Digital foundation of an Austrian limited liability company

04 November 2019 | blog

The Electronic Notarial Form Foundation Act (Elektronische Notariatsform-Gründungsgesetz) ("ENG") came into force on 1 January 2019 and enables going forward the digital foundation of an Austrian limited liability company ("GmbH") by way of an electronic notarial deed. The Austrian notaries were entrusted with the implementation of the digital foundation procedure. Since autumn 2019, the first notaries in Austria have been offering the digital foundation process of a GmbH. Schoenherr attorneys at law, was the first person in Austria to accompany a digital foundation process.

Before we describe the digital foundation in practice, we briefly describe the notarial process of founding a GmbH in general: (i) execution of the deed of incorporation / articles of association as Austrian notarial deed (Notariatsakt), which essentially requires that the notary reads out the agreement and the parties sign the agreement in front of the notary, (ii) appointment of the first managing director(s) by way of a shareholders' resolution (by way of a notarial protocol, circular resolution with certified signatures or – as this is done in practice – as part of the notarial deed described under (i)), (iii) execution of the specimen signatures of the managing director(s) with their signatures being certified by a notary public (this could also be done by a foreign notary or an Austrian embassy/consulate) and (iv) execution of the commercial register filing again with signatures being certified by a notary public or Austrian embassy/consulate.

The ENG now attempts to fully digitalize such process. The process in practice can be described as follows:

Electronic notarial deed (Elektronischer Notariatsakt)

  1. Firstly, the founders of the GmbH have to run through a video identification process by an external video identification provider, similar to the identification process applied when opening a bank account online;
  2. The notary receives the identification data in a secure electronic data room specially set up by him for the GmbH foundation. The notary then starts to verify the identity of the individual founders (KYC-Check);
  3. The communication between the notary and the parties takes place via video conference and the parallel data room, in which the documents to be signed/electronically signed have already been uploaded. The video conference enables the founders (and their legal representatives) to ask questions or make necessary amendments (if all parties agree) and, also, to authenticate signatures (as outlined below);
  4. The notarial deed of the declaration of foundation or articles of association of the GmbH is then read out loud by the notary and signed by all the founders using their qualified electronic mobile signatures (Handysignatur). The notary performs its official (counter-)signature with a special signature card.

The result is a genuine electronic document (genuin elektronische Urkunde) - it is therefore digitally available in its original, electronic form. Printing or scanning of the notarial deed is no longer required.

Digital authentication of signatures

  1. The document to be notarized (i.e. sample signing declaration, shareholder resolution on the appointment of the first managing director(s) or registration in the commercial register) is first shown into the webcam with the notary confirming the document and saving the unsigned document via a screenshot.
  2. The document is then signed by hand by the signatory with the notary witnessing the signing via the video conference (this means that the video device needs to be able to be mounted in a way to let the notary watch the actual process of signing the document).
  3. The signed document is again held into the webcam to allow the notary to take another screenshot of the signed document.
  4. The handwritten document is then scanned and sent to the notary via e-mail. The notary will then upload the scan into the data room.
  5. The signing party shall then electronically sign the already signed document by means of an electronic mobile signature (Handysignatur). A digital reference to the electronic mobile signature is created in the document. This process is relatively time-consuming an requires quite a number of handwritten and electronic signatures.
  6. Once the signatures have been executed physically and digitally, the status of the document in the data room changes to confirmed (green).

As all documents are appropriately signed and notarized, the notary checks the status of the documents in the digital data room. Once all documents have been confirmed, the notary ends the videoconference and the incorporation process is completed.  

The signed documents - the genuine electronic documents - are filed directly by the notary with the electronic archive (Archivium) and can be used for filing for registration of the GmbH with the competent commercial court.

Résumés of the first digital foundation of a GmbH

The electronic notarial deed (Elektronischer Notariatsakt) has great potential to accelerate the founding process of a GmbH. The founders no longer have to personally sit in front of the notary in Austria, and since no travelling is required anymore, this could eventually also save CO2 emissions. Furthermore, there is no need to (laboriously) obtain powers of attorney, which can often lead to formal difficulties, especially for founders from different nations. From our point of view, the potential of the electronic notarial deed has not yet been exhausted, although the Austrian legislator has explicitly stated in the explanations to the ENG that there will be no further deviation from a personal presence before the notary. If this holds up remains to be seen. The electronic notarial deed would be a welcome digital solution, particularly in the case of share transfers and capital increases.

However, the digital certification of signatures is a time-consuming process, especially for a large number of signatures (e.g. several founders or managing directors), since each individual handwritten signature must be digitally signed again by electronic mobile signature (Handysignatur). Here practice will show whether this process can still be optimised by, for example, a person logging in once and confirming all the documents to be signed by him/her and then digitally signing them with one and the same mobile phone signature (Handysignatur).

We are happy to advise you on the digital foundation of a GmbH in Austria. Please contact Thomas Kulnigg or Maximilian Nutz for further questions.