Legal guide for company directors and CEOs in Austria

Because environmental, social and governance (ESG) is such an increasing focal point of good corporate governance, we address ESG duties and responsibilities first. For more general duties and responsibilities of directors and CEOs, please scroll down the page or use the navigator to jump to the relevant section. 

In Austria, ESG-related regulations are stipulated in a number of laws on federal and on state level, for example:

• Sustainability and Diversity Improvement Act (Nachhaltigkeits- und Diversitätsverbesserungsgesetz)
• Austrian Water Rights Act (Wasserrechtsgesetz)
• Austrian Trade Law Act (Gewerbeordnung)
• Environmental Impact Assessment Act (Umweltverträglichkeitsprüfungsgesetz)
• Austrian Waste Management Act (Abfallwirtschaftsgesetz)
• Austrian Climate Change Act (Klimaschutzgesetz)
• Austrian Energy Efficiency Act (Energieeffizienzgesetz)
• EU Regulation on the Carbon Border Adjustment Mechanism (CBAM)
• Stock Corporation Act (Aktiengesetz)
• Austrian Limited Liability Company Act (GmbHG)
• Flexible Capital Companies Act (FlexKapGG)
• Austrian Commercial Code (UGB)
• Austrian Lobbying and Interest Representation Transparency Act (LobbyG)
• Austrian Whistleblower Protection Act (HinweisgeberInnenschutzgesetz)
• EU Taxonomy Regulation
• Consumer Protection Act (Konsumentenschutzgesetz)
• Austrian Working Hours Act (Arbeitszeitgesetz)
• Austrian Employee Protection Act (ArbeitnehmerInnenschutzgesetz)
• General Data Protection Regulation (GDPR) and Austrian Data Protection Act (Datenschutzgesetz)

Furthermore, the EU Corporate Sustainability Reporting Directive (CSRD (EU) 2022/2464) shall be transposed into national law by EU member states by 06 July 2024. As of now, the Austrian legislator has not passed a transposing law. 

Responsibilities outlined in the laws listed above primarily pertain to the respective company. However, it is the duty of the respective company's management to ensure compliance with such regulations. Furthermore, under Austrian corporate law, managing directors of joint-stock companies (Aktiengesellschaften: Vorstand), private limited liability companies (Gesellschaften mit beschränkter Haftung: Geschäftsführer), and flexible capital companies (Flexible Kapitalgesellschaften: Geschäftsführer) bear the responsibility for overseeing all aspects of the company's operations. The Austrian Joint-Stock Companies Act specifically mandates that managing directors must consider the public interest, which encompasses ESG considerations beyond mere adherence to applicable ESG regulations.

In terms of ESG requirements, directors are required to:

• incorporate the due diligence obligation stipulated in ESG-related regulations into corporate policies: This can primarily be achieved by establishing rules, principles, and measures as part of a code of conduct, which employees of the relevant company and its subsidiaries, as well as their business partners, are required to adhere to,
• implement a risk analysis to identify actual or potential ESG-related risks,
• prevent potential ESG risks by taking preventive measures; for this purpose, a prevention action plan should be developed, outlining suitable measures for avoiding/remedying adverse effects, defining schedules for their implementation, and including indicators to measure improvement,
• rectify any negative impact promptly; if immediate rectification is not feasible, such negative impact should be appropriately mitigated, with ongoing efforts to fully address them,
• implement an internal reporting or whistleblower mechanism at companies with more than 50 employees to enable employees, self-employed individuals, interns, and applicants to report violations of diverse regulations, including mandatory workplace standards aimed to protect life, health, or specific rights of employees as well as violations of regulations concerning environmental protection and corruption.

For details of the ESG-related reporting obligations, please refer to item 4. below. 

In case of a violation of the above-mentioned regulations, the competent authorities may impose administrative fines on (each or some of) the company’s directors, which may be imposed on a cumulative basis or increased by the authority in case of ongoing or repeated non-compliance. If violations lead to financial loss/damages of the company or in case that sanctions are imposed on the company (e.g. the loss or revocation of a licence or concession), the managing director may be held personally liable towards the company.

Please refer to item 4. below to review the consequences of breaching ESG-related reporting obligations. 

ESG-related employee protection regulations are stipulated in a number of laws at state level.

Obligations relating to the health and safety of employees are mainly regulated in the Austrian Employee Protection Act (ArbeitnehmerInnenschutzgesetz). Workers are also protected by safety measures and guidelines for dangerous work equipment.

The issue of wage inequality between genders is addressed by the Austrian Equal Treatment Act (Gleichbehandlungsgesetz) and the general legal principle of equal treatment in accordance with Austrian constitutional law (Gleichbehandlungsgrundsatz). In this regard, companies must generally apply equal pay criteria for men and women. In addition, companies are prohibited from discriminating against employees or potential employees on the basis of their ethnicity, religion, ideology, age, gender or disability.

A major step in terms of ESG considerations in the area of diversity and gender equality has been achieved through the Austrian Equality of Women and Men on Supervisory Boards Act (Gleichstellungsgesetz von Frauen und Männern im Aufsichtsrat). It applies to listed public limited companies and other large companies and stipulates that newly constituted supervisory boards must consist of at least 30% women and at least 30% men.

Directors are responsible for complying with and observing the respective provisions and taking appropriate measures to ensure compliance at all lower levels of the organisation. Compliance with these provisions can be enforced by imposing administrative fines on some/all directors of a company. 

1. The Corporate Sustainability Reporting Directive (CSRD) is scheduled to be transposed into national law in early July 2024. For details regarding the obligations it imposes, please consult item 4.
2. The EU Corporate Sustainability Due Diligence Directive (CSDDD), has been adopted on 24 May 2024 by the European Council. After the legislative process will have been finished, the CSDDD will have to be transposed into Austrian law within two years. Subsequently, affected companies would be given one to three years (based on their size) to implement the necessary adjustments. The main responsibility for complying with all measures and due diligence obligations outlined in the CSDDD will lie with the managing directors of joint-stock companies (Vorstand), private limited companies (Geschäftsführer), and flexible companies (Geschäftsführer). Nonetheless, the supervisory board (Aufsichtsrat) of these companies also encounters an increased level of responsibility concerning oversight and audit duties. While the final version of the CSDDD no longer includes explicit personal liability for managing directors and supervisory board members, these individuals could still be personally liable if they culpably breach the CSDDD regulations (and thereby act unlawfully).
3. The directive on empowering consumers for the green transition through better protection against unfair practices and through better information (Empowering Consumers Directive, ECD, (EU) 2024/825) was adopted by the European Council on 20 February 2024 and already entered into force. The ECD shall be transposed into national law by 27 March 2026 and shall be applied from 27 March 2026 onwards. 
   The key element of the ECD are business-to-consumer commercial practices. The ECD focusses on a more precise definition of environmental information provided by companies and related prohibited commercial practices. Please also consult item 4.
4. The EU Regulation on the Carbon Border Adjustment Mechanism (CBAM, Regulation (EU) 2023/956) was adopted on 17 May 2023 with a transitional period starting on 01 October 2023. 
   During the transitional period (from 01 October 2023), importers of CBAM goods are required to submit quarterly reports containing the following aspects:

• Quantities of CBAM goods imported during the quarter, specified per country of origin and per production site where the goods are produced.
• The embedded direct (and – if applicable -, indirect) greenhouse gas emissions stemming from such imports; and
• (If applicable) the carbon price due in the country of origin.

On 01 January 2026 the full scope of the CBAM regulation will enter into force, requiring importers of CBAM to

• Obtain an authorization in order to import CBAM goods (‘authorized declarant’);
• Declare on a yearly basis the quantity of CBAM goods imported into the EU in the preceding year and their embedded greenhouse gas emissions; and
• Surrender CBAM certificates to cover the declared emissions.

1. The Sustainability and Diversity Improvement Act, enacted in Austria in 2017, incorporates the Non-Financial Reporting Directive (NFRD), obliging large public-interest companies to disclose non-financial aspects such as anti-corruption efforts, environmental concerns, human rights, social issues, and diversity.
2. With the introduction of the CSRD – yet to be transposed into Austrian national law – reporting requirements will be significantly expanded and a wider range of companies will be required to report. 
3. On the basis of the ECD (please consult item 3.c)), obligations towards the consumer on pre-contractual information on a product’s durability and repairability, environmentally friendly delivery options, among others, are introduced. 

Violations of reporting obligations can result in civil liability for those responsible, particularly the managing directors. False statements may also prompt legal action under the Austrian Unfair Competition Act (UWG).

Austrian private limited companies and flexible companies have a management board (Geschäftsführung) consisting of one or more directors. Usually, the articles of association determine the number of directors. All directors on the management board are managing directors and thus have an executive function. The managing directors are not mandatorily organized as a board of directors in the sense of a collective management body. The shareholders of the company may, however, issue rules of procedure for the managing directors, including e.g. regular meetings of all managing directors, joint managing director resolutions and/or an allocation of specific responsibilities to each managing director (which however does not relieve the relevant managing directors from their overall executive function and the legal requirement to comply with cardinal obligations and generally oversee the entire business operations of the company (also in areas other than those allocated to the managing director)). 

Under Austrian law, the management of a private limited company is generally structured as a two-tier system. An additional supervisory board (Aufsichtsrat) for a private limited company and a flexible company is mandatory in certain cases, namely if:

• the stated share capital exceeds EUR 70,000 and the number of shareholders exceeds 50,
• the number of employees of the company on average exceeds 300,
• the company centrally manages or, by means of a direct interest exceeding 50%, controls private or public limited companies, and the total combined number of employees of the controlling and controlled companies on average exceeds 300,
• the company is a general partner (Komplementär) in a private limited liability partnership (Kommanditgesellschaft) and the total combined number of employees of the company and the private limited liability partnership on average exceeds 300,
• employee representatives have the statutory right to nominate, appoint, recommend, or reject members of the supervisory board pursuant to Part VIII of the Austrian Labour Relations Act (Arbeitsverfassungsgesetz) as a result of a cross-border merger, or
• the company is a company of public interest (Unternehmen von öffentlichem Interesse). 

Furthermore, for a flexible company, a supervisory board (Aufsichtsrat) is mandatory also if the flexible company qualifies as a "medium-sized corporation". This designation applies if the corporation exceeds at least two of the following three criteria:

• 5 million euros in total assets,
• 10 million euros in turnover in the twelve months prior to the relevant balance sheet date, and/or
• 50 employees on an annual average.

The articles of association may provide for an optional supervisory board. The supervisory board has a controlling function, and thus its members are non-executive. 

The supervisory board of an Austrian private limited company and a flexible company (if the company has a supervisory board) must in essence supervise the management of the company. This primarily includes supervising higher-level aspects of corporate policy, corporate planning, the coordination of decision-makers, performance review and the filling of management positions in the company.

In supervising the management of the company, the supervisory board has a number of rights and duties:

• it may at any time request a report from the directors on the affairs of the company, including its relations with affiliates in the same group of companies,
• it may inspect and examine the books and records of the company as well as its assets, in particular the company's cash, securities and products,
• it must convene a general meeting if the well-being of the company so requires,
• certain management acts require the prior approval of the supervisory board (such as the acquisition and sale of equity interests as well as the acquisition, sale and closure of companies and plants, the raising of bonds, loans and credits that exceed a certain amount individually and in total in a fiscal year and the definition of general principles of business policy),
• it must review the annual accounts, any proposal for the distribution of profits as well as a separate non-financial report, if any, and must report thereon to the general meeting, and
• it is authorised to represent the company in legal transactions with the directors of the company and, after having received the approval of the shareholder(s) of the company, to initiate litigation proceedings against the directors in connection with these legal transactions if necessary. 

Further obligations may be conferred on the supervisory board by the articles of association or by a shareholder resolution. 

There are few restrictions on who can become a director. In particular, a director of a private limited company, or a flexible company, both as managing director as well as supervisory board member (if the company has a supervisory board), is not required to reside in Austria and does not have to be of a certain nationality. Only a physical person with full legal capacity can be appointed as a director. A legal entity or a partnership may not be appointed. Special provisions apply to directors who are shareholders. A company may have one or more directors. Usually, the articles of association determine the number of directors. 

Individuals who have been subject to a legally binding court conviction resulting in a sentence of over six months’ imprisonment for a business-related offense are disqualified from being managing directors for a period of three years following the legally binding conviction. Relevant business-related offenses are conclusively listed and include fraud, embezzlement, fraudulent concealment, money laundering, and tax fraud. Furthermore, a conviction by a foreign court for a "comparable" offence is also relevant. The law entered into force on 01 January 2024. The disqualification is effective for convictions that became legally binding after 31 December 2023. The disqualification is automatic upon a legally binding conviction and creates a barrier to the initial appointment, or the ongoing performance as a managing director. In the latter case, managing directors are obligated to resign from their respective position without delay. These rules on the disqualification also apply to managing directors of joint-stock companies. 

A supervisory board must consist of at least three members. Additional members may be appointed unless the number of members is restricted by the articles of association. Usually, the number of members of the supervisory board is determined by the articles of association. Members of the supervisory board may not simultaneously be directors, permanent substitutes for directors, or employees of the company (unless the company has a works council; see the answer to question 4 below). Also, an individual must not be a member of the supervisory board of more than 10 private or public limited companies (in certain cases 20; the role as chairman of a supervisory board counts as two supervisory board positions) and he/she must not be a director of a subsidiary of the company. 

Although Austrian corporate law does not mandate the managing directors of a private limited company, or a flexible company being resident in Austria (see above), the appointment of (only) foreign residents as managing directors might impose tax related risk. In the case that no managing director has a regular presence/residency in Austria and main management decisions are (regularly) taken outside Austria, there is a risk that the tax seat of the company’s management is qualified as abroad and therefore subject to foreign tax law. In theory, the appointment of (only) foreign residents as managing directors might also lead to the appointment of an emergency managing director by the court in order to safeguard the proper delivery of registered letters or other official company mail.

Directors are appointed by the shareholders as the ultimate decision-making body of a private limited company and a flexible company in Austria. The appointment can be made either in the realm of a formal general meeting of the shareholders (as notarial protocol) or by way of circular shareholder resolution (signatures to be notarially certified). The shareholder resolution regularly also determines the power of representation of the appointed managing director, which can include sole representation power or joint representation power with either one, more or all other managing directors and/or an authorized signatory (Prokurist) of the company (please refer to item 6. below). If the relevant director is, at the same time, a shareholder of the company, such directors may also be appointed by a provision in the articles of association. Furthermore, the articles of association may also grant certain shareholders the right to nominate or directly appoint one or more persons for the office of managing director. The term of office is not limited unless the articles of association provide otherwise. The appointment of a managing director is only possible with immediate effect or with effect in the future; a retroactive appointment is not possible.

A notarially certified notification of the appointment, signed by the director(s) authorized to represent the company, together with a notarially certified evidence of the appointment (e.g. a certified shareholder resolution), as well as a notarially certified sample signature of the relevant director, must be filed with the Austrian Commercial Register (Firmenbuch) without undue delay after the appointment.

The members of the supervisory board are appointed by a shareholder resolution for a maximum of around five years (until the shareholders resolution on discharging the supervisory board member from liability for the fourth business year after appointment). The articles of association may provide for a shorter term. If the employees have established a works council (which requires a minimum of five employees), the works council may nominate one additional member to the supervisory board for every two members of the supervisory board elected by the shareholders. The articles of association may also grant certain shareholders the right to nominate or directly appoint members of the supervisory board. A notification of the appointment or nomination, signed by the director(s), must be filed with the Austrian Commercial Register (Firmenbuch). 

For the filing of the notifications of appointment described above, a small registration fee must be paid by the company to the competent companies’ register court (Firmenbuchgericht). 

A director or supervisory board member may generally be removed at any time by the shareholders through a shareholder resolution. This does not apply to directors, which are at the same time shareholders of the company and appointed in the realm of the company’s articles of association. 

A director may resign at any time by giving notice to the company. However, such a resignation may constitute a breach of duty or a breach of contract. The resignation has immediate effect if there are substantial grounds for the resignation; otherwise, it becomes effective only 14 days after the general meeting or after each shareholder has been notified by the director of the resignation. If the company has multiple directors, the remaining director(s) need to be notified of the resignation as well; if the company has a supervisory board, the chairman of the supervisory board must also be notified. Even if only one director was appointed, resignation is still possible. A director has certain obligations to clarify to the company any business activities carried out by him/her in the course of his/her term and during the five years following his/her removal or resignation. If directors are appointed for a fixed term, or are subject to "rotation", their appointment will terminate automatically if they are not reappointed. 

A member of the supervisory board, who was appointed by a shareholder resolution automatically ceases to be a member of the supervisory board after his/her term of appointment expires. If a member of the supervisory board was appointed by a certain shareholder based on a right afforded to that shareholder in the articles of association, said shareholder may dismiss that supervisory board member at any time. A member of the supervisory board may also resign with immediate effect if there are substantial grounds for the resignation, by giving notice to the company. If that is not the case, the resignation must be declared in advance and in such a way that an adequate substitute member may be found. 

Notification of removal or resignation of a director or member of the supervisory board, signed by the new or remaining director(s), must be filed with the Austrian Commercial Register (Firmenbuch). The company must pay a small registration fee. 

The Austrian private limited company and a flexible company is represented by its directors in external affairs, i.e. all matters in and out of court. The directors are in principle entitled to perform the following activities on behalf of the company:

• to issue binding declarations,
• to enter into contracts, and
• to accept any declarations.

In principle, the power of representation of directors towards third parties is unrestricted and cannot be restricted by the articles of association or the shareholders. The actions of directors properly representing the company – i.e. exercising such powers as are conferred by law or by the articles of association – are valid and binding towards third parties regardless of whether or not prior approval by the shareholders or by the supervisory board is required and has been obtained. 

A director has full authority to represent the company. However, such authority may (for internal purposes only) be restricted by the articles of association or by a shareholder resolution. In many cases, the articles of association will provide that certain key managing acts will be subject to prior approval of the shareholders or supervisory board. With few exceptions (such as collusion of the director with a third party to the detriment of the company), a breach of a restriction on a director's authority to represent the company does not invalidate the director's actions on behalf of the company vis-à-vis third parties. 

In general, the directors can only represent the company together (joint power of representation). The articles of association may provide for a different form of representation and usually provide that one or two directors or, if there is more than one director, one director together with an authorised officer (Prokurist, with limited power to represent may jointly represent the company).

All directors have the same rights and duties and are jointly obliged to manage the company. However, and notwithstanding each director's overall responsibility, certain management roles may be allocated to specific directors by the articles of association, by a shareholder resolution, by a resolution of the supervisory board, by internal guidelines for directors (e.g. rules of procedure) and/or by the management board itself. 

The shareholders may, at all times, give binding instructions to the directors on any management decisions or generally matters of the company’s business operations. The directors must mandatorily obtain the prior approval of the shareholders to certain management decisions, if such approval is required by the company’s articles of association. In addition, the directors may also voluntarily request the shareholders for their approval of management decisions. 

The appointment of a director by a shareholder resolution does not itself constitute a contract with the company or entitle a director to remuneration. A company's articles will generally only entitle members of the supervisory board to reimbursement of expenses incurred by performing their role as supervisory board member. Supervisory board members' fees are payable to the extent specified in the articles of association or approved by a resolution of the shareholders. 

Directors usually have separate contractual relationships with the company; they may either be employees under employment agreements or independent contractors acting under freelance agreements. The termination of such agreements does not automatically result in the dismissal from the corporate appointment/position as director of the company. On the other hand, the dismissal of the director does not automatically end the employment- or freelance agreement, these must be terminated separately subject to applicable termination periods and termination effective dates. 

In the case of a conflict of interest, a director must refrain from any action that might be detrimental to the company. 

A director cannot represent the company in dealings with himself/herself, or with a third party represented by himself/herself, unless the company consents by a shareholder or supervisory board resolution or unless the company's interests are not negatively affected. A director who is the sole shareholder of the company may represent the company in dealings with himself/herself only subject to a written agreement (in some cases, such self-dealing will require the drawing up of a document certified by a notary public). 

Directors must not accept any loans from the company without prior approval of the shareholders or the supervisory board. 

The directors are subject to a statutory non-compete obligation. They must not transact business within the company's line of business for their own account or for the account of third parties, nor may they be general partner in a partnership or a member of the management or supervisory board of another company in the same line of business, without prior approval of the shareholders or of the supervisory board (non – compete). 

A director must manage the company and act on behalf of the company in line with its business purpose, in the best interest of the company and in accordance with the instructions of shareholders, with the diligence of a prudent businessman (ordentlicher Geschäftsmann) irrespective of his/her own individual level of skill and experience (duty of care). In managing the company, the director must safeguard the interests of the company and avert any damage to the company. The director has a fiduciary obligation towards the company. According to the business judgement rule, which has been explicitly introduced into Austrian corporate law following a line of case-law of the Austrian supreme court, a director is deemed to have acted in line with his/her duty of care and generally may not be held liable for damages resulting from his/her actions if (i) he/she does not allow himself/herself to be guided by extraneous interests when making a management decision, and (ii) can assume, on the basis of appropriate information, that he/she is acting for the benefit of the company. However, the business judgment rule only applies to discretionary business decisions by the director (judgement calls), not to decisions that are determined by statutory law. 

Directors are subject to a wide range of specific statutory duties. Such specific duties include, but are not limited to:

• operating the business of the company in line with the business purpose and with regard to the principles of maintenance of capital and protection of creditors,
• making decisions on the execution and implementation of legal transactions,
• supervising employees,
• preparing financial statements and disclosing financial statements to shareholders and to the public,
• setting up an internal control system (internes Kontrollsystem),
• submitting quarterly reports, an annual budget, and reports on extraordinary circumstances to the supervisory board,
• convening general meetings (annually and in the event of loss of half of the stated share capital),
• initiating reorganisation proceedings in the event that a material and sustained deterioration of the company's equity ratio is anticipated,
• timely filing of an application to open insolvency proceedings in the event of insolvency or over indebtedness of the company,
• requesting payments to be made on capital contributions of the shareholders,
• representing the company (in and out of court), e.g. in any challenge proceedings and notification of such proceedings to the shareholders, and
• making submissions to the commercial court regarding certain changes relating to the company, its shareholders, its directors, etc.

Supervisory board members are obliged under statutory law to supervise the management of the company. 

Furthermore, the directors are responsible for ensuring that the company fulfils its obligations under public law, such as tax and social security law. This includes, in particular, the submission of tax or contribution returns as well as the payment of taxes, social security contributions and other contributions from the funds of the company.

A director has a confidentiality obligation. Hence, he/she may not disclose certain information to outside third parties if the disclosure of such information could be detrimental to the company. In addition, the obligation to maintain confidentiality also applies to information which the company wishes to keep confidential. 

Additional duties may arise from a company's articles of association or specific instructions given by shareholder resolutions – such as obtaining the consent of the shareholders (or the supervisory board or advisory board, if there is one) for certain types of transactions and measures. 

The duties of a director are primarily owed to the company. A director's duties are generally not owed to any one shareholder, a business partner of the company or to the company's creditors. 

Notwithstanding the primary obligation of the directors towards the company, the directors also owe duties to third parties, where the purpose of the relevant law is directed towards the protection of such third parties. Examples include the director’s obligation and liability for (i) the timely and correct registration of certain relevant facts with the Austrian Commercial Register (Firmenbuch), the timely and correct filing of insolvency proceedings in accordance with statutory requirements (see in item 12. below for more information), or, more generally, (iii) criminal offences. 

The directors also have to apply the diligence of a prudent businessman (ordentlicher Geschäftsmann) in times of financial difficulties. But there are some duties that are specific in such cases. 

The directors must convene a general meeting if the company's well-being so requires. If half of the share capital is lost or if the equity ratio falls below 8% and the notional debt repayment period is longer than 15 years, this must be done immediately. In the latter case, the company fulfils the requirements under the Austrian reorganisation proceedings act, requiring the company to enter into reorganisation proceedings under the Austrian Corporate Reorganisation Act (Unternehmensreorgnisationsgesetz; URG), which comprise, in essence, the preparation and implementation of a reorganisation plan under supervision of a court appointed reorganisation officer.

The directors must closely monitor the state of the company, because if the company is:

1. insolvent (zahlungsunfähig), e.g. unable to pay its debts as and when they fall due, or
2. over-indebted in accordance with insolvency law (insolvenzrechtlich überschuldet), which is generally the case if the company's liabilities exceed its assets at liquidation values under Austrian GAAP on a standalone basis and if there is a negative forecast regarding the company's future survival (negative going-concern prognosis (negative Fortbestehensprognose)), provided that the insolvency estate's value is sufficient to cover at least the costs of the insolvency proceedings,
3. the company is no longer permitted to make payments (cash payments, deliveries of goods or providing securities) to its creditors and the directors must file for insolvency with the competent court without undue delay and in any event no later than 60 days after the occurrence of insolvency. 

In the event of insolvency caused by a natural disaster (flood, avalanche, snow pressure, landslide, rockslide, hurricane, earthquake, epidemic, pandemic or similar disaster of comparable magnitude), the directors must file for insolvency no later than 120 days (instead of 60 days) after the occurrence of insolvency. 

In times of crisis (if the company is insolvent, over-indebted or the equity ratio is below 8% and the notional debt repayment period is longer than 15 years), directors need to be very careful when making payments to shareholders, especially if shareholder loans are to be repaid. Shareholder loans that are granted in a crisis may be subject to the repayment ban under the Austrian Equity Repayment Act ("EKEG"). According to the EKEG, shareholder loans may only be repaid after the company has been restructured and is no longer in a crisis.

Repayments to a shareholder in spite of the repayment ban violate the prohibition on the repayment of capital contributions, for which directors are personally liable. Such repayments are also invalid. 

A director might be directly liable to creditors in cases of insolvency of the company or failure to file for insolvency proceedings in a timely manner due to wilful misconduct or negligence (e.g. for damages resulting from payments having been made after the point in time at which the director should have filed for insolvency). Wilful or negligent violation of creditors' interests or failure to file for insolvency proceedings on time may constitute a criminal offence. 

When the company takes out a loan (interpreted broadly, i.e. if the contractual partner of the company is to make advance payments), a director of the company has a general duty to inform the business partners of the company of the poor economic situation of the company if the company is already in a state in which an application for insolvency would have to be filed or if it is to be expected that the company will be insolvent when payment falls due. If the directors do not do so, they may be personally liable for the resulting damages. 

During insolvency proceedings, the company is no longer managed by the directors but, insofar as legal acts affecting the assets are involved, by the insolvency administrator. This also includes accounting and disclosure obligations, but not internal company measures such as the appointment and dismissal of directors. 

A director is primarily fully liable to the company, but not to shareholders, business partners of the company or the company's creditors (for exceptions, see below), for a wilful or negligent breach of duty. In the case of wilful or negligent breach of duty by two or more directors, they are jointly and severally liable. If the director adhered to the business judgement rule, he/she may not be held liable for damages resulting from his/her discretionary business decisions. The duty of care of directors is an objective one, which is judged on the basis of the measure of a prudent businessman (ordentlicher Geschäftsmann). Therefore, directors may also be liable if they lack the skills necessary to fulfil the directors' duties and cause damage to the company. A director also acts negligently if he/she does not exercise his/her function as a director and remains inactive. 

Directors may also be liable for damages resulting from repayment of capital contributions if they caused such damage wilfully or negligently. Also, supervisory board members may be liable for such damages if they wilfully or negligently violated their supervisory duties with regard to the prohibited transaction. 

In exceptional cases, however, the director may also be held liable directly vis-à-vis creditors of the company if he/she violates a legal provision that aims to protect creditors, e.g. in the event of insolvency of the company or a failure to file for insolvency proceedings in a timely manner due to wilful misconduct or negligence. Wilful or negligent infringement to creditors’ interests or failure to file for insolvency proceedings on time may constitute a criminal offence. 

In cases of wilful or negligent default in paying taxes or social security contributions, a director may be personally liable to the tax authorities for amounts outstanding or may even be committing a criminal offence. A director may also be criminally liable for wilfully incorrect statements, including financial statements, statements to shareholders or the supervisory board or filings with the Commercial Register. 

Further liabilities of a director might arise from criminal acts such as, but not limited to, fraud, embezzlement or the grossly negligent infringement of creditors’ interests. 

A director’s liability to the company cannot be limited by agreement. However, it is common practice to pass a resolution on the approval of the director’s acts amounting to a discharge of liability vis-à-vis the shareholders (Entlastung) after the close of each business year, thus waiving any known, or at least, recognisable claims by the company against such director. 

In principle, a director is not liable for management actions which he/she performs upon binding instructions of the shareholders. However, if such instructions were based on incomplete or incorrect information provided by the director or if they were void because of a conflict with creditor protection provisions under Austrian law or with "ordre public", the director may be held liable even if he/she respected the shareholders' instructions. A private limited company or a flexible company may purchase directors' liability insurance for its directors, or the directors may take out such insurance themselves.