In Austria, the redenomination of share capital into Euro is regulated by federal law which entered into force on 1 January 1999 (1.Euro-Justiz-Begleitgesetz - "1.Euro-JuBeG"). The 1.Euro-JuBeG amended the Stock Corporation Act (Aktiengesetz) and the Limited Liability Company Act (GmbH-Gesetz) to make the establishment of companies with a share capital denominated in Euro possible. The following will illustrate the provisions regulating the redenomination of share capital of existing stock corporations (Aktiengesellschaften - "AGs") and limited liability companies (Gesellschaften mit beschränkter Haftung - "GmbHs") from Austrian Schilling (ATS) to Euro (EUR). The applicable exchange rate is EUR 1 = ATS 13,7603.
The redenomination of share capital is not made automatically, but only after a respective shareholder resolution is adopted and registered with the Austrian Register of Companies.
There are no specific provisions regarding partnerships (Personengesellschaften), private trusts (Privatstiftungen) and registered co-operatives (Genossenschaften). Partnerships do not have a share capital. Partners may, however, limit their liability to a certain amount by registering such limitation with the Register of Companies. We are of the view that such registration as well as the registration of contributions to private trusts, can be directly made in Euro. Provisions for the conversion to Euro of the capital of co-operatives shall be enacted by 1 January 2002.
Limited Liability Companies
The minimum nominal share capital for GmbHs now amounts to EUR 35.000,--. In the event that there is more than one shareholder, each shareholder must have an interest of at least EUR 70,--. Each EUR 10,-- nominal capital held gives the right to one vote.
The redenomination of the share capital of GmbHs to Euro is made in two steps. First, the nominal value of each shareholder´s interest is converted to Euro. Each shareholder only holds one "share" (therefore, not the number of shares one shareholder holds differ, but only the nominal value of the respective shareholder´s interest is increased or decreased if the shareholder sells part of his share or acquires the shareholder´s interest from another shareholder). As a second step, the (rounded to Cents) nominal values of the individual shareholder´s interests are added. The result is the nominal share capital of the company expressed in Euro.
As mentioned above, a shareholders´ resolution is required to redenominate a company´s share capital in Euro. In a GmbH such a resolution may be adopted by simple majority vote (instead of the usual ¾ majority) at a general shareholders meeting. If the redenomination modifies any shareholder´s rights in the company, i.e., if as a result of rounding off to the nearest cent a shareholder has less voting rights, a resolution may still be adopted by simple majority vote but the consent of the affected shareholder is required.
To make the effects of the redenomination clear to every shareholder an indication of the nominal value of each shareholder´s interest and voting rights before and after the redenomination has to be included in the resolution.
The provisions on the redenomination of the share capital for GmbHs - other than for AGs - do not contain specific rules for an easier increase or decrease of the nominal share capital to an even amount. Therefore, for such measures (if the articles of association do not set a higher limit) a ¾ majority is required.
The minimum nominal share capital of AGs now amounts to EUR 70.000,--. Each share has to have a nominal value of at least EUR 1,--.
Shares in AGs may now be either pro rata (Stückaktien) or par value shares (Nennbetragsaktien). Pro rata shares, which were introducted by the 1. Euro-JuBeG only, do not have nominal value. Nevertheless, each individual pro rata share must at least represent a nominal value of 1 Euro. The nominal value of a par value share has to amount to Euro 1 or a multiple of 1 Euro.
As with GmbH´s, the redenomination of the share capital of an AG is also made in two steps. In step one, the nominal value of the share with the lowest nominal value (which is usually ATS 100,-- as this was the minimum value so far) is converted to Euro. This sets the basis for conversion of shares with a higher nominal value (if shares with different values exist within the same AG). The converted nominal value of each share is then multiplied with the number of shares. The result is the nominal share capital expressed in Euro (if shares with different nominal values exist, then the results of the multiplications of each group are added).
As for pro rata shares, the general shareholders´ meeting may resolve to redenominate the total share capital by direct conversion (i.e., the current nominal share capital in ATS is divided by 13,7603; the result - rounded to the nearest Cent - is the converted share capital).
These resolutions may be adopted by simple majority.
With respect to the par value shares, shareholders must resolve to increase or decrease the company´s share capital in order to have a nominal value of 1 Euro or multiples thereof as required by law. Since ATS 100,-- equals 7,27 Euro an additional 0,73 Euro or a reduction of 0,27 Euro would be needed to achieve a multiple of 1 Euro. As a capital decrease may affect the good standing of the company and a capital increase of EUR 0,67 per share for companies with a high nominal capital would require significant additional funds (either from the shareholders or from the profits and - under certain conditions - from the reserves of the company), conversion to pro rata shares is a better alternative.
Increases or decreases of the share capital due to Euro-conversions may be resolved by a simple majority vote if at least 50% of the voting stock is present.
Taxes and Accounting
There are no specific rules concerning taxes in connection with capital increases or decreases resulting from share capital redenominations. However, there is an exemption from registration fees when registering an Euro-conversion with the Register of Companies.
As of 1 January 1999, all companies may keep their accounts in Euro.
Time Frame for the Redenomination
After 31 December 2001, changes in the share capital of an AG or GmbH may only be registered with the register of companies if they are redenominated to Euro. Likewise, companies may only be established with a nominal capital expressed in Euro from 1 January 2002 on.