Austria (AT)

Jurisdiction Overview

IDQuestionAnswer
172 *Are bearer shares available? Yes, unregistered bearer shares are available/circulating or registered by a private custodian.
 Data Date: 2018

Notes

 
In 2018 the Global Forum (GF) reports that "Since the 2015 Report, the monitoring process has continued, but little monitoring has been necessary as no bearer shares could be issued, the existing bearer shares were cancelled, and no issue arose in practice." (GF 2018: 42). However, no reference is made to the fact that holders could still recover them without any time limit upon disclosure of their identity to the company (see notes below); and no reference is made in the 2018 FATF report on Austria (FATF 2018). Therefore, we undestand that "It is possible to register as a shareholder even after the conversion period had expired" as had been assessed by FATF in 2016 (FATF 2016: 94)
 
In 2016 the FATF wrote "There is still evidence that bearer shares are misused for criminal purposes, although they are prohibited since 2011, and should have been converted to nominative ones. It is possible to register as a shareholder even after the conversion period had expired. However, it is not sufficient to simply present the invalid bearer share certificates: the person claiming to be a shareholder will either have to show that he/she already was in possession of the bearer share certificates when they became invalid (for example by showing that he/she had already participated in general meetings in the past) or must show how he/she acquired the shares. In practice, this means that the acquirer has to present a document proving his/her entitlement (for example a purchase agreement with the former shareholder or a document showing his/her position as the legal successor)." (FATF 2016: 94).
 
While in 2015 the Global Forum considered that Austria had made sufficient amendments regarding bearer shares, in reality provisions make it 'unattractive' for bearer shares to remain unidentified due to several new sanctions, but it does not rule it out (GF 2015: 26-33).
 
In 2013, the Global Forum reported: "Pursuant to section 10 of the Stock Corporation Act, AGs (as well as SEs) may choose to issue their shares either in nominative or bearer form. [...] In 2011 Austria amended its Company Law to address the fact that no ownership information on holders of bearer shares was available in Austria. The law provides that listed companies can still issue bearer shares for the purpose of being listed. [...] for listed companies, identity details in relation to the owner of all shares will be known from 1 January 2014. In contrast, for unlisted companies, the issuance of bearer shares is prohibited from 1 January 2014. From this date, companies are allowed to issue only nominal shares (registered shares). All shares that qualify as registered shares must be entered in the company’s share register." (GF 2013: 38-39).
 
However, "while the conversion of bearer shares must be completed by 1 January 2014 and the holders of bearer shares whose shares are not converted by this date will lose their rights in the company from that date, the holders will be entitled to recover them without any time limit upon disclosure of their identity to the company. The system implemented by Austria does not provide any incentive for shareholders to convert their bearer shares into nominal shares, until such time as they have a need to obtain their rights in the company. In the meantime, there is nothing to prevent them from transferring the shares to another person (until 31 December 2013) who may then claim them as their own without identifying the former owner. Austria has stated that after 1 January 2014, the owners of bearer shares cannot exercise their rights. However, they remain owners of their shares in the company and remain entitled to be registered as shareholders later on. [...] the lack of incentive and sanctions does not ensure that from 1 January 2014 the identity of all holders of shares in unlisted joint-stock companies will be known in all instances" (ibid.: 39-40).

Sources

GF 2018: 42; FATF 2016: 94; GF 2015: 26-33; GF 2013: 38-40; GF 2011: 24- 25; FATF 2018