Buying and selling GmbH shares in Austria: notarial deed, transfer restrictions and the company register

Unlike a share in a stock corporation, the share in an Austrian GmbH is not a security. It arises with the assumption of a share in the capital and is documented in the articles of association and in the list of shareholders. Each shareholder holds exactly one share per capital contribution. Whoever subscribes for several tranches still holds a single share in the corresponding amount.

This particular feature shapes the sale. What is transferred is not a bundled security but a right defined by statute and by contract. The transfer takes place by assignment. Whoever sells only part of the share must first split it in the extent of the capital portion to be transferred. On a split the minimum capital requirements of the GmbHG must be observed.

With the acquisition the buyer enters the position of a shareholder. It receives voting rights, profit participation and information rights. It also takes on any outstanding payment obligations on capital that has not been fully paid in. The basic concept is explained in the glossary entry on the transfer of shares.

Many Austrian GmbH constitutions contain transfer restrictions. They tie the effective assignment to the consent of the general meeting or of individual shareholders. Without that consent the assignment contract is effective between seller and buyer, but it has no effect vis-a-vis the company. Before every share purchase the current articles of association belong in the review.

Often pre-emption or call rights are added. A pre-emption right gives the other shareholders the option to step into the agreed purchase price. A call right allows the remaining shareholders to acquire the share themselves at a price defined in the constitution. Both clauses delay a sale to third parties and have to be worked through cleanly.

In family-owned and partnership-style companies shareholders agreements are common. They can set additional limits, such as drag-along or tag-along clauses. Whoever overlooks this layer may buy a share whose transfer is blocked later. The focus page on shareholder disputes shows how transfer restrictions can lead to conflicts.

The assignment of a GmbH share requires a notarial deed under the GmbHG. Seller and buyer have to draw up the assignment agreement before an Austrian notary in this form. Without a notarial deed the assignment is formally void. At the appointment the transfer process, the purchase price and all ancillary arrangements are bindingly recorded.

After execution the managing directors file the change of shareholders with the company register. The entry has declaratory effect: it makes the change visible in the register, but it is not a precondition for the effectiveness of the assignment itself. Only the entry, however, creates publicity vis-a-vis third parties. Further depth on the mechanics is given by the post on share transfer agreement, notarial deed and company register.

In parallel further steps need to be organised: the removal and reappointment of the management, the deposit of the specimen signature, the filing with the register of beneficial owners and, where applicable, an amendment of the articles of association. The concept of the company register is explained in the glossary.

With the assignment only the shareholder changes, not automatically the management. In most sales, however, the removal of the previous managing director and the appointment of a new one by the buyer follow immediately. The related resolutions are ideally recorded at the notary at the same time. Afterwards bank accounts, powers of attorney, IT access and official correspondence are switched to the new management.

From a liability angle the former shareholder is, in principle, no longer exposed to the obligations of the company, provided no personal security is in place. Personal guarantees, letters of comfort or pledges have to be released separately. Otherwise the seller economically continues to pay for a business it no longer owns.

On the tax side the transition is felt as well. Profit distributions reach the buyer from the agreed reference date, while the seller may realise a capital gain. How the purchase price itself is adjusted post-closing is shown in the post on the purchase price adjustment.