Military Personnel Participation in Startups and Shareholdings in Austria.

Based on our understanding, Austrian law does not prohibit members of the Austrian Armed Forces from holding a purely passive shareholding in a private company, including a startup, solely by reason of their military status.

The key distinction appears to be between passive share ownership and active outside activity. Section 56(1) BDG 1979 defines a secondary employment (Nebenbeschäftigung) as an activity or occupation carried out outside the civil-service relationship. Section 56(2) BDG 1979 prohibits secondary employment only where it impairs official duties, gives rise to the appearance of bias or lack of impartiality (Befangenheit) or otherwise endangers essential official interests.

The Austrian framework appears to be directed primarily at outside activities rather than passive ownership. This follows from the wording of section 56 BDG 1979, which regulates secondary employment, remunerated secondary employment and corporate-body functions, but does not contain a general prohibition on share ownership.

A passive investment would therefore not normally fall within this concept unless the circumstances create a conflict with the individual's military duties or official responsibilities. This assessment follows in particular from section 56(2) BDG 1979, which refers to impairment of official duties, apparent bias and essential official interests, and from section 43(2) BDG 1979, which requires civil servants to avoid actual or apparent conflicts of interest.

By contrast, where the individual's involvement extends beyond a passive investment, for example as a managing director, board member, supervisory board member, consultant, employee or founder with an operational role, the position would need to be assessed separately.

We are not aware of any general statutory requirement to notify or obtain prior approval solely for acquiring a passive shareholding in a private company.

However, where the shareholding is connected with remunerated secondary employment, the competent service authority must be notified without undue delay. A secondary employment is considered remunerated where it is intended to generate significant income in cash or in kind (section 56(3) BDG 1979).

Similarly, where an individual assumes a position on a management board, supervisory board, administrative board or another corporate body of a profit-oriented private-law entity, that position must be notified in any event (section 56(5) BDG 1979).

Approval may be required in certain circumstances where the individual intends to engage in remunerated secondary employment while falling within one of the statutory categories listed in section 56(4) BDG 1979, including reduced working-time arrangements, parental leave-related arrangements and certain forms of leave.

As a matter of prudence, it may be advisable to seek written clarification in advance where the company operates in a sensitive sector such as defence, security, cybersecurity, dual-use technology, critical infrastructure or public procurement, even where the statutory framework does not expressly require prior approval. This approach is supported by the conflict-of-interest obligations in section 43(2) BDG 1979, the bias provisions in section 47 BDG 1979, the restrictions in section 56(2) BDG 1979 and the military duties set out in section 3 ADV.

We are not aware of any statutory shareholding threshold under Austrian law that would automatically prohibit military personnel from holding shares in a private company. The relevant restrictions appear to be functional rather than percentage-based.

In particular:

• the shareholding or related activity must not impair the performance of official duties (section 56(2) BDG 1979);
• it must not give rise to actual or apparent bias (Befangenheit) or a conflict of interest (Interessenkonflikt) (sections 43(2) and 47 BDG 1979);
• it must not endanger essential official interests (section 56(2) BDG 1979);
• the soldier must comply with duties of loyalty, discipline and confidentiality (section 3(2) ADV);
• the soldier must avoid conduct that could adversely affect the reputation of the Austrian Armed Forces or public confidence in national defence (section 3(1) ADV); and
• the individual may be required to recuse themselves from official matters involving the company, particularly in procurement, funding, regulatory, technical evaluation or supervisory contexts (sections 43(2) and 47 BDG 1979).

Particular caution may be required where the company or startup supplies, seeks to supply or otherwise cooperates with the Austrian Armed Forces or the Ministry of Defence, or where the service member has access to confidential or sensitive information that could be relevant to the company's business (sections 43(2), 47 and 56(2) BDG 1979; section 3 ADV).

In addition, under the WG 2001, soldiers in active service are obliged to serve wherever required within the Austrian Armed Forces and must do everything necessary to fulfil the tasks of the Armed Forces while refraining from conduct that could damage their reputation (section 41 WG 2001). These obligations may become relevant where outside business interests interfere with military duties, readiness or availability for service.

Conclusion

In conclusion, based on our current understanding, Austrian law does not prohibit passive share ownership by members of the Austrian Armed Forces. The relevant restrictions instead arise from the rules on secondary employment, conflicts of interest, bias, confidentiality and military duties. Whether a particular investment is permissible will depend on the specific circumstances, including the individual's role, level of involvement in the company and any connection between the company's activities and the individual's official responsibilities.