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31 January 2020

New hope for the Austrian start-up scene

The new government promises great things for start-ups and for blockchain users. We have looked into the government's agenda  - here is a brief overview:

  • Blockchain: development of a master plan for blockchain technology and its opportunities which will include the following projects: (i) creation of a uniform legal framework for investments in block chain; (ii) examination of the development possibilities of promising use cases; (iii) establishment of an Austrian blockchain centre of excellence; and (iv) setting up a strong forward-looking Austrian position for the support, application and regulation of blockchain technology.
  • New corporate form for start-ups: a new corporate form be internationally competitive, especially for innovative start-ups and their founders in the early stages. This is to be supported in particular by the following measures: (i) a digital form of incorporation; (ii) English as the official language at the authorities; and (iii) a share capital savings scheme. Furthermore, the government will support a standardisation within the EU of this corporate form as an "EU Limited".
  • Flexible share transfer to investors and employees: unfortunately, the current government's agenda does not yet reveal any details, except that only minimal digital actions shall be required for an effective transfer.
  • Acceleration and simplification of the foundation of companies: by (i) expanding digitalisation in Austrian corporate law; (ii) introducing structured commercial register filings; and (iii) enabling commercial register filings. Furthermore, the share capital of Austrian limited liability companies shall (in addition to the foundation privilege option) generally be reduced to EUR 10,000.
  • Flexibilisation of Austrian corporate law: Austrian corporate law, meaning the Austrian Act for limited liability Companies (GmbHG) and for joint stock corporations (AktG), shall become more flexible to the benefit of family businesses and start-ups.  
  • Funds of funds for start-ups: establishment of a fund in cooperation with private investors to expand the availability of growth capital for start-ups (financing volume of EUR 2 million to EUR 20 million).
  • Investment of institutional investors: institutional investors such as pension funds, retirement funds and insurance companies shall be allowed to invest in innovative start-ups.

Apart from the new corporate form for start-ups and the flexibilisation of Austrian corporate law, we see great potential in easing transfer of shares to investors and employees. A simplification of employee share ownership would be an important step for Austria to become an internationally competitive player in the start-up sector.

In the next few years, the Austrian government has a number of exciting and interesting legislative projects that will, from what we expect, make Austria a much more attractive place for start-ups. We are excited and look forward to a positive future for the Austrian start-up scene.

authors: Thomas Kulnigg and Maximilian Nutz



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