Prevailing Opinion in the Past
Pursuant to Sec 76 of the Austrian Act on Limited Liability Companies (GmbHG), agreements on a transfer of shares in a GmbH must be drawn up in the form of an Austrian notarial deed. This form requirement applies to both the legal title (i.e. the underlying obligation) such as e.g. a share purchase agreement, as well the transfer deed. The form requirement also applies to agreements on future (potential) transfers such as e.g. option agreements or agreements on rights of first refusal (Vorkaufsrechte).
Upon formation of a GmbH, the articles of association must also be drawn up in the form of a notarial deed.
Based on this, the Austrian Supreme Court has consistently held that an amendment of the articles of association of a GmbH which introduces pre-emption rights (Aufgriffsrechte) into the articles must also be drawn up in the form of a notarial deed. Appellate Courts have in the past disagreed on this opinion.
By its reasoning, the court established a more stringent form requirement than for other amendments of the articles because, generally, amendments of the articles of a GmbH only require a shareholder' resolution (with a majority of 75 % of votes cast) to be recorded in the form of notarial minutes (Sec 49/1 GmbHG) and the filing of these minutes together with the amended articles to the companies' register (Sec 51/1 GmbHG).
New Austrian Supreme Court Ruling
In a recent decision (6 Ob 63/10y), the Austrian Supreme Court has overruled its past position and has held that amendments of the articles of association of a GmbH introducing a pre-emption right only require a shareholder' resolution to be drawn up in the form of notarial minutes – and not the stricter notarial deed form.
The court based its decision on two core arguments:
- pre-emption rights in articles are, in substance, part of the bylaws and thus the governing rules of the company rather than an "agreement" in the sense of a contract concluded between two parties; and
- the three main objectives which are typically seen as the basis for the notarial deed form requirement in connection with agreements on share transfers (i.e. to restrict free trading of GmbH-shares with third parties, to protect purchasers from rushing into the acquisition of GmbH-shares and to provide a means to determine the identity of the shareholders of a GmbH) are largely irrelevant in the context of the introduction of pre-emption rights into the articles of a GmbH.
Pre-emption rights confer a right to acquire the share of an exiting shareholder (who is under a corresponding obligation to then transfer its share). Typically, a pre-emption right is triggered by extraordinary events upon which the (remaining) shareholders want to have the option to decide whether they prefer to continue amongst themselves or whether they are happy with a third party coming in as a new shareholder of the company (e.g. in case of the death of a shareholder, as in the case at hand). If the pre-emption right is exercised, the transfer of the share as such requires that a transfer instrument is drawn up. For this transfer instrument, the notarial deed form requirement applies. This has been expressly confirmed by the Supreme Court in the case at hand.