The Government Programme for 2020 - 2024 provides for the creation of a new type of legal form for companies ("Austrian Limited") which is intended to offer an internationally competitive option for start-ups in particular.

In order to strengthen Austria as a business location, the government plans to create a new legal form for companies, which has become known under the working title "Austrian Limited" in reference to its model, the English limited company. The Austrian Limited is expected to feature less red tape in incorporation (digital communications with authorities, no more obligatory use of notarial acts), such incorporation also being possible in English, not just in German; simple share transfer mechanisms; and low capital requirements, with an option for saving up until the minimum amount of capital is reached. These measures are intended to provide start-ups in particular with an internationally competitive corporate model in their early stages. 

Possible key elements of the Austrian Limited

The Federal Ministry of Justice and the Federal Ministry for Digital and Economic Affairs are currently coordinating the specific design of the Austrian Limited. However, possible key elements have already become known:

• Amount of minimum share capital EUR 5,000 or EUR 10,000, where half of the amount may also be raised through assets in kind or services;
• Optional model for saving up for the minimum share capital;
• Lifting of the obligation to use a notarial act for incorporation and transfer of shares;
• Keeping of a share register by the company instead of registration of the shareholders in the Austrian company register; 
• General simplification of form requirements such as for circulated resolutions (simple written form or also text form by e-mail); 
• Optional execution of the articles of association in the English language;
• Implementation of various share classes such as non-voting shares, in particular for employee participation;
• Flexible capital measures such as authorized or conditional capital as in stock corporations;
• Improved rights to appeal resolutions;
• Expansion of minority rights.

Unresolved questions regarding the Austrian Limited

Currently, there is a lot of discussion regarding the amount of minimum share capital and shareholder transparency. Although lower minimum requirements for share capital may make company incorporation easier, it reduces creditor protection. Furthermore, while greater anonymity due to registration in the Austrian company register no longer being required may be attractive to certain investors, this measure may result in less transparency and legal certainty as an effect of reduced control by the company court. 

The government also has plans to reform of the GmbH and AG legal forms in order to create more flexible regulations for family businesses and start-ups, such reforms taking in-vestor and creditor protection into consideration. Therefore, the government is also con-templating not to implement the Austrian Limited as a new legal form of company, but to fundamentally revise the provisions applicable to the legal forms of GmbH and/or AG in-stead so as to make them attractive for start-ups.

The plan was to implement this project in 2021; however, due to the COVID-19 pandemic, it is questionable whether the schedule can be met.

It remains to be seen which of the proposals presented will actually be implemented. However, it is clear that there will be extensive innovations that will offer interesting opportunities for start-ups and established companies alike. Companies will be able to use these op-portunities to their advantage - provided they are implemented correctly.  

Conclusion

In the future, entrepreneurs and especially founders of new companies will have a more flexible and simpler legal form at their disposal either through the introduction of the Austrian Limited or through a revision of the GmbH and/or AG legislation. 
Advantages should include in particular less red tape in incorporation, simple share transfer mechanisms and lower minimum share capital requirements. However, only a look at the draft legislation will make it possible to assess whether the intended goals will be achieved.