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Restructuring
(Spinn-off/Merger/Squeeze
out/Transformation)
Ass.-Prof. Dr. Peter Stockenhuber LL.M.
Spin-off
Definition
 Division of companies with limited liability (corporations)
having legal personality and transfer of assets by means of
universal succession and with exclusion of the liquidation
of the respective companies;
 (4 types of spin-off)
 Key aspects:
 Only for corporations
 Universal succession
 The principle of maintenance of capital with respect to the nominal
capital
 Exclusion of liquidation
 Protection of creditors
Consideration for „old“
shareholders
 The shareholders of the transferring company receive shares
of the accepting company as consideration
 Ratio continuation (“verhältniswahrend”)
 Without ratio continuation (“nicht verhältniswahrend”)
 When the companies involved have a different legal form
(“rechtsformübergreifend”) or a spin-off without ratio
continuation is intended the shareholders objecting to the spinoff have the right to relinquish their position against a cash
consideration
Type I (Aufspaltung zur Neugründung)
 The company forms two or more new companies by means of transferring all
its assets and liabilities via universal succession to the respective new
companies without going into liquidation (“Aufspaltung” zur Neugründung)
A AG
B AG
(new company)
C AG
(new company)
Type II (Aufspaltung zur Aufnahme)
 The company transfers all its assets and liabilities via universal succession
to more than one existing company without going into liquidation
(Aufspaltung” zur Aufnahme)
C AG
B AG
(existing company)
(existing company)
A AG
Type III (Abspaltung zur Neugründung)
 The company forms a new company by means of transferring (a part of) its
assets by universal succession to a thereby newly established company
(“Abspaltung zur Neugründung”)
A AG
A AG
(exisiting company)
B AG
(new company)
Type IV (Abspaltung zur Aufnahme)
 The company transfers a part of its assets to another existing recipient
company and remains in existence („Abspaltung zur Aufnahme”)
A AG
A AG
Assets
B AG
B AG
Maintenance of capital
 The principle of summation (“Summengrundsatz”)
 The sum of the nominal capital of the involved companies must
amount at least to the value of the nominal capital of the
transferring company prior to the spin-off
 The sum of the legal reserves of the involved companies must
amount at least to the value of the legal reserve of the transferring
company prior to the spin-off
 Not applicable when the company transfers its assets to another
existing recipient company without being wound up (continuance)
 The value of the net assets left behind in the transferring
company must amount to the value of its nominal capital
including the legal reserves after the spin-off
Procedure I
1. Planning phase:
1. Draft terms of the spin-off drawn up by the managing board of
the company, when establishing a new company in the course of
the spin-off.

The content with respect to the minimum information required is
regulated by law such as:



The type, name and the registered office of both companies involved
The share exchange ratio and the amount of any cash payment
The precise description and allocation of the assets and liabilities to be
transferred
2. Spin-off and transfer agreement concluded between managing
boards of both involved companies, in the course of allocation of
assets and liabilities to an existing company

The content with respect to the minimum information required is
regulated by law
Procedure II
3. Establishing the effective day of the spin-off
1. Determines the date of effectiveness of the spin-off with respect to
tax law and accounting
2. For accounting purpose the respective transactions will be treated
as being those of other of the recipient companies
3. Closing balance sheet needs to be issued for the effective day of the
spin-off, dated not longer than 9 months prior to the notification of
the spin-off to the court
4. The draft terms of the spin-off furthermore need to specify
1. The date from which the allocated shares entitle the new holder to
participate in profits
Procedure III
1. Spin-off report
1. Drawn up by the managing board of the each company
2. Explains the draft terms of the spin-off
3. Sets ground for the legal and economic ground for the spin-off
1. In particular the share exchange ratio
2. The Assessment of the spin-off
1. The supervisory board determines the auditor
2. The auditor has to report to the company in writing
3. Assessment by the supervisory board
Publicity
 Draft terms of the spin-off need to be published in the official
gazette (Amtsblatt der Wiener Zeitung)
 At least one month prior to the shareholders‘ meeting resolution
on the respective spin-off
 The spin-off including the draft terms needs to be notified to
the companies register at least one month prior to the
shareholders‘ meeting resulting on the respective spin-off.
 The following documents need to be available at the
companies registered office throughout the period of one
month prior to the shareholders‘ meeting resulting on the
respective spin-off
 Draft terms of the spin-off
 Balance sheets (and interim balance sheet)
 The reports
Shareholders Resolution I
 The spin-off needs to be approved by the shareholders
resolution which furthermore needs to be notarized by the
public notary
 Majorities
 GmbH: AG: 75% of the votes cast in the shareholders’ meeting
 AG: 75% of the share capital represented in the shareholders’
meeting
 In cases of spin-off without ratio continuation
 90% of the whole nominal/share capital
Application for registration
 After the shareholders have resolute on the respective spin-off
the spin-off needs to be applied to the companies register in
order to be registered.
 The application must be signed by all members of the
managing board
 The application also needs to contain the statement of the
managing board of the transferring company that all
shareholders have waived their right to content the spin-off
 The application needs to contain the following documents
 The shareholders‘ resolution
 The reports
 The copy of the publication in the official gazette
 The statement
Protection of the creditors
 Joint and several liability of the each company involved in the
spin-off
 For the allocated assets
 For other old liabilities of the of the other company
 Limited by the net value of allocated assets
 Maintenance of capital
Merger
Definition
 Unification of companies with limited liability (corporations)
having legal personality and transfer of assets by means of
universal succession and with exclusion of the liquidation
of the respective companies
 Down-stream merger: the parent company merges into its
subsidiary (subject to special conditions);
 Up-stream merger: the subsidiary merges into its parent;
 Side-stream merger: between sister companies
Consideration
 The shareholders of the transferring company receive shares
of the accepting company as consideration
 The exception thereof is regulated by law and appleis in particular:
 When the acquiring company holds shares of the transferring company
 The transferring company holds own shares
 Furthermore the legal regulations provide for the possibility to exclude
the respective consideration in shares e.g. by waiver of the
shareholders of the transferring company
 When the companies involved have a different legal form the
shareholders objecting to the merger have the right to
relinquish their position against a cash consideration,
which needs to be set out in the merger agreement/draft terms
of the merger
Merger through Absorption
(Verschmelzung durch Aufnahme)
 A company transfers its assets and liabilities to another
existing company (acquiring company)
A AG
(aquiring company)
A AG
(aquiring company)
B AG
Merger through formation of a new company
(Verschmelzung zur Neugründung)
 Two or more companies transfer their assets and liabilities to a
company that they form in the course of the merger (new
company)
A AG
AB AG
(new company)
B AG
Maintenance of capital
 To avoid the “reduction of capital”-effect: The nominal
capital of the transferring company must be equal or lower
than nominal capital of the acquiring company, or else the
acquiring company needs to assure the full settlement of the
creditors of the transferring company by either
 Securities
 Evidence, that all creditors have been settled
 Binding the acquired capital into the companies premium reserves
for the purpose of settlement of potential creditors
 Positive market value of the transferred shares
Procedure I
1. Planning phase:
1. Merger agreement/Draft terms of the merger drawn up by the
managing board of the company, the content with respect to the
minimum information required is regulated by law
2. Agreement/Draft must contain inter alia the following
information
1.
2.
3.
4.
5.
The type, name and the registered office of both companies involved
Agreement to transfer the assets and liabilities
Shares exchange ratio
Effective date of the merger (see below 3)
The date from which the allocated shares entitle the new holder to
participate in profits
Procedure II
3. Establishing the effective date of the merger
1. Determines the date of effectiveness of the merger with respect to
tax law and accounting
2. For accounting purpose the respective transactions will be treated
as being those of one or other of the recipient companies
3. Closing balance sheet needs to be issued with reference to the
effective date of the merger, dated not longer than 9 months prior to
the notification of the merger to the court
Procedure III
1. Merger report
1.
2.
3.
Drawn up by the managing board of each company
Explains the merger agreement
Sets ground for the legal and economic ground for the merger
1.
In particular the share exchange ratio
2. The Assessment of the merger
1.
2.
The supervisory board determines the auditor
The auditor has to report to the company in writing
3. Assessment by the supervisory board
4. In case of intra-group mergers many of the above mentioned
measures may be waived by the shareholder(s)
Publicity
 Draft merger agreement/draft terms need to be published in
the official gazette (Amtsblatt der Wiener Zeitung) and needs
to be notified to the companies’ register at least one month
prior to the shareholders‘ meeting resulting on the respective
merger (not required for GmbH)
 The following documents need to be available at the
companies registered office throughout the period of one
month prior to the shareholders‘ meeting resolving on the
respective merger (not required for GmbH)
 Merger agreement/draft terms
 Balance sheets (and interim balance sheet)
 The reports
Shareholders Resolution
 The merger needs to be approved by the shareholders
resolution which furthermore needs to be notarized by the
public notary
 Majorities
 GmbH: AG: 75% of the votes cast in the shareholders’ meeting
 AG: 75% of the share capital represented in the shareholders’
meeting
Application for registration I
 After the shareholders have resolved on the respective merger
the boards of the directors of both companies involved need to
apply to the companies’ register for registration of the merger
 The application must be signed by all members of the
managing board
 The application also needs to contain the statement of the
managing board of the transferring company that all
shareholders have waived their right to contend the merger
Application for registration II
 To be submitted:
 The merger agreement
 Minutes of the respective shareholders‘ meeting
 Merger balance sheet
 Other documents regarding the transferring company
 Declaration, stating that
 no action of nullification has been filed (1 month after the
shareholders‘ resolution) or
 that such action has been withdrawn or
 shareholders have waived their right to bring such an action in
the form of a notarial deed
Squeeze-out
Squeeze-out
A “squeeze out” previously required:
 A transformation of the corporate form
(Umwandlungsgesetz „UmwG“)
or
 The spin-off of Corporations (Spaltungsgesetz „SpaltG“; so
called squeeze-out spinn-offs)
Now:
 By means of a shareholders’ resolution
 if the majority shareholder holds at least 90% of the shares
according to the Austrian Act on Exclusion of Minority
Shareholders
Act on Exclusion of Minority
Shareholders
 Conditions
 Shareholders resolution resolving on the squeeze-out
 Offer of a cash compensation
 Majority shareholder holds at least both, 90% of the issued
shared capital containing voting rights, and 90% of the voting
rights of the company
 When in addition the respective shareholder holds the 90% of the
total issued shared capital, he can also acquire the non-voting
preference shares of the respective company
 Squeeze-out sometimes pursued subsequent to a takeover bid
aiming at the acquisition of all shares
Act on Exclusion of Minority
Shareholders: Step by step
Exclusion of a minority shareholder:
 Demand of the majority shareholder to exclude minority shareholder
 Evaluation of the company (by KPMG, Deloitte, Ernst & Young etc. )
 Joint report of the management and main shareholder
 Request to commercial register to appoint an auditor
 Auditor evaluates the adequateness of the cash compensation
 Convocation of the general meeting and forwarding of the documents
to the shareholders
 Resolution of the general meeting on the exclusion and consent of
the majority shareholder
 Request to commercial register to register the exclusion
Transformation of
Corporate Forms
Change of the legal form
(Rechtsformändernde Umwandlung)
 By changing the legal form with continuation of the identity of
the company
 Without the transfer of the assets
 Without liquidation of the company
A AG
A GmbH
Transfer onto the main shareholder
(Übertragende Umwandlung)
1.
Transfer of the company's entire business to the majority
shareholder holding at least 90% of the issued shared capital by
means of universal succession


The majority shareholder may not be a corporation
Cash compensation for the minority shareholders being
squeezed-out in the course of the transformation
B
C
92%
A
GmbH
D
D
Transformation of the Company
(Errichtende Umwandlung)
2.
Transfer of the company's entire business (assets and
liabilities) into newly established partnership by means of
universal succession


Former shareholders become partner of the new partnership
In case of declining to become a partner they are entitled to cash
compensation
2%
2%
2%
2%
94%
GmbH
2%
94%
2%
OG