A limited liability company (Gesellschaft mit beschränkter Haftung, GmbH) is the most popular form of business in Austria for small and medium-sized businesses. The joint-stock company (Aktiengesellschaft, AG) is slightly inferior to it. In this article, we will consider what requirements are put forward for these companies and how they are registered in the federal states.
Main differences between GmbH and AG in Austria
GmbH is a corporation, the authorized capital of which consists of contributions from shareholders. At the same time, shareholders are not responsible for the company’s obligations above their contributions. The company is a legal entity with its legal personality. This means that a legal entity can acquire rights, assume obligations, sue and answer for them.
AG also has the same legal personality. In this case, the contributions of the company’s members are shares. Shareholders are not personally liable for the company’s obligations.
An important difference between GmbH and AG is the number of founders. An LLC can even be organized by one person. JSC – at least two shareholders.
The legal regulator of the activities of the GmbH is the federal LLC Law. AG activity is based on the federal law on joint-stock companies.
Registration GmbH
This type of company has many advantages. Moreover, it is a more popular way to open a company in Austria. The shareholders bear limited liability for possible losses of the company within the limits of their shares and are not responsible for the obligations of the company. At the same time, the requirements for GmbH are less stringent than for AG.
Shareholders
A GmbH can have one or several shareholders. A legal entity or an individual can become a participant in an enterprise. Even a foreign citizen who does not reside permanently in Austria can be a shareholder.
Company name
The name of the company must contain an indication of its organizational and legal form, that is, include the designation GmbH after the name. For example, Traktionssysteme Austria GmbH.
Authorized capital
The nominal authorized capital of a company with foreign participation during its registration must be € 35,000. At the same time, each participant must deposit at least € 7,000 in cash to an account with an Austrian bank or in kind. The general rule is to deposit at least half of the total in cash.
Managing Director
The GmbH must have at least one managing director. Managing directors can be appointed:
- by decision of partners;
- following the partnership agreement;
- in rare cases – by a court decision (the so-called emergency managing director).
The Managing Director is the central management and representative office of the GmbH. If more than one person is appointed as managing directors, they manage and represent together, unless otherwise provided by the articles of association.
They must fulfill the duties established by law or statute and are bound by the instructions of the partners.
In some cases, a supervisory board is formed in the GmbH. This happens if:
- share capital exceeds € 70,000;
- the company has more than 50 shareholders;
or
- the number of company employees exceeds 300 people.
However, the supervisory board can be created voluntarily.
If a supervisory board is formed, it must consist of at least three shareholders and two employees. Individuals must be members of the supervisory board. However, they cannot simultaneously be managing directors of the same company or subsidiary. The Supervisory Board is elected by a decision of shareholders, individual partners (if such is specified in the Articles of Association), or by a court decision.
The tasks of the supervisory board include:
- monitoring of the company’s activities;
- consideration of annual financial statements;
- resolving legal disputes with managing directors;
- approving the performance of the managing directors concerning certain transactions.
The shareholders of the GmbH constitute the General Meeting. At meetings of the meeting, decisions are made using resolutions – with a simple majority of votes (50% of shareholders + 1 vote).
The general meeting decides the following issues:
- audit and approval of annual financial statements;
- capital investment report;
- receiving applications for the activities of managing directors and the supervisory board;
- must be individuals.
However, they cannot simultaneously be managing directors of the same company or subsidiary. The Supervisory Board is elected by a decision of shareholders, individual partners (if such is specified in the Articles of Association), or by a court decision.
The tasks of the supervisory board include:
- monitoring of the company’s activities;
- consideration of annual financial statements;
- resolving legal disputes with managing directors;
- approving the performance of the managing directors with certain transactions.
The shareholders of the GmbH constitute the General Meeting. At meetings of the meeting, decisions are made using resolutions – with a simple majority of votes (50% of shareholders + 1 vote). The general meeting decides the following issues:
- audit and approval of annual financial statements;
- capital investment report;
- receiving applications for the activities of managing directors and the supervisory board;
- conclusion of contracts with a profit that exceeds the authorized capital by 20% (large investments);
- appointment and dismissal of managing directors and members of the supervisory board;
- changes in the Charter.
The balance sheet profit is distributed among the shareholders. Unless otherwise agreed in the partnership agreement, profits are distributed as capital contributions paid. Losses are mainly borne by the company, that is, there is no need to make additional contributions if this was not agreed upon in the company agreement.
