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COVID-19-Update: Corporate Law

01/08/2021 - Reading time: 5 minutes

Author

Elisa Kaplenig

Attorney at Law

Tim Pasternak

Associate

In the wake of the Covid-19 pandemic, the legislator enacted a variety of corporate law measures during 2020 to ensure a functioning economy and help prevent the spread of COVID-19.

The measures introduced by the COVID-19 Corporate Law Act (COVID-19-GesG), the COVID-19 Corporate Law Regulation (COVID-19-GesV) and the 4th COVID-19 Act for the conduct of corporate law meetings and for digital notarization by notaries were originally each to expire on 31 December 2020.

Due to the ongoing pandemic, the legislator felt compelled to continue in 2021 the measures that had been introduced and tested in the meantime, and to expand them in some cases.

Virtual assemblies

With the introduction of the COVID-19 Corporate Law Act in 2020, the legislator made it possible to hold shareholders' meetings (general and shareholders' meetings) and meetings of board members (supervisory board and management board meetings) without the physical presence of the participants.

It was possible to hold socalled virtual meetings in real time by means of an acoustic and optical two-way connection, and it became possible to hold meetings and gatherings of corporate bodies by means of video conferencing and thus to participate from any location. The possibility of passing resolutions virtually was also implemented and supported by amendments to the Notaries Regulation and the execution of digital notarizations.

Due to the ongoing pandemic, the legislator has now extended the measures until 31 December 2021. Virtual meetings will therefore remain an integral part of corporate practice in 2021.
For details: virtual meetings of shareholders and consequences for meetings of shareholders

Ordinary general and shareholders´ meetings

As a supplementary measure, the legislator has again extended the 8-month period pursuant to section 104 (1) of the Austrian Stock Corporation Act and section 35 (1) of the Austrian Limited Liability Companies Act for the holding of an ordinary general meeting to 12 months. This measure was also deemed necessary for the year 2021, so that general and shareholders' meetings can also be held at a later date within the first 12 months of the financial year (section 2 (1) to (3) COVID-19 Corporate Law Act). This provision will therefore only cease to apply at the end of 2021.

Annual financial statements

The extension of the deadline for the preparation of annual financial statements and submission of documents specified by law by up to four months has also been approved by the legislator for 2021. The same applies to other accounting documents that must be submitted within the deadlines applicable to the submission of annual financial statements.

In deviation from section 277 (1) of the Austrian Business Enterprise Code (UGB), the documents to be disclosed referred to therein must now be submitted to the Commercial Court no later than 12 months after the balance sheet date. In deviation from Section 277 (2) Austrian Business Enterprise Code (UGB), the publication must also take place no later than 12 months after the balance sheet date.

Thus, the easing of the deadline regime pursuant to section 3a of the COVID-19 Corporate Law Act remains in place during 2021 and relieves the burden on corporate practice.

Associations

The general meetings of associations are to be convened every five years pursuant to section 5 (2) of the Austrian Associations Act (VerG). Section 2 (3a) of the COVID-19 Corporate Law Act now provides that a meeting may be postponed until the end of 2021. In addition, the term of office of a governing body of an association expiring prior to the meeting shall be extended until the date of the scheduled meeting, unless it is dismissed or a new appointment is made earlier.

Notarial services – electronic notarization

A significant improvement by the legislator regarding legal transactions concerned the creation of the electronic notarization. The legislator extended the possibility of the digital formation of a limited liability company (LLC, “GmbH”) by the notary to a large number of notrial deeds. The introduction of the new section 90a Notarial Regulation (NO) by the 4th COVID-19 Act created the possibility to perform the notarial acts required for the establishment of deeds by analogously applying the provisions on digital limited liability company formation (section 69b NO) - virtually, without physical presence before the notary (for details see consequences for notarial services.

The 4th COVID-19 Act enabled both the certification of signatures and the establishment of notarial acts or other public or publicly certified deeds by means of uninterrupted, optical and acoustic two-way connection (video conferencing) in real time - but only until 31 December 2020.

The legislator has now taken the ongoing pandemic as an opportunity to incorporate the reliable provisions introduced with section 90a NO into permanent law in a slightly modified form. As of 1 January 2021, the modified provision opens up the possibility to draw up all notarial acts or other public or publicly certified deeds using electronic means of communication without the need for physical presence before the notary. 
Likewise, the scope of application for the certification of signatures using an electronic communication option is extended and is no longer linked to a direct connection with an electronic notarial act provided for by law (section 79 (9) NO).

In this context, the legislator has also extended the simplified electronic limited liability company formation pursuant to section 9a Austrian Limited Liability Companies Act, which should have expired at the end of 2020, for an unlimited period.

The amendments to the law now bring a clear simplification and acceleration for the performance of the official notarial acts required in corporate law, which are often associated with a high level of travel and time expenditure, especially if the parties involved are located abroad.

 

Author

Elisa Kaplenig

Attorney at Law

Tim Pasternak

Associate