1E9Ct5D

Other clauses of the Articles of Association can be stipulated to suit the requirementsof the investor. In particular the financial year, rights of shareholders, procedures inAGMs, transfer of shareholdings etc. Austrian corporate law does not use model orstandard articles of association, and most are drafted individually to suit theshareholders.A GmbH has to state its statutory capital to be subscribed by the shareholders.There is no concept of capital being authorised but not subscribed. At the time offormation, at least a quarter of the subscribed capital has to be contributed by theshareholders in cash or in kind. At present, the minimum amount of statutory capitalis EUR 35,000 of which half, i.e. EUR 17,500 has to be contributed at the time of theformation. The shareholders remain personally liable for any unpaid part of thestatutory capital. This personal liability even survives the transfer of the shareholdingto a new shareholder.A GmbH does not and must not issue share certificates. The shareholding is abusiness and ownership interest evidenced in the corporate documentation and theentries in the public Company Registry.Foreign investors are always advised to contribute the initial capital contribution incash and not in kind. In case contributions are made in kind, an application has tobe made to the court for the appointment of an expert to evaluate the actual value ofthe contribution in kind with a view to protect creditors.The capital contribution is subject to a one per cent Capital Transfer Tax. It will onlybe levied at the time of the formation or capital increase of the company. Thetransfer of a shareholding to another shareholder does not trigger any tax.The initial cash contributions by the shareholders have to be paid into an Austrianbank account opened in the name of the company to be formed. The bank will blockthe funds until the actual registration of the company in the Company Registry. Thebank will issue to that effect a certificate to be submitted to the Company Registrartogether with the application for registration.No particular debt-equity ratios are required with the exception of companies carryingout special business such as banking, insurance and the like. The thin-capitalisationrules are reduced to the simple requirement of having to call a shareholders’ meetingif a company has lost half or more of its equity. Also a company director may incurpersonal liability for debts of the company if she/he keeps on trading while thecompany has become insolvent.The GmbH requires at least one director. He/she is appointed by resolution of theshareholders signed in the presence of an Austrian notary public. The GmbH doesnot require any other company officers, though it is possible to appoint additionaldirectors and procurists. The latter are appointed by the director.To avoid the necessity of actually coming to Austria to appear before a notary,foreign investors are advised to empower Austrian representatives with anauthorization to sign the Articles of Association and any shareholder resolutions. Thisprocedure avoids any language problems. If the notary is faced with a person who isnot able to communicate in German, a court licenced interpreter is required to attendthe signing to interpret, which adds to the time, cost and expense.The director of the company has to sign the application to the Company Registrar forthe registration of the company in the presence of the notary public. Together withthe application, the Company Registrar needs to have the Articles of Association, thebank certificate on the paid in capital, the director’s specimen signature, the taxclearance of having paid the one per cent tax on the capital and, in the case of anyunusual company name, such as geographic description, an opinion by the localChamber of Commerce.- 19 -