Due diligence requirements
What due diligence is necessary for buyers?
Formalised due diligence procedures with document disclosure made in virtual or physical data rooms have become the norm in private Austrian M&A transactions. For asset deals, the review will usually focus on whether contracts can be taken over or need to be terminated and on the requirement for third-party consent.
For share deals, key review items will include change of control clauses and – particularly in the case of minority stake acquisitions – shareholder arrangements. It is also important that chain of title and share ownership issues are assessed.
hat information is available to buyers?
Certain information is available for buyers as it comes from publicly accessible sources (eg, the documents filed with commercial registers, published financial statements and stock exchange filings). The scope of disclosure and due diligence will usually be determined by the size of the transaction and the industry that it is in.
What information can and cannot be disclosed when dealing with a public company?
When dealing with a public company, no insider information should be disclosed to a potential buyer. ‘Insider information’ is information of a precise nature, which has not been made public, relating – directly or indirectly – to one or more issuers or to one or more financial instruments and which, if it were made public, would be likely to have a significant effect on the prices of those financial instruments or on the price of related derivative financial instruments.
The Stock Corporation Act sets forth further disclosure restrictions that apply to the management of any stock corporation (whether it is publicly listed or not).
How is stakebuilding regulated?
Stakebuilding is governed for companies with a corporate seat in Austria and listed on a regulated market. Section 130 of the Stock Exchange Act determines that if persons directly or indirectly acquire or sell shares in a company which is listed on a regulated market, they are obliged to immediately (within two trading days) inform the Financial Market Authority, the exchange operating company and the issuer, if their share in the voting rights reaches, exceeds or falls below:
- 75%; or