Posted: 25 Apr. 2022 5 min. read

New guidelines for pre-emptive rights regarding company shares in cases of insolvencies and executions

Overview

In its recent decision (6 Ob 86/21x) the Supreme Court had to deal with the issue of pre-emptive rights regarding limited liability company shares once more. Pre-emptive rights are a useful tool to protect shareholders from the entry of - possibly unwanted - third parties into the company. The scope of possibilities and the extent to which such regulations are permissible are controversial and have already been the subject of previous Supreme Court decisions.

 

Facts of the case

The managing directors of a limited liability company applied for the registration of a resolved amendment to the articles of association in the commercial register. The amendment of the articles of association aimed at eliminating existing unequal treatment within the stated pre-emptive rights, in that a uniform assignment price was to be paid when exercising each pre-emptive right. In the event of the exercise of the pre-emptive right, the transfer price was to be calculated based on 50 % of the value of the company, aliquoted to the respective share.

According to the articles of association, the pre-emptive rights were provided for, among other cases, the event of an execution of satisfaction on the share and in the event of a legally binding opening of bankruptcy proceedings against the assets of a shareholder. On the other hand, the voluntary sale of the share within the family circle was not to trigger a pre-emptive right. The pre-emptive rights were thus only intended for certain cases of a change of shareholder. Consequentially, those cases of a change of shareholders that were not covered by the stipulated pre-emptive rights - such as the sale of a share within the family that does not require any consent - the transfer price could be freely agreed upon; in contrast to the cases triggering the pre-emptive rights, the settlement price in the cases not triggering the pre-emptive right could therefore also be higher than 50 % of the aliquot company value.

In summary, this regulation on pre-emptive rights opened the possibility of unequal treatment regarding the amount of the settlement price. While cases of a change of shareholder covered by the pre-emptive rights provided for a discount in the settlement price, the assignment price for those cases of a change of shareholder not covered by the pre-emptive rights could have been freely agreed.

The lower court instances dismissed the application for registration.

 

Decision of the Supreme Court

The Supreme Court confirmed the decision of the lower courts and ruled against the admissibility of the aforementioned provision in the articles of association. In earlier decisions on pre-emptive rights, the Supreme Court had already stated that, from the point of view of creditor protection, voluntary withdrawal and the death of a shareholder on one the hand and execution or insolvency on the other hand are to be treated equally in cases of pre-emptive rights. In cases of execution and insolvency of the shareholder, a limitation of the settlement below market value of the share is only permissible if it not only applies in these cases, but if a corresponding reduction of the settlement claim is also agreed for each constellation of voluntary and involuntary withdrawal of the shareholder.

Following this case law, the Supreme Court clarified in the present decision that in case the articles of association provide for pre-emptive rights in the event of insolvency or execution of a shareholder with a settlement below the market value (appraised value), this reduced settlement must be provided for in each constellation of voluntary or involuntary withdrawal of the shareholder. Otherwise, reductions in compensation provided for in the articles of association are inadmissible in the event of insolvency and execution.

 

Conclusion

As a result, this decision - in addition to restricting the private autonomy of shareholders - provides more clarity regarding the possibilities of structuring pre-emptive rights in articles of association. For practitioners, this decision means a necessary review of any provisions on pre-emptive rights in existing articles of association and, if necessary, a need for adjustment of these provisions in connection with insolvencies and executions of shareholders.

Even after this decision of the Supreme Court, the question as to how high the deductions may ultimately be in cases of seizure remains unanswered. Whether a discount of 50 % of the market value, as intended in the specific case, is permissible, was not discussed further by the Supreme Court due to the lack of relevance for the decision.

 

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Mag. Julian Grosslercher

Mag. Julian Grosslercher

Jank Weiler Operenyi RA | Deloitte Legal

Julian Grosslercher ist Rechtsanwaltsanwärter bei Jank Weiler Operenyi RA | Deloitte Legal und Mitglied des Praxisteams Corporate/M&A. Seine Tätigkeitssschwerpunkte liegen in den Bereichen Gesellschaftsrecht und M&A.

Dr. Maximilian Weiler

Dr. Maximilian Weiler

Jank Weiler Operenyi RA | Deloitte Legal

Maximilian Weiler ist Rechtsanwalt und Gründungspartner von Deloitte Legal / Jank Weiler Operenyi Rechtsanwälte, der österreichischen Rechtsanwaltskanzlei im globalen Deloitte Legal Netzwerk. Er leitet die Praxisgruppen Corporate sowie Private Clients und beschäftigt sich schwerpunktmäßig im Bereich Corporate/M&A sowie mit der nationalen und internationalen Rechtsberatung von Family Offices, Stiftungen und Private Clients/High Net Worth Individuals in sämtlichen Bereichen der Vermögensverwaltung, Vermögensnachfolge und bei der Strukturierung und Abwicklung strategischer Investments. Maximilian Weiler ist Autor zahlreicher Fachpublikationen und trägt an der Fachhochschule IMC Krems zu Wirtschaftsrecht vor.