Flexible CompanyFor the first time in decades, a new type of company has been introduced into Austrian law: the Flexible Company (FlexKapG or FlexCo). The FlexCo, which was established by the FlexKapGG (Flexible Capital Company Act), aims to make Austria a more attractive location for start-ups and international investors. The new company form offers numerous simplifications for the participation of new shareholders. The FlexCo is largely based on established law governing Austrian limited liability companies (GmbH), which is currently the most popular company form in Austria to date. However, in contrast to the GmbH, the FlexCo has numerous special characteristics that offer increased flexibility for founders, shareholders and investors, such as:
- Capital contributions: The minimum amount for capital contributions by shareholders is EUR 1 as opposed to EUR 70 for a GmbH.
- Minimum share capital: The new minimum share capital of both the FlexCo and GmbH is EUR 10,000, half of which must be paid in.
- Shareholder resolutions: The articles of association of FlexCo may stipulate that circular resolutions are always permissible. In the case of a GmbH, it is not possible to obtain such advance approval for written votes, meaning that an individual shareholder could prevent circular resolutions and force a general meeting to be convened.
- Simplified share transfers: The form of a notarial deed is required for the transfer of a share in a GmbH. In the case of FlexCo, it is sufficient for a lawyer or notary to draw up a private deed. This is a reduced formal requirement in which the admissibility of the share transfer and the identity of the persons involved must be checked and the parties must be informed of the legal consequences of their declarations. This simplified formal requirement also applies to takeover declarations. The involvement of a notary is therefore not required for share deals.
- Enterprise value shares: Enterprise value shares were created as a new category of participation (up to 25 % of the share capital). Enterprise value shareholders receive a share in FlexCo's net profit and liquidation proceeds, but do not have voting rights. Enterprise value shares should prove to be an ideal new form of participation in the economic success of the company, particularly for employee participation models. Enterprise value shares have the following features compared to company shares:
- The capital contributions of the individual shareholders have to amount to only 1 cent.
- The written form is sufficient for the transfer of company value shares, so there are even fewer formal requirements than for transfers of shares (share deals).
- Enterprise value shareholders have a mandatory co-sale right if a founding shareholder sells the majority of his shares.
- Non-uniform voting: Shareholders who have more than one vote can also exercise their voting rights non-uniformly. This could be of interest, for example, if shareholders hold shares (or parts thereof) in trust.
- Capital measures: FlexCo has various capital measures that were previously reserved exclusively for stock companies. For example, managing directors may be authorized in the articles of association to increase the share capital up to a certain nominal amount by issuing new shares (authorized capital). A conditional capital increase or the acquisition of own shares are also permitted under certain conditions.
The above-mentioned advantages of FlexCo can also be a reason to convert an existing GmbH into a FlexCo. All that is required is a shareholder resolution for conversion of the company in the general meeting of the GmbH. The conversion becomes effective upon entry in the commercial register. Measures to protect creditors are not required. STADLER VÖLKEL will gladly assist you if you need support with the formation, the conversion of the GmbH into a FlexCo or the transfer of shares. Further information on FlexCo may also be found at https://flexco.io/.