Corporate Governance In The Context Of Corporate Restructurings

Who calls the tune in corporate restructurings – managers or shareholders?

Overview

Overcoming so-called "agency problems" occupies centre stage in corporate law. Generally speaking, whenever an agent acts on behalf of a principal, the problem arises that the agent does not necessarily share the principal's interests or act accordingly. With regard to corporate law, conflicts of interest must be addressed between (i) managers and shareholders, (ii) controlling and minority shareholders, and (iii) shareholders and non-shareholder constituencies. This is especially true for corporate restructurings (eg, mergers, demergers, etc.). Corporate law around the world attempts to mitigate the opportunism related to corporate restructurings.

With that said, this articles shows how the Austrian law on stock corporations (Aktiengesellschaften) and limited liability companies (Gesellschaften mit beschränkter Haftung) assigns the roles between managers and shareholders in the context of corporate restructurings.

Managerial power

Austrian stock corporations and limited liability companies are governed by their management. However, the law reserves certain fundamental decisions to the...