Since January 2024, there has been a new form of company in Austria – the Flexible Company (“FlexKapG”) pursuant to the Flexible Company Act (FlexKapGG). The German term is “Flexible Kapitalgesellschaft”, but the company may also be referred to as a „Flexible Company“ or „FlexCo“. The new FlexCo is now the third form of corporation in Austria alongside the existing limited liability companies (GmbH) and stock corporations (AG). In addition, there are still partnerships such as the OG, KG or GesbR, which – in contrast to corporations – are generally associated with personal liability of the partners.

The introduction of the FlexCo was preceded by long-standing reform efforts to make the GmbH more modern and attractive. The resistance to a reform of the GmbH was apparently so great that the legislator decided to leave the GmbH essentially unchanged and introduce the FlexCo in parallel. Only the minimum share capital of the GmbH was adjusted to that of the FlexCo and is now € 10,000 (instead of € 35,000 previously). At least half of the share capital (for FlexCo and GmbH) must be paid in, so that a minimum amount of € 5,000 must be paid in upon formation.

The FlexCo is a type of „GmbH plus“: the provisions of the GmbHG apply to it, unless special provisions of the FlexKapGG apply. The FlexCo can therefore utilize all the advantages of the GmbH and the FlexCo, whereas the advantages of a FlexCo cannot be utilized with a GmbH. This means that there is hardly any reason to establish a GmbH, with the exception of the obligation to have a supervisory board, which applies earlier with a FlexCo.

The main innovations and advantages of FlexCo are:

• The FlexCo can be founded for any permitted purpose.

• The minimum share capital is € 10,000 (as is now also the case with the GmbH).

• The company can use the English name „Flexible Company“ or „FlexCo“ as part of its name.

• The minimum share capital contribution is € 1, the minimum payment on a share capital contribution is ¼; the minimum payment on the share capital is € 5,000 in total.

• FlexCo must appoint a supervisory board if it is a medium-sized corporation within the meaning of Section 221 (2) and (4) Austrian Business Code (UGB). This is the case if at least two of the following criteria are exceeded:

• • 5 million euros balance sheet total (Bilanzsumme);
  • 10 million euros sales revenue (Umsatzerlöse) in the 12 months prior to the balance sheet date;
  • an annual average of 50 employees.

The obligation to appoint a supervisory board therefore applies earlier than in the case of a GmbH. As with the GmbH, the appointment of a supervisory board implies the appointment of employee representatives in accordance with sec. 110 ArbVG.

• The articles of association may provide for written voting (circular resolution) without a shareholder being able to object to this type of voting.

• Voting rights can be exercised unevenly („voting rights splitting“). This enables a trust solution in which a trustee holds the shares for several trustors and can vote differently for each trustor.

• „Enterprise value shares“ (“Unternehmenswert-Anteile”; UWA) can be issued (up to a maximum of 25% of the share capital). This is a shareholding in the company that generally confers a share in profits but no voting rights on resolutions. Among other things, UWAs are intended to facilitate employee participation, for which tax advantages are also provided. Enterprise value shareholders are not registered in the commercial register; however, the persons of the enterprise value shareholders can be seen in a list of names (“Namensliste”) in the collection of dees (“Urkundensammlung) of the companies register. The amount of their shareholding must be submitted to the companies register in the form of a list of shares (“Anteilsliste”), but is not published. Only the written form is required for the transfer of UWA. In the event of an „exit“ of the founding shareholders, shareholders with an enterprise value have a right of co-sale.

• In general, the formal requirements for FlexCo are reduced. As with the GmbH, a notarial deed is still required for formation (the exception of simplified formation only applies to companies with a sole shareholder and with rudimentary articles of association; section 9a GmbHG). There are also formal requirements for an amendment to the articles of association or a capital increase (notarization). Shares in a FlexCo, on the other hand, can be transferred by having a notary or lawyer draw up a document on the transfer. A (more formal) notarial deed is still required for the transfer of shares in a GmbH.

• A FlexCo can acquire its own shares in accordance with the regulations for a stock corporation (AG).

• FlexCo has access to the capital measures of conditional capital increase (“bedingte Kapitalerhöhung”) and authorized capital (“genehmigtes Kapital”), which previously only existed for stock corporations (AGs). This enables FlexCo to issue financing instruments with conversion or subscription rights, such as convertible bonds or share options as part of employee participation models.

It is possible to convert a GmbH into a FlexCo and vice versa simply by amending the articles of association.

VBSN View: The FlexCo is the „better“ GmbH and has almost only advantages compared to the GmbH. In particular, the lack of a notarial deed requirement for the transfer of shares is a convincing argument, as is the greater flexibility in the issue of shares and the possibility of company value shares, which makes employee participation in particular more attractive. FlexCo is also extremely interesting for start-ups, especially as forms of financing such as authorized capital and conditional capital increases are possible. Trust models for participation in a company are also facilitated.

Only the obligation to appoint a supervisory board applies „earlier“ if two of the thresholds of € 5 million in balance sheet total, € 10 million in sales revenue and 50 employees are exceeded. By contrast, the criteria for the mandatory appointment of a supervisory board are less strict for limited liability companies (generally only from 300 employees). For companies that exceed or come close to the thresholds, the advantages of the FlexCo must be weighed against the obligation to appoint a supervisory board (higher bureaucratic effort, control and co-determination rights of the supervisory board including employee representatives).

Overall, the FlexCo is significantly more attractive than the GmbH and enables many flexible structuring options and internationally known mechanisms, such as employee participation or the issue of financing instruments such as convertible bonds, share options or profit participation rights (“Genussrechte”).

Your contact person: RA Mag. Dr. Florian Linder und  RA Dr. Lukas Schenk