AUSTRIA Law and Practice Contributed by: Clemens Hasenauer and Albert Birkner, CERHA HEMPEL
5.2 Market Practice on Timing The issuer is required to publish inside infor - mation without undue delay. Therefore, market practice regarding the regular timing of disclo - sure does not and should not differ from legal requirements to avoid any consequences of vio - During takeovers, due diligence is rather the exception than the rule. In such cases, the scope of due diligence can be limited to only the pub - licly available information of the target. Pursuant to the Austrian Stock Corporation Act, members of the management board of a stock corpora - tion are exercising the diligence of a responsi - ble and conscientious corporate executive when making business decisions if they do not allow themselves to be guided by extraneous interests and if it may be reasonably assumed based on adequate information that they are acting in the best interest of the company (Business Judge - ment Rule). lating the disclosure obligations. 5.3 Scope of Due Diligence Defining the scope of the due diligence to be carried out is, in particular, a commercial deci - sion based primarily on the Business Judgment Rule, knowledge of the relevant market and the target. When determining the scope of the due diligence, it always comes down to the relevance of the transaction, with the transaction volume playing a significant role. Due diligence can be conducted in a two-step process where: • due diligence is carried out with certain restrictions; and • comprehensive and unrestricted due dili - gence may be performed. 5.4 Standstills or Exclusivity Generally, exclusivity is not often required in public transactions, while standstill obligations
not have to include the bidder’s intention or the rationale behind the acquisition.
5. Negotiation Phase 5.1 Requirement to Disclose a Deal In the case of extended circumstances, not only the transaction’s realisation but also each inter - mediate step is subject to the principles of ad hoc disclosure in accordance with Article 17 of the Market Abuse Regulation (Regulation (EU) 596/2014). The existence of inside information can be assumed if either of the following criteria is fulfilled. • The occurrence of the final result is: (a) sufficiently likely; (b) price-specific; and (c) price-relevant. • The intermediate step: (a) has already occurred, or its occurrence is sufficiently likely; (b) is price-specific; and (c) is price-relevant. Intermediate steps that derive their price rele - vance from the final result are to be regarded as price-relevant if the occurrence of the final result can be expected. Generally, the information is not precise enough to constitute inside information when the target is first approached or the negotiations com - mence. A non-binding letter constitutes an ad hoc notification obligation if it is price-specific and price-relevant. The question of how likely the final result will occur plays a crucial role in this respect. In general, the signing of definitive agreements triggers an obligation to issue an ad hoc notification.
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