary offers aimed at obtaining control are sub - ject to a statutory acceptance threshold of more than 50% of the voting rights (which may be com - bined with a higher minimum acceptance threshold in the offer). • Purely voluntary offers may be made subject to any threshold of minimum acceptance. • Subject to the above, thresholds are usually set at more than 50%, at 75% and sometimes also at 90% of the voting rights for the following reasons: (a) 50% plus one vote enables a shareholder to take majority decisions in the general meet - ing, in particular when electing members of the supervisory board, which in turn decides on the managing board’s composition, distribution of dividends and similar; (b) 75% of the votes (a qualified majority) enables a shareholder to amend almost all provisions of the articles of association and to implement most types of corporate restructurings (merg - ers, transformations, spin-offs, etc); and (c) 90% of the shareholding enables a shareholder to initiate a squeeze-out of minority sharehold - ers (see 6.10 Squeeze-Out Mechanisms ) with the aim of acquiring up to 100% ownership. 6.6 Requirement to Obtain Financing Regarding private transactions, it is legally possible to make completion of a signed SPA/APA conditional on the bidder obtaining financing (eg, by implementing a condition precedent stipulating (re)financing meas - ures). However, such a contract structure is seldom accepted by the seller’s side and is therefore rarely seen in practice (except, for example, in small private real estate transactions). In public takeovers, financing must be secured upfront (ie, a qualified independent expert must certify in advance that the bidder is able to finance the offer). 6.7 Types of Deal Security Measures The principle of freedom of contract granted by Aus - trian law enables the parties to a transaction to seek any deal security measure, provided it does not vio - late moral principles ( Sittenwidrigkeit ). Purchasers fre - quently aim to negotiate a material adverse change (MAC) clause to protect themselves against unfore - seen occurrences that may adversely affect the target.
Such clauses may become increasingly important if the length of the interim period between signing and closing is dependent on governmental decisions for which a longer decision-making process may need to be factored in. In particular, the actual practice applied by authorities on foreign investment regulatory screening has impacted the length of interim periods for recent M&A transactions. However, in situations where the Takeover Act applies, further limitations need to be observed. Exclusivity Agreements These are quite commonly sought after by a bidder from a core shareholder and should be legally feasi - ble, particularly in a phase preceding a public tender, but arguably also during a tender process. Exclusivity arrangements with the target appear more problem - atic – particularly if the aim is to restrict management’s free business judgement in acting in the best interests of all shareholders. Therefore, no-talk arrangements (lock-ups) typically risk being too restrictive and thus void, while no-shop and market test provisions (if they just limit management to actively seeking other bid - ders) are arguably more likely to be upheld. Break-Up Fees Sometimes also called inducement fees, termination fees or drop-dead fees, these will conflict with the Takeover Act if the amounts involved are substantial, such that they de facto exclude or materially impede competing offers (in particular, if they are not limited to just compensating the bidder for their out-of-pocket costs but also have some penalty element). Standstill Obligations The Takeover Act already foresees these, containing statutory rules prohibiting the launch of a new or mod - ified offer once the tender offer is published (with only very few exceptions) and a statutory waiting period in the event the offer is unsuccessful. 6.8 Additional Governance Rights If a company’s shares are not held by a single share - holder but by two or more shareholders, it is very com - mon to stipulate a governance structure among unaf - filiated shareholders that goes beyond the protection
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