AUSTRIA Law and Practice Contributed by: Clemens Hasenauer and Albert Birkner, CERHA HEMPEL
The Austrian Takeover Act also requires managing directors and members of the supervisory board to act in the interests of all shareholders, employees, credi - tors and the general public and to remain objective during the takeover procedure. As soon as the inten - tion to launch a bid has been announced (respectively, the members of the boards have knowledge of the intention to launch a bid), the boards: • must not prevent the public bid; • must stay objective; and • must respond to the bid by way of a statement. Nevertheless, searching for a “white knight” to make a competing offer is permitted. 8.2 Special or Ad Hoc Committees In Austria, it is not common for managing boards to establish special or ad hoc committees in business combinations or in cases of conflict of interest. Usu - ally, conflicted members abstain from voting, do not participate in the meeting or are not granted access to information on those items in relation to which the conflict exists. Depending on the corporate governance, directors’ conflicts of interest may also be addressed by an existing supervisory board that, among other things, serves as an intermediary between the managing board and the shareholders and represents the com - pany in dealings with directors. At the supervisory board level, specific committees (eg, audit commit - tees) may need to be established, depending on the size of the company. 8.3 Business Judgement Rule In Austria, courts defer to the judgment of manag - ing directors according to the Business Judgement Rule, which applies to any business decisions of board members regardless of the business situation. The Business Judgement Rule, as it is understood in Austria, establishes a “safe harbour” with regard to decisions of board members, provided that: • a business decision is made; • the board members act free from conflicts of inter - est;
• the decision is based on all information reasonably available; and • board members had justifiably believed that the decision was in the best interest of the company. A board member acting within the scope of the Busi - ness Judgement Rule is generally not liable to the company, its shareholders or other stakeholders. However, the Business Judgement Rule will not help if the law explicitly sets up a more specific rule in certain situations. Violations of law, even if they were believed to be in the company’s best interest, cannot be justi - fied under the Business Judgement Rule. More specif - ic rules under the Takeover Act take precedence – eg directors must act in the interests of all shareholders, employees, creditors and the general public and must typically remain objective. 8.4 Independent Outside Advice Directors of Austrian target companies sometimes turn to lawyers and other consultants seeking outside advice on business combination matters. Advice giv - en to directors is often limited in scope and typically concerns aspects of employment law (eg, regarding employment contract issues) but also the conduct of a due diligence process (eg, regarding confidential - ity/disclosure matters) or, more generally, the scope and limitations of the Business Judgment Rule and related aspects of careful management of a prudent business person. In regulated industries, managing directors may request advice regarding statutory duties, such as ad hoc reporting obligations. Public takeovers require independent experts (nor - mally auditors) to be appointed to assess offers and provide opinions. Additionally, an expert appointed by the target company has to assess the obligatory state - ments of the target company’s managing board and supervisory board, in which they recommend whether
or not to accept the offer. 8.5 Conflicts of Interest
Directors’ conflicts of interest may be addressed to a supervisory board that, among other things, acts as an intermediary between the managing board and the
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