AUSTRIA Law and Practice Contributed by: Clemens Hasenauer and Albert Birkner, CERHA HEMPEL
responsible for the day-to-day business, while the supervisory board mainly monitors these activities and, in particular, resolves statutory as well as assigned matters. If a works council is established, the Austrian Labour Constitution Act entitles employees to delegate one-third of the supervisory board’s members, and the shareholders elect the remaining two-thirds (principle of one-third par - ity). Thus, employee representatives may gain insights, are entitled to the same level of infor - mation as shareholder delegates, and, most notably, actively take part in important business decisions. Acquired Rights Since the implementation of the European Acquired Rights/Transfer of Undertakings Direc - tive, the Employment Contract Law Adaptation Act states that the acquisition of a business unit (eg, by way of an asset deal) involves a man - datory automatic transfer of all employment contracts that are part of the affected busi - ness unit. Therefore, it is not possible to “pick and choose” employees and consequently, the acquirer assumes the employment contracts, as they exist at the time of the transfer (including all benefits, unsettled claims, holiday entitlement yet to be taken and severance pay entitlements). 2.6 National Security Review In 2020, in compliance with Regulation (EU) 2019/452, a new framework for screening foreign investments was introduced in Austria (under the Foreign Investment Control Act), replacing the respective provisions of the Foreign Trade Act 2011, with a view to: • significantly extending the scope of sensitive industries; • lowering applicable thresholds; and
• amending and adapting the clearance pro - cess (including with respect to the require - ments set out in the aforementioned EU Regulation). Direct and indirect foreign investments (ie, investments by foreign investors that are not residents or citizens of the EU, the EEA or Swit - zerland) in Austrian companies operating in certain sensitive areas (including, inter alia, the defence industry, the operation of critical energy or digital infrastructure, water, operation of sys - tems securing the data sovereignty of Austria and, temporarily, research and development in the medical and pharmaceutical sectors) require clearance by the Ministry for Digital and Eco - nomic Affairs if a shareholding representing at least 10%, 25% or 50% of the voting shares is to be acquired. In addition, the annex to the Foreign Investment Control Act sets out an extensive list of other industries for which the acquisition of 25% or 50% of the voting shares triggers the clear - ance requirement. It also covers other means of acquiring a controlling influence (sole or joint control) over a respective Austrian company, its business, or a major part thereof (in the case of an asset deal). The request for approval must be filed without undue delay after the signing of the respective acquisition documents or the publication of the intention to file a bid. There are safeguards in place to enable the Ministry to start proceedings even without a formal notification by the acquirer (including, inter alia, a prompt notification duty of the target once the target learns of the respec - tive intention of an acquirer). Where there is deemed to be “serious threat” to the interests of public security and order, the
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