Equity capital markets in Austria: regulatory overview

A Q&A guide to equity capital markets law in Austria.

The Q&A gives an overview of main equity markets/exchanges, regulators and legislation, listing requirements, offering structures, advisers, prospectus/offer document, marketing, bookbuilding, underwriting, timetables, stabilisation, tax, continuing obligations and de-listing.

To compare answers across multiple jurisdictions visit the Equity Capital Markets Country Q&A tool

This Q&A is part of the PLC multi-jurisdictional guide to capital markets law. For a full list of jurisdictional Q&As visit www.practicallaw.com/capitalmarkets-mjg.

Uwe Rautner, Rautner Huber Attorneys at Law

Main equity markets/exchanges

1. What are the main equity markets/exchanges in your jurisdiction? Outline the main market activity and deals in the past year.

Main equity markets/exchanges

The Vienna Stock Exchange (VSE), operated by the Wiener Börse AG, is the only stock exchange in Austria. The Official Market (Amtlicher Handel) and Second Regulated Market (Geregelter Freiverkehr) are regulated markets in accordance with section 1(2) of the Stock Exchange Act, while the Third Market (Dritter Markt) is operated as a multilateral trading facility (MTF).

The VSE groups financial instruments traded on the VSE into certain market segments according to certain criteria, including:

  • Type of market (Official, Second Regulated or Third).

  • Type of financial instrument (such as shares, participation certificates or bonds certificates).

  • Stringency of reporting, quality and disclosure requirements.

  • The provision of liquidity (such as specialist and market maker).

  • Trading system and type of trading.

The following segments are usual.

The equity market. The equity market is divided into the:

  • Prime market. This comprises of stocks that are admitted to listing on the Official Market or Second Regulated Market. Companies agree to fulfil more stringent reporting, quality and disclosure requirements than required by law.

  • Mid market. This comprises of stocks that are admitted to listing on either the Official or Second Regulated Markets or admitted to trading in the Third Market. Companies agree to fulfil less stringent reporting, quality and disclosure requirements than the prime market but still more stringent than required by law.

  • Standard market. This comprises all stocks admitted to listing on the Official or Second Regulated Markets that fail to meet the criteria for the prime or mid market as well as participation certificates admitted to listing on the Official or Second Regulated Markets.

The bond market. The segment bond market contains all bonds that are admitted to listing on the Official or Second Regulated Market or admitted to trading on the Third Market. These include government bonds, federal treasury certificates, interest rate and government strips, corporate bonds, banking bonds and convertible bonds.

The bond market.at is divided into the:

  • Public sector. This contains all debt securities issued by the federal government, entities under public law and supranational institutions.

  • Corporate sector. This contains bonds issued by companies for the purpose of financing corporate activities.

  • Financial sector. This contains bonds issued by banks, frequently used to refinance loans.

  • Performance-linked bonds. This contains debt securities whose redemption price has not yet been fixed at the date of issue, as it is based on performance.

The derivatives market. The derivatives market is divided into:

  • Austrian derivates. This comprises Austrian index products and Austrian stock products.

  • CEE derivates. This represents in particular the product group CEE Index Products as well as CEE Stock Products (Single Stock Futures in CZK).

The structured products. The segment structured products contains all certificates, exchange traded funds, investment funds and warrants admitted to listing on the Official Market or Second Regulated Market or admitted to trading in the Third Market.

Other securities. The segment "other securities" contains all securities that cannot be allocated to any other segment. These securities include:

  • Profit-sharing rights that are admitted to listing on the Official Market or Second Regulated Market or admitted to trading in the Third Market.

  • Stocks admitted to the Third Market (including shares represented by certificates).

  • Participation certificates admitted to the Third Market.

Market activity and deals

At the end of 2012, 58 of the 96 trading members on the Vienna Stock Exchange were foreign firms. They continue to account for more than two-thirds of total trading volume in equities with a share of 67.21%. Total equity market capitalisation on 30 December 2012 was EUR80.43 billion. The trading volumes on the Vienna Stock Exchange for domestic stocks dropped to EUR35.85 billion (EUR2.99 billion on the monthly average) in 2012, which is a decrease of almost 40% compared to the previous year. Three capital increases (UNIQUA, HTI and Intercell) were carried out in 2012, raising fresh capital amounting to EUR0.52 billion. Most recently, Erste Group Bank AG tapped capital markets by way of a EUR660 million securities issue in the form of an accelerated bookbuilding offering. However, there were no new listings or secondary public offerings (SPOs).

The primary market for corporate bonds, however, continued to be extraordinarily active. There were 29 new listings plus one tap issue (when borrowers can sell bonds or other short-term debt instruments from past issues) and the volume of funds raised reached a new record of EUR5.5 billion.

2. What are the main regulators and legislation that applies to the equity markets/exchanges in your jurisdiction?

Regulatory bodies

The main regulatory bodies for equity markets in Austria are the:

  • Financial Market Authority (FMA). The FMA supervises activities to ensure that trading in listed securities complies with:

    • legal requirements;

    • principles of fairness and transparency; and

    • legal and formal requirements regarding prospectuses on the public sale of securities.

  • Vienna Stock Exchange (VSE). The regulatory responsibilities of the VSE include:

    • deciding on the admission of securities to listing at the stock exchange; and

    • controlling compliance with VSE rules.

Legislative framework

The main legal framework concerning equity markets and exchanges in Austria is set out in the:

  • Stock Exchange Act (Börsegesetz (BörseG)).

  • Capital Market Act (Kapitalmarktgesetz (KMG)).

  • Securities Supervision Act (Wertpapieraufsichtsgesetz 2007 (WAG 2007)).

  • Investment Funds Act 2011 (Investmentfondsgesetz 2011).

  • Real Estate Investment Funds Act (Immobilien-Investmentfondsgesetz (ImmoInvFG)).

  • EU capital market legislation (for example, Regulation (EU) No 486/2012 amending Regulation (EC) No 809/2004 on the format and content of the prospectus, base prospectus, summary and final terms and regarding disclosure requirements).

  • Code of Conduct according to the standards of the Organisation for Economic Development (OECD).

  • General terms and conditions of the VSE.


Equity offerings

3. What are the main requirements for a primary listing on the main markets/exchanges?

Main requirements

The admission criteria to be listed on the Official Market and the Second Regulated Market are set out in the Stock Exchange Act (SEA). The admission must be:

  • Submitted in writing by the issuer.

  • Co-signed by an exchange member.

  • Accompanied by:

    • a current excerpt from the companies register;

    • the current company bye-laws;

    • the company's compliance guidelines; and

    • an approved prospectus in two counterparts in accordance with Section 74 of the SEA, unless an exemption from these rules applies.

The prime market and mid market are two market segments of the VSE where stocks are listed of companies that have agreed to adhere to more stringent transparency, quality and disclosure obligations than those otherwise applicable to the listing of securities (see Question 1, Main equity markets/exchanges). Only ordinary shares (and certain certificates that are deemed equivalent to common stock) can be included in the prime market and mid market. Common stock that grants the holder more than one vote is not permitted. For the entire duration of the listing, the issuer's stock must be included in the trading procedure continuous trading according to the Trading Rules for the Automated Trading System XETRA (Exchange Electronic Trading). The applicable admission criteria and on-going obligations of the issuer are set out in the prime market and mid market rules which can be downloaded from the VSE website (www.wienerborse.at).

Minimum size requirements

The minimum size requirements are as follows:

  • Official Market (Article 66, SEA). In the Official Market, the total nominal value of shares admitted to trading must be at least EUR2.9 million. The total nominal value of securities (other than shares) must be at least EUR725,000.

  • Second Regulated Market (Article 68, SEA). The total nominal value of securities admitted to trading must be at least EUR725,000. In the case of admission of no-par value securities, the issuer needs to certify that the market value is expected to be at least EUR362,500 and the total number of securities must be at least 10,000.

  • Third Market. There are no minimum size requirements.

No specific rules apply to the prime market and mid market segment of the VSE.

Trading record and accounts

The rules for trading records and accounts are as follows:

  • Official Market. The company must have existed for a minimum of three years and must have published financial statements for the three preceding full business years.

  • Second Regulated Market. The company must have existed for a minimum period of one year and must have published financial statements for the preceding full business year.

  • Third Market. The company must submit the financial statements of the last business year.

Specific rules apply to the prime market and mid market segment of the VSE (in addition to the rules stipulated for each type of market as set out above) as follows:

  • Prime market rules. The issuer must have:

    • existed for a minimum period of three years; and

    • published the audited financial statements for the three financial years preceding the admission to the prime market.

  • The Management Board of the VSE can however waive the three-year requirement provided the issuer prepares a prospectus in accordance with section 74 of the SEA, which contains information that is equivalent to the financial statements for the preceding three years concerning the issuer's economic and legal situation. In any event, the issuer must publish the financial statements for at least one full financial year.

  • Mid market rules. The issuer must have published audited financial statements for at least one full financial year.

Minimum shares in public hands

The minimum number of shares in public hands varies depending on the market:

  • Official Market. A minimum free float nominal value of EUR725,000 for par value shares and at least 10,000 shares for no-par-value shares.

  • Second Regulated Market. A minimum free float nominal value of EUR181,250 and at least 2,500 shares for no-par-value shares.

  • Third Market. There are no minimum free float requirements.

Specific rules apply to the prime market and mid market segment of the VSE (in addition to the rules stipulated for each type of market as set out above):

  • Prime market rules. At least 25% of the stock must be held in free float and the capitalisation of the free float must be at least 15 million. If the free float falls below the threshold of 25%, the free float requirement is still deemed to be fulfilled provided the capitalisation of the free float exceeds EUR30 million.

  • Mid market rules. No additional free float requirement applies.

4. What are the main requirements for a secondary listing on the main markets/exchanges?

Main requirements

In general, the same requirements apply to a secondary listing on the Vienna Stock Exchange as for a primary listing (see Question 3).

A prospectus must be prepared and published by the issuer for the admission of the shares to trading on a regulated market, unless an exemption applies. However, if a prospectus has already been drawn up and approved by the Financial Market Authority (FMA), it will be valid for a period of up to 12 months from the date of approval by the FMA (subject to certain requirements to supplement the prospectus). The 12-month period also applies to securities that have been admitted to trading on another regulated market, provided the prospectus has been prepared and approved by the relevant Home Member State authority for that market. The existing prospectus can then be used for the listing on the VSE.

Minimum size requirements

See Question 3.

Trading record and accounts

See Question 3.

Minimum shares in public hands

See Question 3.

5. What are the main ways of structuring an IPO?

An IPO can be structured as either an offer of:

  • New shares resulting from a capital increase.

  • Existing shares from shareholders who are willing to dispose of their shares.

The amount of fresh capital to be obtained through the IPO and the extent to which existing shareholders wish to exit in the course of the IPO will determine its final structure. In Austria, it is common to see a combination of both of these structures, including structures where part of the shares are offered to the public in Austria and part to institutional investors abroad by way of a private placement (which can include an offering to US investors under Rule 144A of the US Securities Act of 1933).

Where the IPO is structured by way of a capital increase, the existing shareholders are entitled to a portion of any newly issued shares in proportion to their actual participation in the total shareholding (a so called "pre-emption right"). However, the pre-emption right can, subject to fulfilling certain conditions, be restricted or limited by a shareholders' resolution.

6. What are the main ways of structuring a subsequent equity offering?

Subsequent equity offerings are structured in the same way as IPOs (see Question 5).

A subsequent equity offering can also be made in the form of a private placement of newly issued or existing shares (as opposed to a public offering). In this case, depending on the structure of the issue, no prospectus would be required.

7. What are the advantages and disadvantages of rights issues/other types of follow on equity offerings?

Rights offerings are generally structured in the same way as offerings where existing shareholders are offered the right to subscribe to the newly issued shares in proportion to their existing shareholding. One disadvantage of this structure is that a contemplated offering must be made to existing shareholders (unless they have waived their pre-emptive rights or such pre-emptive rights have been excluded, see Question 5) before any new investors can be approached.

If the issuer needs to make a rights offering more quickly, the offering to new investors can be structured by using already authorised share capital (genehmigtes Kapital) by way of an accelerated bookbuilding.

8. What are the main steps for a company applying for a primary listing of its shares? Is the procedure different for a foreign company and is a foreign company likely to seek a listing for shares or depositary receipts?

Procedure for a primary listing

The main procedural steps for a company seeking a primary listing on the Vienna Stock Exchange (VSE) are:

  • To appoint advisers and investment bank(s) and prepare a general structure for the IPO. The company will usually select a consultant to accompany it throughout the IPO process and an underwriting bank.

  • Prepare a business plan and equity story (in-depth information on the issuer's business strategy and current developments).

  • Conduct a due diligence examination in co-operation with the underwriting bank, including an examination of the company's major contracts and liabilities and an analysis of its commercial and financial situation.

  • Prepare a listing prospectus in accordance with the Stock Exchange Act and the Capital Market Act (CMA) in joint co-operation with the underwriting banks, external lawyers and consultants. Briefly, the listing prospectus must include information on the:

    • share capital and the shares;

    • issuer and its capital;

    • business of the issuer;

    • assets and financial situation of the issuer;

    • administration, management and supervision of the issuer;

    • recent business developments and business prospects (see Question 12).

    The timing for the listing and approval of the listing prospectus should be co-ordinated with the Financial Market Authority (FMA) in advance. The first submission of the prospectus must already be made by way of an official application. As a result, the prospectus must bear the issuer's representatives' signatures. The FMA will either issue an improvement order (by transmitting comments) or approve the prospectus within 20 working days (or, if the issuer has already offered securities to the public, ten working days) from receipt of the application.

  • Negotiate and sign the underwriting documents.

  • Obtain legal opinions from lawyers and a comfort letter from the issuer's auditors (this is often a condition precedent under the underwriting agreement).

  • Print and publish the prospectus.

  • Undertake marketing activities, such as road shows and press conferences to make potential investors aware of the possibility of subscribing to the shares.

  • Bookbuilding and pricing. Investors have the opportunity to submit bids for the purchase of the shares at pre-defined prices. At the end of the book-building phase, the price is fixed and the shares allocated. A supplement to the listing prospectus, indicating the price of the shares is published.

  • File the capital increase with the commercial register.

  • Admission to trading by the VSE.

  • Allocation of shares, settlement and commencement of trading.

  • A period of stabilisation and the exercise of greenshoe options, if demand is greater than expected. A greenshoe option gives the underwriter the right to sell investors more shares than originally planned by the issuer.

Procedure for a foreign company

The procedure for a foreign company is substantially the same as for an Austrian company. Foreign companies established within the EEA may have an approved prospectus passported into Austria. This prospectus can be used for the listing on the VSE.

Shares represented by certificates (such as Austrian Depositary Certificates (ADCs) and Global Depository Receipts (GDRs)) are generally subject to the same listing requirements that apply to the shares.


Advisers: equity offering

9. Outline the role of advisers used and main documents produced in an equity offering. Does it differ for an IPO?

Investment banks (lead managers)

The main tasks of the investment banks (lead managers) include:

  • Structuring and organising the IPO.

  • Preparing a research report representing the analyst's independent view of the issuer.

  • Entering into an underwriting syndicate with other banks for the purpose of allocating the shares.

  • Book-building and underwriting of the shares (usually as part of the underwriting syndicate led by the lead manager).

  • Pricing of the shares.

  • Co-ordinating the allocation of shares (settlement).

  • Post-IPO support.


The parties usually appoint an issuer's counsel, an underwriters' counsel and, in some cases, a selling shareholders' counsel:

  • Issuer's counsel. The issuer's counsel advises the issuer on all the legal aspects of the transaction including:

    • conducting a legal due diligence;

    • assisting the issuer with the preparation of the prospectus;

    • negotiating the underwriting documentation; and

    • issuing a legal opinion and disclosure letter to the underwriting bank(s).

  • Underwriters' counsel. The underwriters' counsel advises on all legal aspects of the transaction relevant to the underwriters, including:

    • preparing and negotiating the underwriting documentation;

    • assisting with the preparation of the prospectus;

    • co-ordinating the admission procedure; and

    • issuing legal opinions and disclosure letters to the underwriting bank(s).

  • Selling shareholders' counsel. Advising the selling shareholders (if any) on the underwriting documentation and lock-up agreements (if any).


The issuer's auditors verify that the financial information in the prospectus corresponds to the audited annual accounts and, on this basis, issue a comfort letter for the benefit of the underwriting bank(s).

Financial adviser

The tasks of the financial adviser include advice on the issuer's business plan, capital structure and other financial matters. Additionally, the financial adviser can support the issuer in selecting the underwriting bank(s).

Public relations consultants

Public relations consultants advise the issuer on all aspects relating to public relations matters.

IPO advisers (if applicable)

IPO advisers provide general advice to the management in connection with the structuring of the IPO. This typically includes the development of the equity story and the preparation of fact books for selecting the underwriting bank(s).


The main documents for an equity offering include the:

  • Engagement letter with the lead manager(s).

  • Underwriting agreement, and, if not included in the underwriting agreement, a separate agreement among underwriters and a separate lock-up agreement with selling shareholders (if any).

  • Pricing agreement.

  • Prospectus.

  • Publicity and research guidelines.

  • Research and road show presentation.

  • Legal opinions, disclosure letters and comfort letters.

  • Corporate resolutions (for example, for the capital increase) and other necessary corporate measures (such as filing the capital increase with the Companies Register).

  • Application for listing with the Vienna Stock Exchange.

In general, the main documents do not differ from the documentation required for an IPO.


Equity prospectus/main offering document

10. When is a prospectus (or other main offering document) required? What are the main publication, regulatory filing or delivery requirements?

A prospectus is required (unless an exemption applies) where the shares are either:

  • Offered to the public in Austria.

  • To be admitted to trading on a regulated market in Austria (that is, the Official Market or Second Regulated Market).

A prospectus is not required for a listing of shares on the Third Market of the Vienna Stock Exchange (VSE), unless the offer is made to the public and no exemption from the prospectus requirements under the Capital Market Act applies.

The prospectus must be:

  • Approved by the Financial Market Authority (or, where the issuer is established in another EEA country, an approved prospectus can be passported into Austria).

  • Where the issuer is incorporated outside the EEA, filed with the competent authority of the EU/EEA member state in which the shares are offered to the public for the first time, or where the first application for admission to trading on a regulated market is filed.

  • Published at least one trading day prior to the public offer in accordance with the respective legal requirements together with a notice, containing information on where the prospectus is available. The prospectus can be published:

    • in the Amtsblatt zur Wiener Zeitung or, alternatively, in at least one newspaper with nationwide circulation;

    • in printed form, free of charge to the public at the offices of the market on which the securities are being admitted to trading, or at the registered office of the issuer and at the offices of the financial intermediaries placing or selling the securities, including paying agents; or

    • in electronic form on the issuer's website and, if applicable, on the website of the financial intermediaries placing or selling the securities, including paying agents.

  • Available in printed version free of charge with one original copy submitted to the Oesterreichische Kontrollbank AG (OeKB).

In addition, a filing must be made with the issue calendar prior to the public offering and an International Securities Identification Number (ISIN) must be obtained from the OeKB.

11. What are the main exemptions from the requirements for publication or delivery of a prospectus (or other main offering document)?

Exemptions differ depending on whether the shares are:

  • Offered to the public.

  • Admitted to trading on the Official Market or Second Regulated Market of the Vienna Stock Exchange.

If the offer is both made to the public and admission to trading on a regulated market is sought, it is necessary to qualify for exemptions under both rules for the prospectus requirements not to apply.

Offer to the public

The key exemptions from the requirement to publish a prospectus under the Capital Markets Act include, where the offer is:

  • Solely addressed to qualified investors (which is defined as professional clients within the meaning of Directive 2004/39/EC as regards organisational requirements and operating conditions for investment firms and defined terms (MiFID Implementation Directive)).

  • Addressed to fewer than 150 natural or legal persons (other than qualified investors) in each EU/EEA state.

  • Addressed to investors who acquire securities for a total consideration of at least EUR100,000 per investor, or where the denomination per unit is at least EUR100,000.

  • Of shares issued to employees as part of an employee share scheme (if a document is available which sets out the details of the employee share scheme).

  • Of securities with a total consideration for all in the EU/EEA offered securities of less than EUR250,000 over 12 months (with effect from 22 July 2013).

Admission to trading

The key exemptions for admission to trading on the Vienna Stock Exchange include:

  • Shares representing, over 12 months, less than 10% of the number of shares of the same class already admitted to trading on the same regulated market.

  • Shares issued to employees as part of an employee share scheme (if a document is available which sets out the details of the employee share scheme).

  • Under additional requirements, shares offered to existing shareholders by way of a dividend or issued on the exercise of pre-emption or conversion rights from other securities.

These exemptions apply to both domestic and foreign issuers.

12. What are the main content or disclosure requirements for a prospectus (or other main offering document)? What main categories of information are included?

In general, the prospectus must contain all the information necessary to enable investors to make an informed assessment of the issuer's:

  • Assets and liabilities.

  • Financial situation.

  • Profits and losses.

  • Future prospects.

  • Rights attached to the securities.

The content and disclosure requirements vary depending on the nature and circumstances of the issuer and the type of securities to be offered (Regulation (EU) No 486/2012 amending Regulation (EC) No 809/2004 on the format and content of the prospectus, base prospectus, summary and final terms and regarding disclosure requirements). The Regulation prescribes specific rules for the structure and content of the summary providing the investors with key information about the securities offering.

The main content of a prospectus includes:

  • A summary of the key information and risks (see above).

  • Information on the risk factors.

  • Information on the issuer.

  • Annual financial statements (including auditor's report).

  • Quarterly or half-yearly reports.

  • Review of the financial condition and the operating results of the issuer.

  • Pro forma information and other key financial data.

  • Forecasts (optional).

  • A working capital statement.

  • Information on the shares to be offered and the terms and conditions of the offer.

13. How is the prospectus (or other main offering document) prepared? Who is responsible and/or may be liable for its contents?

The prospectus is usually drawn up by the issuer's lawyer in co-operation with the underwriting bank(s) and their legal advisers. All financial data must be reviewed by the issuer's auditor. The persons with statutory liability for any incorrect or incomplete information contained in the prospectus, which is material for the assessment of the securities, include any person who is responsible for the preparation of the prospectus or has caused the issue of the prospectus. This includes:

  • The issuer, for any incorrect or incomplete information provided by him or by any person engaged with drawing up the prospectus.

  • A person making the offer in Austria for a foreign issuer for any incorrect or incomplete information to the same degree as domestic issuers.

  • Persons acting as intermediaries between the investor and the issuer, who are professionally engaged in trading or brokering securities, for information provided in the prospectus or the prospectus audit, with knowledge of the inaccuracy or incompleteness of the information or whose lack of knowledge is grossly negligent.

  • The auditor of the annual accounts for giving the annual accounts an audit opinion despite knowledge of the inaccuracy or incompleteness of the information contained in the prospectus and knowing that the annual accounts confirmed by him form part of the prospectus.

Where several people are at fault, they are jointly liable. Liability towards investors can neither be restricted nor excluded in advance. Unless the damage has been intentionally caused, liability towards each individual investor is limited to the purchase price paid plus fees and interest as of the date of purchase.

In most cases, under the underwriting agreement, the issuer assumes responsibility for the content of the prospectus and agrees to indemnify any other party from any third party claims.


Marketing equity offerings

14. How are offered equity securities marketed?

The marketing of equity offerings includes:

  • Pre-marketing activities, such as investor pilot fishing meetings where lead manager(s) meet with potential key investors to determine potential interest.

  • Presentations of the research reports prepared by the lead manager(s).

  • Meetings of the leading manager(s) with potential investors and retailers before publication of the prospectus.

  • Road show presentations.

  • Other advertising and publicity measures, such as brochures, flyers and press releases.

15. Outline any potential liability for publishing research reports by participating brokers/dealers and ways used to avoid such liability.

In general, any information (including information that is contained in research reports) which is misleading or incorrect, can lead to the liability of the person responsible towards third parties relying on the information. However, liability can be avoided or limited by using disclaimers and/or appropriate limitation language. In practice, a blackout period is common during which research reports cannot be published or distributed.



16. Is the bookbuilding procedure used and in what circumstances? How is any related retail offer dealt with? How are orders confirmed?

The bookbuilding procedure is commonly used in securities offerings. A price range is usually determined by the underwriting bank(s) based on their own valuation of the issuer and the feedback received from investors during the pre-marketing phase. The price range is often published in the prospectus. Investors are then invited to place their orders and to specify a price limit. Based on these orders, an agreed price is set by the:

  • Issuer.

  • Selling shareholders (if any).

  • Underwriting bank(s).

By contrast, in the accelerated bookbuilding procedure, no price range is published in the prospectus but the information obtained in the roadshow is used to publish a price range in a supplement to the prospectus followed by a relatively short offer (bookbuilding) period.


Underwriting: equity offering

17. How is the underwriting for an equity offering typically structured? What are the key terms of the underwriting agreement and what is a typical underwriting fee and/or commission?

Typically, the underwriting bank(s) subscribe to the issuer's new shares (or purchase the shares from the existing shareholders) and sell them to the investors for the offer price. Subsequently, the underwriters forward the proceeds from the sale minus their fees and expenses to the issuer. The issuer, selling shareholders (if any) and underwriting bank(s) are the main parties to the underwriting agreement.

The key terms of an underwriting agreement include:

  • The underwriting as well as provisions as to the admission to listing.

  • Provisions on over-allotment, greenshoe options and stabilisation measures.

  • A lock-up period (only relevant in connection with secondary offerings).

  • Representations, warranties, undertakings and indemnities by the issuer.

  • Condition precedents for underwriting.

  • Provisions on fees and expenses (for example, an underwriting fee).

The fees of the underwriting syndicate usually vary between 2% to 3% of the total volume of the offer.


Timetable: equity offerings

18. What is the timetable for a typical equity offering? Does it differ for an IPO?

The timetable for a typical equity offering in which the bookbuilding method is used and the price range is included in the prospectus is as follows:

  • Appointment of advisers, start of the due diligence process and drafting of the prospectus. Depending on the size of the transaction, the process is usually started four to five months before the offering of the securities.

  • Passing of the shareholders' resolution on the capital increase (if no authorised capital is available).

  • Submission of the prospectus to the Financial Market Authority (FMA) and financial statements.

  • Start of the pre-marketing phase (after receipt of initial comments by the FMA), which normally takes place three to four weeks before the offering.

  • Submission of documents for listing to the Vienna Stock Exchange (VSE).

  • Signing of the underwriting agreement.

  • Approval of the prospectus by the FMA.

  • Start of the public offering, bookbuilding and road show.

  • Immediately before the allocation of the shares to the investors, the shares will be subscribed by the underwriting bank(s), the capital increase registered with the companies register and the shares admitted to trading on the VSE.

  • Pricing and allocation of shares and publication of the offer price.

  • First day of trading.

  • Settlement.

  • 30 calendar days after the start of trading, end of stabilisation period (see Question 19).

In an accelerated bookbuilding process, the initial prospectus does not include a price range and, in some cases, there is no specific offer period or number of offered shares.



19. Are there rules on price stabilisation and market manipulation in connection with an equity offering?

Regulation (EC) 2273/2003 implementing Directive 2003/6/EC as regards exemptions for buy-back programmes and stabilisation of financial instruments (Buyback and Stabilisation Regulation) provides protection from market manipulation. The Buyback and Stabilisation Regulation stipulates a period of 30 calendar days following the start of trading of the securities during which stabilisation measures can, subject to certain conditions, be carried out. Stabilisation measures must be published and the Financial Market Authority notified.


Tax: equity issues

20. What are the main tax issues when issuing and listing equity securities?

Capital duty

The issue of new shares is subject to a 1% capital duty calculated on the amount of the capital increase.

(Corporate) income tax on dividends

Generally, dividends paid by an Austrian corporation are subject to a 25% withholding tax.

Investors, who are not resident for tax purposes in Austria, are only subject to limited taxation on their income from Austrian sources. Dividends paid by an Austrian corporation are subject to Austrian (corporate) income tax as well as dividends from foreign corporations if an Austrian paying agent or custodian is involved. Austrian income tax is also levied in the form of a withholding tax.

However, if the investor is an Austrian or foreign corporation, which holds the shares through an Austrian permanent establishment, dividends paid by an Austrian corporation are tax-exempt in principle (sections 10 and 21 paragraph 1 no. 2, CITA (Corporate Income Tax Act)). Relief from the withholding tax is granted only to certain corporate investors from the European Union. Others must claim a refund of a levied withholding tax under Austrian domestic tax law. Reduced rates may be available if there is an applicable double taxation treaty.

Capital gains tax

Capital gains realised by individuals after 31 March 2012 from the sale of shares that were acquired after 31 December 2010 are subject to a capital gains tax of 25%. The capital gains tax is withheld where an Austrian paying agent or custodian is involved. For Austrian corporations that sell shares, the realised capital gains are classified as current returns, and subject to corporate income tax at the standard rate of 25%.

Under domestic Austrian tax law, foreign corporate investors are subject to capital gains tax in respect of capital gains realised from the sale of shares representing a 1% or more shareholding in an Austrian corporation. This limited tax liability, however, can be overruled by a double taxation treaty, which allocates the right of taxation from the source state (Austria) to the residence state of the corporation.


Continuing obligations

21. What are the main areas of continuing obligations applicable to listed companies and the legislation that applies?

Financial reporting

Issuers must publish yearly and half-yearly financial statements as well as interim management statements in the middle of each financial year (or alternatively, quarterly reports).

Ad hoc publicity

Companies listed on a stock exchange must publish an ad hoc announcement containing any new facts in its field of activity (that are not publicly known) which are likely to have a significant influence on the price of its shares.

Voting rights notifications

Any person whose direct or indirect shareholding reaches, exceeds or falls below 3%, 5%, 10%, 15%, 20%, 25%, 30%, 50% or 75% of the voting rights of a company admitted to trading on a regulated market must inform the following in writing:

  • The issuer.

  • Financial Market Authority.

  • Vienna Stock Exchange.

Insider law

Issuers whose shares are admitted to trading on the stock exchange must comply with all insider legislation.

Austrian Corporate Governance Code

Austrian stock corporations listed in the prime market segment must publish a yearly declaration confirming their compliance with the Austrian Corporate Governance Code.

22. Do the continuing obligations apply to listed foreign companies and to issuers of depositary receipts?

The continuing obligations apply to both domestic and foreign issuers. In addition, foreign issuers may be subject to obligations under their respective national laws. The continuing obligations also apply to issuers of depositary receipts, provided these securities are listed on a regulated market.

23. What are the penalties for breaching the continuing obligations?

A breach of the continuing obligations can lead to:

  • A suspension or revocation of the admission to trading.

  • The imposition of penalties on the issuer and/or responsible directors.

  • In the case of a violation of certain insider laws, criminal liability of the respective individuals.

  • In the case of a violation of the notification duties in respect of an increase or decrease of certain shareholdings, the temporary loss of shareholders' rights.


Market abuse and insider dealing

24. What are the restrictions on market abuse and insider dealing?

Market abuse

Market abuse can be either:

  • Information based, such as:

    • the publication of false or misleading information in financial reports, ad hoc announcements and prospectuses; or

    • withholding important information relating to financial instruments.

  • Trade based, such as fictional trades or other actions that result in or secure stock prices at an abnormal or artificial level.

Insider dealing

Insider dealing concerns making, without having authority to do so:

  • Use of inside information to acquire or dispose of securities.

  • Inside information available to a third party.

It includes recommending the acquisition or disposal of securities to a third party, or otherwise inducing a third party to do so. Inside information is specific information that, if it became publicly known, would be likely to have a significant effect on the price of the issuer's shares, including any future circumstances, provided they are reasonably likely to occur.

Penalties for market abuse/insider dealing

Violations of the rules on market abuse and insider dealing can constitute both an administrative offence and/or a criminal offence (which can be punished with imprisonment or a criminal fine). In the case of market abuses, whether conduct is regarded as administrative or criminal depends on whether the exchange price was actually influenced by the offence, and whether the offender is found to have acted wilfully or gross negligently.



25. When can a company be de-listed?

Voluntary de-listing

A voluntary de-listing of a company requires a shareholders' resolution with a capital majority of at least 75% at the shareholders' meeting. Further, in the absence of a statutory rule, there is consensus that shareholders must be compensated in cash for any potential losses resulting from the de-listing. An ad hoc announcement must be made to inform investors and the general public about the intended de-listing. In addition, the Vienna Stock Exchange (VSE) must be notified at least one month in advance.

Alternatively, a de-listing can be the result of a corporate restructuring such as a merger or conversion, known as a cold de-listing. In this case, the above principles also apply.

Compulsory de-listing

The VSE can impose a de-listing of the shares if the listing requirements cease to be fulfilled by the company (for example, the minimum free float obligation is not adhered to).



26. Are there any proposals for reform of equity capital markets/exchanges? Are these proposals likely to come into force and, if so, when?

The most recent reforms include the implementation of Directive 2011/61/EU on alternative investment fund managers (AIFM Directive) through the Alternative Investment Fund Managers Act (Alternative Investmentfonds Manager Gesetz (AIFMG)) which entered into force on 22 July 2013. However, more significantly, the Capital Market Act has been amended and now provides a broader exemption from the prospectus requirement. Following the amendment, securities can be offered to the public without publishing a prospectus if the aggregate volume of the issue amounts to less than EUR250,000 over a period of 12 months (prior to the amendment, the threshold amounted to EUR100,000). The recent change in the law is intended to facilitate crowd funding under the existing market conditions (see Question 11). The author is not aware of any other reforms that would lead to significant implications for the current legal framework.


Online resources

Financial Market Authority (FMA)

W www.fma.gv.at/en/homepage.html/

Description. Website of the Austrian financial supervisory authority.

Oesterreichische Kontrollbank AG (OeKB)

W www.oekb.at/en/Pages/default.aspx

Description. Contains information assisting companies with the issuance of securities.

Vienna Stock Exchange (VSE)

W http://en.wienerborse.at/

Description. English-language translation of certain Acts of Austrian federal law relating to securities trading and useful summaries of the rules of the VSE.

Contributor profile

Dr Uwe Rautner, Partner

Rautner Huber Attorneys at Law

T +43 1 3611361 11
F +43 1 3611361 99
E rautner@rautnerhuber.com
W www.rautnerhuber.com

Professional qualifications. Rechtsanwalt, Austria; Solicitor of the Senior Courts of England and Wales (non-practising); LLM (LSE)

Areas of practice. Worked in the legal department of an Austrian bank and for over eight years with two prestigious international law firms in Vienna and New York City. Extensive experience in negotiating and structuring domestic and international finance and capital markets transactions with a particular focus on structured finance, hybrid capital transactions and restructurings.

Recent transactions

  • Advising the lead manager in connection with the structuring of subordinated hybrid securities recognised as regulatory capital under Basel III/CRD IV.
  • Advising the lead manager in connection with the issue of deeply subordinated notes by an Austrian corporate.
  • Advising the lead manager as transaction counsel in connection with a bond issue listed on the Vienna Stock Exchange by one of Austria's provincial states in the form of a private placement to institutional investors.
  • Advising the lead manager in connection with the placement of a EUR100 million registered bond to institutional investors.
  • Advising the arranger in connection with the syndication/placement of a Schuldschein loan entered into with an Austrian borrower to institutional investors, predominantly insurance companies.

Languages. German and English

Professional associations/memberships. Rautner Huber is a member of the Austrian Association of Investment Companies.

Publications. Numerous publications in the fields of banking and capital markets law.

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