AUSTRIA Law and Practice Contributed by: Clemens Hasenauer and Albert Birkner, CERHA HEMPEL
• 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 Business Judgement Rule is generally not liable to the company, its shareholders, or other stake - holders. 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 justified under the Business Judgement Rule. More specific rules exist under the Takeover Act that take precedence – eg, directors need to act in the interest of all share - holders, the employees, creditors and the gen - eral public, and generally need to stay objective. 8.4 Independent Outside Advice Directors of Austrian target companies some - times turn to lawyers and other consultants seeking outside advice on business combina - tion matters. Advice given 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 confidentiality/ 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 (normally auditors) to be appointed to assess offers and provide opinions. Additionally, an expert appointed by the target company has to
assess the obligatory statements 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 shareholders. In addition, share - holders may initiate special audits to review (potentially conflicted) business activities. How - ever, in Austria, it is rare for conflicts between shareholders and the managing board to end up in court. Conflicts among shareholders – which may arise from time to time – also do not often end up in court. Conflicts, if any, between majority and minority shareholders sometimes result in the legal challenge of majority resolutions filed by minority shareholders.
9. Defensive Measures 9.1 Hostile Tender Offers
Both friendly and hostile takeovers are allowed under the Austrian Takeover Act. Nonetheless, friendly takeovers prevail in practice. Either way, one of the general principles of the Act requires the management board and the supervisory board of the target company to remain neutral in the interests of the shareholders and not in any way prevent the shareholders from deciding on the proposed takeover or seeking to influence
the decision of the shareholders. 9.2 Directors’ Use of Defensive Measures
In the event of a takeover offer, the administra - tive bodies of the target company (management
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