Legal guide for company directors and CEOs in Austria

ESG considerations encompass a wide range of aspects such as human rights, equality and diversity, consumer protection, animal welfare, corporate governance, climate change, etc. In Austria, ESG-related regulations are stipulated in a number of laws on federal and on state level, for example:

• Austrian Water Rights Act (Wasserrechtsgesetz)
• Austrian Trade Law Act (Gewerbeordnung)
• Environmental Impact Assessment Act (Umweltverträglichkeitsprüfungsgesetz)
• Stock Corporation Act (Aktiengesetz)
• Austrian Commercial Code (UGB)
• Consumer Protection Act (Konsumentenschutzgesetz)
• Austrian Working Hours Act (Arbeitszeitgesetz)
• Austrian Employee Protection Act (ArbeitnehmerInnenschutzgesetz).

Obligations under these laws are mainly addressed to the respective company. However, compliance with such regulations must be ensured by the management. Moreover, under Austrian corporate law, managing directors of a joint-stock company (Vorstand) and of a private limited company (Geschäftsführer) are responsible for conducting all of the company’s business. The Austrian Joint-Stock Companies Act explicity requires managing directors to be guided by public interest, which includes at its core ESG considerations, limited to simple compliance with the applicable ESG regulations.

In terms of ESG requirements, directors need to:

• identify any ESG issues which need to be addressed in their company (in accordance with applicable law and best practice considerations)
• propose appropriate measures to be taken
• monitor/ensure the proper implementation of such measures.

In case of violation of the above-mentioned regulations, the competent authorities may impose administrative fines on (each or some of) the company’s directors. If violations lead to sanctions being 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.

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.

The EU Taxonomy Regulation was recently introduced. This provides for new disclosure obligations as from 1 January 2022. The Regulation will be directly applicable to Austrian companies and their directors.

In Austria, various laws require the disclosure of ESG information; some of these disclosure provisions are directly contained in the ESG-related laws mentioned above. For example, according to the Austrian Commercial Code (UGB), large capital market-oriented companies, credit institutions and insurance companies in the EU have been required to report on non-financial aspects since 2017. Such companies and institutions must disclose – in their management report or a separate sustainability report – how they meet social requirements in terms of environmental protection, employee protection, respect of human rights, anti-corruption, etc.

Until now, however, the relevant reporting has in practice shown certain shortcomings: some reported information is not relevant, it is often unreliable and is only comparable in the rarest cases. Also, only a small number of companies is currently subject to the reporting obligation due to the scope of the respective provisions.

To address such shortcomings, the European Commission issued a draft directive on Corporate Sustainability Reporting (the “CSRD”) on 21 April 2021. This is due to be transposed into national law by the EU member states by 1 December 2022 and thus shall be applicable as of 1 January 2023.

As of 1 January 2024, all management reports must be published in accordance with the reporting requirement set out in the CSRD.

Austrian private limited companies generally 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.

An additional supervisory board (Aufsichtsrat) is only 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 in 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).

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 (if the company has a supervisory board) must 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 a group company,
• 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 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.

The company must be effectively managed from within Austria. Otherwise, it might be regarded as liquidated and taxed on built-in gains. 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.

Directors are appointed by a shareholder resolution. Directors may also be appointed by a provision in the articles of association if they are shareholders. The term of office is not limited unless the articles of association provide otherwise.

A notification of the appointment, signed by the director(s), together with certified evidence of the appointment (e.g. a certified shareholder resolution), as well as a certified sample signature of the director, must be filed with the Commercial Register.

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 appoint members of the supervisory board.

A notification of the appointment or nomination, signed by the director(s), must be filed with the Commercial Register.

For the filing of the notifications of appointment described above, a small registration fee must be paid by the company.

A director or supervisory board member may be removed at any time by a shareholder resolution.

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 14 days after the general meeting or after each shareholder has been notified 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 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 Commercial Register. The company must pay a small registration fee.

The Austrian private limited 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 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 give binding instructions to the directors on any managing acts unless otherwise provided by the articles of association.

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. Supervisory board members' fees commensurate with their duties may be 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 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 accordingly. 

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 (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 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, 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 he/she does not allow himself/herself to be guided by extraneous interests when making a management decision and 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.

Further, 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 owed to the company. A director’s duties are not owed to any one shareholder, a business partner of the company or to the company’s creditors.

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 to such times.

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.

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,

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 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, the director may be held liable also 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 recognisable claims by the company.

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 may purchase directors' liability insurance for its directors or the directors may take out such insurance themselves.

Financial sustainability: At this point of the crisis and the resulting adverse financial effects on companies, the directors must ensure the solvency and short- and long-term financial sustainability of the company. Directors must closely monitor the financial state of the company and keep the insolvency indicators under Austrian law in mind: (i) inability of the company to pay its debts as they fall due (Zahlungsunfähigkeit) or (ii) over-indebtedness in accordance with insolvency law (insolvenzrechtliche Überschuldung), 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), see answer to question 12 below for more information). Further, directors must also monitor the equity ratio and the notional debt repayment period of the company, as insolvency or over- indebtedness in connection with an equity ratio that is below 8% and a notional debt repayment period that is longer than 15 years would constitute a state of crisis with serious implications for the repayment of shareholder loans resulting from the very strict Austrian capital maintenance rules (see below for COVID-19 related exemptions). Directors of companies threatened with insolvency should (i) seek specialist advice, both legal and financial, (ii) ensure that all directors and key stakeholders are kept informed, and (iii) keep a verifiable record of their decision making, and the materials available to them to review. In light of the uncertainty regarding the advance of economic recovery, directors will also have to come up with plans and strategies to keep the company solvent in a variety of scenarios. If the company is part of a group, the directors must bear in mind that they owe their duties to the company itself and not to the group or the parent company.

Risk: Even if the company's solvency is not in question, directors are likely to be faced with a number of difficult decisions as they develop their strategy for the company. For example, the need to ensure safe working conditions for staff will often conflict with purely commercial objectives. Consumer-facing companies will also have to manage new reputational issues as public expectations of these companies keep shifting as a result of the crisis and ensure their communication strategy is adequately prioritised. Directors need to find a way to balance these competing considerations, in the long-term interest of the company.

Logistics: Directors should address the logistical challenges that international lockdown rules, travel restrictions and social distancing create. Existing operations, including supply and distribution chains, and internal processes, such as accounting, reporting and HR management, will be disrupted and will have to be adapted. It still may be difficult for directors to hold meetings in the normal way since working from home and social distancing have become an integral part of today's work life. Care should be taken to ensure that changes to decision-making processes do not adversely affect the company's tax residence. Methods of communication with shareholders should be reviewed, and consideration given to any upcoming shareholders' meetings which may now be held digitally under certain circumstances pursuant to a law passed in light of the COVID-19 crisis, or any required shareholder authorisations. Shareholder authorisations may be obtained by written resolutions if provided for by the articles of association and communications to shareholders can in many cases be sent electronically (subject to any prohibitions in the company's articles of association).

The Austrian government has announced numerous measures in connection with the COVID-19 crisis and passed several laws to implement those measures. Directors need to monitor the measures announced and assess which of them are relevant to their company.

The most relevant measures for companies in Austria include:

• Digital shareholder meetings (video conference: acoustic and optical two-way connection in real time from any place), even without these being explicitly permitted in the articles of association of the company. Half of the participants have to participate by means of a two-way acoustic and optic real time connection in order for the shareholders' meeting to be validly held and decisions to be validly passed.
• Annual financial statements:

the time period within which private and public limited companies need to prepare their annual financial statements (usually within the first 5 months of the business year) has been extended by 4 months (however, the provision ceases to apply at the end of 31 December 2021 and is only applicable to financial statements with a balance sheet date on or before 31 December 2020.)

the time period within which private and public limited companies need to file their annual financial statements with the commercial court (usually within the first 9 months of the business year) has been extended by 3 months (however, the provision ceases to apply at the end of 31 December 2021 and is only applicable to financial statements with a balance sheet date on or before 31 December 2020.)

this also applies to consolidated financial statements and other accounting documents which shall be prepared and submitted within the specified periods.

Exemption from paying out-of-court enforcement costs if a contracting party whose economic performance was significantly affected by the COVID-19 crisis defaulted on payment obligations that became due in the period from 1 April 2020 to 30 June 2021 and a cap on interest on arrears of 4%. This exemption shall stay in force until 30 June 2022.

• Notarial deeds (including certifications) can now generally also be drawn up using electronic means of communication.
• Extended possibility of state-subsidised short-time work (reduction of working hours and remuneration), the latter being subsidised by the state:

An application for state-subsidised short-time work may be submitted for Phase V, from 1 June 2021 to 30 June 2022, for a period of no longer than 6 months, whereby the maximum duration of the total short-time work may not exceed 24 months.

• Companies which have suffered revenue shortfalls of at least 30% between September 2020 and June 2021, can apply for fixed costs grants (Fixkostenzuschüsse) until 31 December 2021. The amount to be granted corresponds to the shortfalls of the respective company.
• Companies that have suffered a revenue shortfall of at least 50% can apply for a shortfall bonus (Ausfallbonus II) for the months July, August and September 2021 until 15 January 2022. The bonus amounts up to a maximum of EUR 80,000.
• Companies that face liquidity bottlenecks due to the COVID-19 crisis and therefore require a bridging loan (Überbrückungskredit) usually lack the necessary securities to adequately secure the loan. With a guarantee provided by the Republic of Austria, the state steps in as a guarantor and provides the necessary security in form of bridging guarantees (Überbrückungsgarantien). These guarantees are issued (depending on the loan amount) for up to 100% of the loan. The necessary applications may be submitted until 15 December 2021 for a term of (usually) 5 years.

As mentioned above, many of these measures will only remain in place until 31 December 2021.

The legal framework for the duties of directors has largely remained the same (except for the relief measures described above). 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 the shareholders, applying the diligence of a prudent businessman (ordentlicher Geschäftsmann). Further, a director must observe the business judgement rule, i.e. when he/she makes discretionary business decisions (judgement calls) he/she must not allow himself/herself to be guided by extraneous interests and must act for the benefit of the company on the basis of appropriate information. The requirement to base a decision on appropriate information must take into account that decisions in times of crisis often have to be made very quickly and that it is neither possible nor necessary to obtain all potentially relevant information.

Even in times of crisis, the shareholder approval requirements (e.g. in the articles of association or in rules of procedure) must be strictly observed. Acting without the required consent of the shareholders can only be justified in exceptional cases of imminent danger if the management can assume that the shareholders will give their consent at a later date.

Practically speaking, directors have to monitor the financial state of the company more closely, and due to work from home adapt their internal method of communication and supervision. Moreover, directors have to implement measures for the mitigation of epidemical danger concerning on-site personnel, i.e. provision and control of COVID-19 tests and vaccination, as well as take further measures to ensure the safety of workers in the workplace.