AUSTRIA Law and Practice Contributed by: Clemens Hasenauer and Albert Birkner, CERHA HEMPEL
board and supervisory board) must not take any measures which would likely deprive share - holders of the opportunity to make a free and informed decision about the offer. No measures must be taken that frustrate the outcome of the offer from the moment the bidder’s intention to launch an offer becomes known until publica - tion of the results of the offer and, in the event that the offer is a success, until implementation of the offer. However, measures that could frustrate the out - come of the (hostile) takeover are permissible if the target company’s shareholders’ meeting explicitly approves the measure in question. The Takeover Act mentions the issuance of securi - ties that could prevent the bidder from acquir - ing control of the target company. The target company’s administrative bodies are also free to seek out competing bidders ( “white knights” ) without obtaining the consent of the sharehold - ers’ meeting. 9.3 Common Defensive Measures If an intention to make an offer has not yet been announced, the management board may imple - ment defensive measures to protect against hostile takeovers. These measures can include introducing a limit on voting rights or establish - ing long-term contracts with management board members, as long as they comply with applica - ble Austrian stock corporation law. However, if the bidder’s intention to make an offer has already been announced, any defen - sive measures taken will require approval from the shareholders’ meeting. Such measures may include, among other actions: • the inclusion of change-of-control clauses in certain contracts; • the issuance of securities;
• the purchase or disposal of own shares; • the disposal of important assets of the com - pany; or • significant changes concerning the compa -
ny’s finance structure. 9.4 Directors’ Duties
The Takeover Act does not provide specific duties for administrative bodies when enact - ing defensive measures. However, based on the rules of general Austrian stock corporation law, preventative measures taken by the man - agement board must be in the interest of the target company. Should preventative measures be based on a resolution adopted by the share - holders’ meeting, such rules of general Austrian stock corporation law do not apply. 9.5 Directors’ Ability to “Just Say No” A baseless rejection of a takeover offer is not permitted since, in most cases, this is not in the best interests of the company. After the offer document has been published, the management board (and the supervisory board) of the target company must prepare a statement regarding the takeover offer, encompassing an economic assessment of the offer price and a recommen - dation to the target company’s shareholders. The management board is at liberty to explain in its statement why a takeover offer should not be accepted, and it ought to underscore its position by putting forward a counterplan for the future direction of the company and its corporate policy.
10. Litigation 10.1 Frequency of Litigation
In general, litigation is not common in connec - tion with M&A transactions in Austria. In prac - tice, costs and the duration of proceedings
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