A Flexible Capital Company plans to become a stock corporation before a capital-markets step. Prepare the resolution, organs and mandatory formation audit under section 26 FlexKapGG.
An Austrian Flexible Capital Company can be converted into a stock corporation before a planned IPO. Section 26 FlexKapGG applies sections 245 to 253 AktG by analogy to this conversion. The process therefore requires a carefully prepared resolution, suitable articles and the formation audit required by law.
The resolution alone does not turn the FlexKapG into an AG. The new legal form takes effect when the conversion is registered in the Firmenbuch. Until then, the organ appointments, balance sheet, audit reports, registration documents and rights of dissenting shareholders must be prepared as one coordinated process.
This article covers the conversion of a FlexKapG into an AG under section 26 FlexKapGG and the analogous application of sections 245 to 253 AktG. Admission to a stock exchange, a public offering and other capital-markets preparation are separate steps.
Assess the resolution, organ structure, balance-sheet audit and Firmenbuch registration separately. The result shows which documents belong together for the next review.
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Read FlexKapGG, the conversion resolution, draft articles, organ appointments and the audit plan as one set. Record which information must be included in the resolution under section 245(3) AktG.
Collect the current articles, draft articles, proposed organs and documents for the balance-sheet and formation audit. Any additional obligations of individual shareholders require a separate review.
Compare the deeds appointing the Vorstand and Aufsichtsrat, the reports, the balance sheet and the conversion resolution with the Firmenbuch filing. The company continues as an AG only after registration.
Prepare a document list under section 248 AktG and add each missing report or supporting document. Also check that the rights of dissenting shareholders are reflected in the file.
Section 26(1) FlexKapGG provides that sections 245 to 253 AktG apply by analogy to the conversion of a FlexKapG into an AG. The conversion therefore follows the stock-law framework for converting a GmbH into an AG. Each provision must still be applied with the legal form of the FlexKapG in mind.
Under section 245(1) AktG, the conversion takes place by resolution of the General Meeting. Section 245(2) AktG also brings in the rules on amendments to the articles of association. If shareholders have obligations beyond their capital contributions and those obligations cannot continue because of the statutory restriction referred to in that provision, the conversion resolution requires the consent of the affected shareholders.
The minutes must name the shareholders who voted in favour of the conversion. Section 246(1) AktG expressly requires this. A reliable file therefore keeps the invitation, agenda, powers of attorney, votes cast and minutes in the same version.
Under section 245(3) AktG, the conversion resolution must set out the company name, the way in which the Vorstand and Aufsichtsrat are composed and the other amendments to the articles required to implement the conversion. The articles should therefore be aligned with the new legal form, the shares and the organ structure before the resolution is passed.
The shareholders appoint the first Aufsichtsrat. Section 246(2) AktG requires them to do so, and the appointment must be notarised. If the FlexKapG already has a supervisory board, its members may be confirmed in office. The resolution and appointment deeds should state clearly which route is being used.
The appointment of the Vorstand also needs to be prepared. Names, representation rules and deeds must match the draft articles and the later Firmenbuch filing. An organisation chart does not replace the required appointments or their supporting documents.
Under section 246(3) AktG, the managing directors must prepare a balance sheet. Section 220(3) AktG applies by analogy. The balance-sheet date and underlying accounting records therefore need to be selected and documented so that the conversion review can rely on them.
Section 247(2) AktG requires the conversion report to describe the course of business and the position of the company and to explain this balance sheet. The report should make the FlexKapG's economic starting point understandable. It should be read together with the balance sheet, annual accounts and relevant valuation documents.
The examination by one or more special auditors under section 25(2) AktG must take place in every case under section 247(3) AktG. In particular, it examines whether the balance sheet was prepared in accordance with the law. This mandatory formation audit is a separate implementation step. An internal plausibility check or an existing annual account does not replace the special audit report.
At the same time as the conversion resolution, the members of the Vorstand must be filed for registration in the Firmenbuch. Section 248(1) AktG also refers to the deeds appointing the Vorstand and Aufsichtsrat and to the audit reports of the Vorstand, Aufsichtsrat and special auditors, together with their documentary foundations.
The balance sheet under section 246(3) AktG must also be attached under section 248(2) AktG. The document list should therefore go beyond the minutes. It must show the articles, appointments, reports, balance sheet and the documents on which each item is based. Inconsistent versions of names, representation rules or capital figures should be corrected before filing.
Registration has a clear legal effect. Under section 250 AktG, the company continues as an AG from that point. The Stammkapital becomes Grundkapital, the Geschäftsanteile become shares and third-party rights in a Geschäftsanteil continue in the share replacing it. Section 251 AktG also requires the balance sheet to be published without delay.
Once registered, the existing Geschäftsanteile become shares. Section 252 AktG applies to the exchange by analogy. If Geschäftsanteile are consolidated, the rule referred to there on the cancellation of shares must be considered. Court approval is not required for the exchange under section 252 AktG.
Shareholders who oppose the conversion must be included in the implementation plan. Under section 253 AktG, each shareholder who declares an objection for the record has a right to appropriate cash compensation against surrender of the shares. The requirements and the declaration must therefore remain traceable in the minutes and the other documents.
For information, section 253 AktG applies sections 244(2) and (3) and 234b AktG by analogy. The audit report must be sent to the shareholders. At least 14 days must pass between the date the mailing is posted and the resolution. The timetable should show this period explicitly.
The conversion answers the company-law question of the legal form in which the company continues. It does not itself grant admission to a stock exchange or authorise a public offering. The planned capital-markets step therefore requires separate review of the transaction, share structure, financing, reporting and the applicable capital-markets requirements.
The conversion file should bring together the current FlexKapG articles, all amendments, a Firmenbuch extract, the ownership table, draft articles, proposed organs, conversion balance sheet, conversion report, special audit reports and planned Firmenbuch filing. If a shareholder objects, add the mailing of the audit report and the cash-compensation documents.
The economic ownership plan must also match the new share structure. For comparison with a KG review, see the two-account model in a KG agreement. The article on agio, capital reserve and payment due covers a different question concerning an additional payment in a capital measure.
No. Under section 250 AktG, the company continues as an AG from registration of the conversion in the Firmenbuch. The resolution starts the process but does not replace registration.
Yes. Section 247(3) AktG provides that the examination by one or more special auditors under section 25(2) AktG takes place in every case. It covers in particular whether the balance sheet was prepared in accordance with the law.
The shareholders appoint the first Aufsichtsrat. Under section 246(2) AktG, the appointment must be notarised.
No. The conversion governs the company's continuation as an AG. Admission to a stock exchange, a public offering and other capital-markets steps require separate review and preparation.
Under section 253 AktG, the right belongs to a shareholder who declares an objection to the conversion for the record. The further requirements and the audit report must be reviewed under the provisions applied by analogy.
Start with one document set: current articles, amendments, Firmenbuch extract, ownership table and draft articles. Add the proposed Vorstand and Aufsichtsrat, conversion balance sheet, conversion report, audit reports and planned filing.
Then review the resolution, organ appointments, balance sheet, special formation audit, shareholder information and rights of dissenting shareholders within one timetable and document structure. For a specific review, bring these documents together with the planned IPO and share structure. We identify which details are still missing from the resolution or articles and which documents must be completed before registration in the Firmenbuch. New articles and legal updates are available through BRANDaktuelle Rechtsnews.
Review and structure GmbH articles with Brandauer Rechtsanwälte in Austria.
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