One of the primary objectives of the reformed Austrian Insolvency Act ("IO"), which entered into force on 1 July 2010, has been to increase the number of successful corporate reorganisations and to facilitate the continuation of business operations during financial crises. After the initiation of insolvency proceedings, the creditors of an insolvent debtor shall not be entitled to revoke or terminate contracts that are essential for continuing the debtor’s business operations.

Coherent and clear rules for restructuring proceedings

Capital measures are common reorganisation measures when a capital company is in financial crisis, including eg injection of fresh capital by way of a capital increase. The implementation of capital measures during financial crisis is often a source of dispute amongst shareholders, in particular if the capital measures are driven by a financially strong majority shareholder.

With effect as per 1 July 2013, the Austrian legislator has enacted an amendment to the Limited Liability Companies Act (GesRÄG 2013) providing primarily for a de-crease of the minimum share capital to EUR 10,000, as well as a decrease of the formation costs. These changes are aimed at maintaining Austrian limited liability companies’ competitiveness in comparison to other European limited capital compa-nies and to fostering the formation of new limited liability companies also by small service providers.