Dear Clients,
New legal form - reduced share capital
With FlexCo, a new form of corporation was introduced on 1 January 2024. The old legal form of the GmbH continues to exist unchanged alongside the new FlexCo. The formation of both types of company will be simplified by reducing the share capital from EUR 35,000 to EUR 10,000. This applies to both the GmbH and the FlexCo. As before, half of the share capital, i.e. at least EUR 5,000, must be paid in. The lower share capital means that the minimum corporation tax for the FlexCo and the GmbH will only be EUR 500 per year in future.
Different share classes (shares)
In the traditional GmbH, each individual shareholder previously had to hold a share corresponding to a share capital contribution of at least EUR 70. As each shareholder could only hold one share, it was not possible to issue different share classes to one and the same shareholder. With FlexCo, it is now possible to introduce shares with a nominal amount in the articles of association. Each share is associated with one vote and must have a nominal value of at least EUR 1. Each shareholder can therefore hold different shares and dispose of them separately. The individual share classes can also be endowed with different rights and obligations, such as preferential profit entitlements.
Written circular resolutions
At FlexCo, it is possible to stipulate in the articles of association that written circular resolutions are always permitted. Individual shareholders can therefore no longer block the vote by circulation. A further simplification is that the articles of association can stipulate that resolutions can also be passed by e-mail, for example. There is also no minimum quorum for these resolutions.
Enterprise value shares
The biggest innovation at FlexCo is definitely the Enterprise Value Shares. Put simply, this is a pure participation in the profit and substance of FlexCo, without granting any influence over the company. This means that employees can simply participate in the profits without having the right to vote at the Annual General Meeting. Enterprise value shares can be issued for up to 25 % of FlexCo's share capital. In addition, the problem of "dry income" that previously arose in this context has been solved. This arose when employees were to participate in the company as part of an employee share scheme and had to pay income tax on the value of the company shares they received, even though they did not receive any liquid funds in return. In such cases, income tax is only payable when the company is sold.
Simple transfer of shares
Enterprise value shares in FlexCo can be granted and transferred by means of a simple written deed. There is no notarisation requirement for these shares, so transfers can be made quickly, easily and inexpensively. Shares can also be transferred by means of a private deed executed by a lawyer. Here too, it is no longer mandatory to conclude the transfer in the form of a notarial deed.
Outlook
The advantages of the new FlexCo legal form are obvious. It is to be expected that in future FlexCos will be founded instead of the previous GmbHs and that many existing GmbHs will also be converted into FlexCos.
Best regards
Christine Casapicola
Vienna, January 2024
