There has been much discussion in recent years about whether or not a new legal form is needed in company law. As the "Austrian Limited" announced in 2020 was ultimately never adopted, this wish, which was often expressed by the start-up scene, was somewhat forgotten until the discussion about a flexible capital company first arose in the spring. The draft bill presented by the Ministry of Justice was passed in December and the Flexible Capital Company Act (FlexKapGG) is set to come into force on 1 January 2024. This not only introduces the first law written in the female form, but also a new legal form that can be described as a bit of a hybrid and is primarily intended to make it easier for employees to participate.
Incorporation of a FlexCo
The Flexible Capital Company (FlexKapG) is initially strongly modelled on the GmbH and, where the FlexKapGG does not contain its own provisions, the law of the limited liability company, in particular the GmbHG, is applied accordingly. According to the legal definition, a flexible capital company is a capital company that (in accordance with the provisions of the FlexKapGG) can be founded by one or more persons for any legally permissible purpose. One-person formation is therefore permitted, as is the case with the GmbH. The FlexKapG has a company name and must be entered in the commercial register. The addition to the legal form can be "Flexible Kapitalgesellschaft" or "Flexible Company" and can be abbreviated to "FlexKapG" or "FlexCo".
The shareholders of FlexKapG must pay capital contributions into the flexible capital company when the company is founded, each of which must amount to at least EUR 1. At least one quarter, but in any case an amount of EUR 1, must be paid in on each capital contribution to be made in cash. As the FlexKapGG does not contain any special provisions in this regard, the minimum share capital of the FlexKapG must amount to EUR 10,000.00. In this context, the minimum share capital for a GmbH is - again - reduced to EUR 10,000.00 and the founding privilege no longer applies. Half payment is possible, as with the GmbH. The FlexKapGG does not contain any special provisions for the formation itself either. As a result of the general reference to the GmbHG, the formation of FlexKapG will therefore also be subject to the formal requirements of the notarial deed for the articles of association.
Transfer of shares
However, the transfer of shares is different: In this case, the notarial deed obligation provided for under GmbH law no longer applies, meaning that the transfer of shares is possible by means of a deed drawn up by a lawyer or notary ("lawyer's deed"). The lawyer (or notary) must check the admissibility of the share transfer and instruct both parties about the legal consequences of their declarations and possible further requirements for the validity of the transfer. The provision of these instructions must be documented in the deed. Takeover declarations in the event of a capital increase can also be drawn up in this way.
Further innovations
FlexCo offers plenty of scope for employee participation. For example, the articles of association can provide for the issue of "company value shares" of up to 25% of the share capital. Such "Enterprise Value Shares" are entitled to their share of the net profit and liquidation proceeds in proportion to their paid-up capital contributions, but in the event of capital increases they have no preferential right to take over the new capital contributions unless otherwise agreed. Although they are entitled to participate in the Annual General Meeting, they only have voting rights in exceptional cases, for example if this is provided for in the articles of association or if the rights of the Enterprise Value shareholders are to be changed or a conversion of Enterprise Value shares into shares is to be carried out. The written form is sufficient for the acquisition or transfer of Enterprise Value Shares. If the majority of the shares are sold by the shareholders, the value shareholders have a co-sale right.
Another new feature compared to the GmbH is that FlexKapG can acquire its own shares under certain conditions.
There are also simplified conversion options between these two company forms. A FlexKapG can be converted into a GmbH by resolution of the general meeting. A conversion in the opposite direction is also anchored in the GmbHG. It is also possible to convert a FlexKapG into an AG.