Austrian Merger Agreements Require a Notarial Deed

The Austrian Supreme Court (Oberster Gerichtshof (OGH)) has passed a decision in February 2014 which sets the record straight on Austrian Merger Law requirements.

All Austrian merger agreements must be concluded in the form of a notarial deed. This requirement also extends to mergers involving Austrian limited liability companies (Gesellschaft mit beschränkter Haftung (GmbH)) . The decision clarifies a law provision that, because of terminology, was ambiguous with regards to whether a notarial deed was required or not. In the absence of case law on the matter, parties could argue either way.

To rectify the situation, the Austrian Supreme Court took on a case concerning the merger of two Austrian limited liability companies. The merger agreement of the two companies originally only existed in notarized form that was presented in the first instance to the Register Court (Firmenbuchgericht).

The Register Court then ordered the applicant to present the merger agreement in the form of a notarial deed. To fulfill this demand, the applicant proceeded to establish the merger agreement in the form of a notarial deed after the fact. The date of the new agreement, however, no longer complied with the 9-month application period since the date chosen for the merger coincided with the date of the closing balance sheets.

The Register Court therefore rejected the applicant’s registration.

The appellate court as well as the Austrian Supreme Court confirmed this decision.

According to the cited decision, ambiguity over the term, “notarial certification“ (“notarielle Beurkundung“) in the Austrian Stock Corporation Act (AktG)  ended once and for all when the Austrian Act on Cross Border Mergers within the European Union (“EU –Verschmelzungsgesetz”) (which without a doubt requires a notarial deed) came into effect. Therefore, in order for a merger agreement to be valid, a notarial deed must be established.

In the case described, because the merger agreement first became valid with the establishment of the notarial deed, presentation of the merger agreement in the form of a notarial deed did not constitute a remedy to the application.

And because the establishment day fell outside of the legally permitted nine month time period, there were no valid deficiencies that could be viewed as grounds for the applicant to remedy the application. For this reason, the court justifiably dismissed the party’s application.

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