Legal Expertise

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We see it as part of our mission that we simplify access to legal services and make legal understanding possible for as many people as possible. In our constantly growing Legal Expertise section, we collect information on a wide range of legal topics. We strive to provide a better understanding and overview of the complex field of law for the average person.

Knowledge Base

Company name (GmbH)

The company is the name of an entrepreneur entered in the commercial register under which he conducts his business and submits his signature. Essentially, therefore, it serves as the name of the entrepreneur in business transactions.

What types of company names can be chosen?
A distinction can be made between personal companies, factual companies and fancy companies. A mixture of these company types is also permitted.

Personal (Personenfirma): Name of the sole proprietor or one or more partners (e.g. Müller und Bauer GmbH)
Corporate (Sachfirma): refers to the specific object of the company; in order to distinguish it from other companies, distinctive additives must be used (e.g. Müller und Bauer Anlagenbautechnick GmbH, MB Anlagenbautechnik GmbH)
Fantasy (Phantasiefirma): any letter and/or word sequences (and also number sequences) can be used; the impression of a personal company should be avoided (e.g. Heli FX GmbH)

What other requirements must be met?
The company name must be suitable to identify the entrepreneur, must be distinctive and must not contain any information which is liable to mislead as to business relationships which are essential to the targeted public. In the case of place names, care must be taken to ensure that correct notions of the entrepreneur's place of business and the nature and scope of this business are created. This applies to the use of words such as "Austria", "International" etc.

The company name may include upper and lower case letters as well as foreign language terms and numbers, as long as the name (identification) function is fulfilled. The company name should be designed in such a way that its individuality is capable of distinguishing the entrepreneur concerned from other persons (distinctiveness). For example, the use of mere factual, branch or place names (e.g. Holzfäller GmbH, Burgenland GmbH) is not permitted.

Company suffix: In the case of GmbHs registered in the commercial register, the company name must also have a company suffix (e.g. GmbH; Ges.m.b.H.; Gesellschaft mbH; Gesellschaft mit beschränkter Haftung).

Tip:

When a company is incorporated, the commercial judicial clerk assesses whether a company of another entrepreneur in the same political municipality is registered in the cmmercial register with a name that is similar to that of another entrepreneur. We are happy to take on the (preliminary) clarification of the proposed company name with the competent judicial clerk.

Apart from existing companies, any possible collision with the rights of other persons must also be taken into account from the point of view of trademark and/or competition law.

Founders of a GmbH

Shareholders of a GmbH can be individuals, legal entities and partnerships. Thus, both private persons and companies can form a GmbH either alone or together.

Tip:

The drafting of the articles of association is of essential importance. Key issues include: Profit and loss distribution, majority resolutions, non-competition, transfer of shares. We will of course address these issues with you in the course of our company foundation advice.

Commercial register number

The commercial register is a central, public register in Austria. It contains essential information on registered companies. The commercial register number is the number automatically assigned to each company entered in the commercial register.

You can find out the commercial register number here: Company Register

Example: FN 485841 y

Tip:

To make it as easy as possible to set up a GmbH, you should check whether all the details of the founders have been correctly stated. The name of a founder must be complete and correct and written in the same way as in the identification document (passport, identity card, driving licence).

If, for example, you have a double last name, it must also be given in this way. The address must also be given accurately. Your academic degrees have to be proven at a later date at the notary (for example by already appearing in the identification document or by presenting the award certificate).

"Privileged" LLC

The share capital of a "regular" GmbH must be at least EUR 35,000. When a "regular" GmbH is formed, at least a total of EUR 17,500 must be paid-up in cash.

However, there is also the possibility of claiming a "founding privilege". In the case of the founding privilege, the privileged share capital amounts to at least EUR 10,000, of which at least half, i.e. EUR 5,000, must be paid in cash and deposited. This foundation privilege is valid for a period of 10 years from the formation of the GmbH.

An example of a GmbH as privileged LLC:

Share capital: EUR 35,000
"Privileged" Share capital: EUR 10,000
Paid-up: EUR 5,000

Line of Business

The company's object describes the specific area of activity of the company. In principle, this sets out the framework within which the company may conduct business activities. It is also important for a possible prohibition of competition by shareholders.

A subsequent change of the company's object requires an amendment of the articles of association. Such an amendment is in principle only possible by means of an unanimous resolution (unless otherwise provided for in the articles of association) by the shareholders in the context of a general meeting and must be certified by a notary. Therefore, the company's object must be chosen with care, especially from the point of view of costs and expenses.

A good source for choosing your suitable area is the website of the Austrian Federal Economic Chamber (WKO

Tip:

A political activity and the operation of insurance business is not permitted under a GmbH. The same applies to equity fund business, the operation of building society and pension funds and stock exchange business. In addition, banking transactions and securities services, for example, also require a licence.

Management

The management board (managing directors) is a necessary corporate body of a GmbH. A GmbH is represented by at least one or more individuals as managing directors. Shareholders can also assume such position. However, external individuals may also act as managing directors.

Managing directors are usually appointed by a shareholder resolution at a general meeting or by circular resolution. An appointment in the articles of association is also possible. A dismissal is also possible by shareholder resolution. There is also the possibility of dismissal by court decision for cause. Appointment and dismissal must be entered in the commercial register.

The managing directors are responsible for the entire management of the GmbH (internally) as well as the judicial and extrajudicial representation of the company (externally), always taking into account the specific will of the majority of shareholders and any instructions from the shareholders. Managing directors can be authorised to represent the company either individually or jointly with another managing director (or also authorised signatories).

The managing directors are obliged vis-a-vis to the company to exercise the diligence of a prudent businessman in their management of the company

Non-competition clause

By law, shareholders are not subject to any prohibition of competition, only the managing directors of the GmbH.

If (subsequent) non-competition is envisaged, this would have to be agreed accordingly in the articles of association, in a possible shareholder agreement (= a separate agreement between the shareholders, which is not disclosed in the commercial register and is therefore particularly suitable for regulating aspects which are not intended to be accessible to the public) or in some other way (free of formalities) - subject to the limitations of cartel law and possible nullity of a contractual provision.

The scope of the non-competition clause is defined by the company's object and the spatial activity of the GmbH. Its purpose is to prevent competing activities by shareholders with the LLC.

Please note: Competition clauses that are particularly far-reaching in terms of territory and content can only be effectively agreed for 2 years.

Contractual penalty

A contractual penalty represents a "lump sum compensation". It has two main components: on the one hand, it creates an increased sense of duty in the potentially obligated party due to its threatening effect, and on the other hand, it does not require proof of damage that has occurred, which would otherwise be difficult to provide.

Tip:

The amount of the contractual penalty should be determined on a case-by-case basis and should be appropriate in the overall context of the intended use and its purpose. Whether, in what form or amount such a contractual penalty will be used, is essentially a matter for negotiation between the parties.

Pre-emptive rights

Pre-emptive rights (right of access) are rights of shareholders granted in the articles of association (or in a separate shareholder agreement) in connection with the transfer of shares in the GmbH. A right of first refusal (Vorkaufsrecht) enables the entitled shareholder to acquire a the entire share of another shareholder or part thereof on a preferential basis if such other shareholder wishes to sell his share. Pre-emptive rights apply to other forms of share transfers (e.g. donations, transfers by way of reorganizations) or in the event of the death of a shareholder.

The aim of such clauses is, on the one hand, to enable the existing shareholders to control the specific shareholder status, which can prevent the addition of undesirable persons. On the other hand, by acquiring the share of the withdrawing shareholder, the acquiring shareholder also achieves an increase in his share in the GmbH.

Shareholder resolutions

Certain transactions require by virtue of the law the adoption of resolutions by the shareholders of the GmbH (e.g. amendments to the articles of association, audit and approval of the annual financial statements, distribution of profits, repayment of additional contributions, audit and monitoring of the management and its discharge, reorganizations etc.). Resolutions may be passed in a general meeting or by circular vote (written resolution).

In the articles of association, the objects which are to be subject to the passing of resolutions by the shareholders may be increased or reduced. However, a shareholder resolution must always be passed on certain matters (e.g. annual financial statements, repayment of additional contributions). In addition, fundamental resolutions (Grundlagenbeschlüssse) (e.g. reorganisations [mergers, conversions, de-merger], amendments to the articles of association, dissolution, etc.) and the control of the management are, according to the prevailing view, mandatorily incumbent on the shareholders.

Quorum and voting majorities

In order for the General Meeting to have a quorum, at least 10% of the share capital must be present or effectively represented (presence quorum), otherwise a second meeting would have to be convened. Shareholders listed in the commercial register are entitled to participate and vote. The voting right is determined by the amount of the assumed capital contribution - 1 vote per EUR 10 (this can be adjusted in the articles of association).

In principle, shareholder resolutions are passed with a simple majority of the votes cast. Certain measures require other majorities. For example, a majority of amendments to the articles of association, capital measures (capital increases and reductions), transfers of registered offices or mergers require a majority of ¾ and changes to the company's object require unanimity.

In particular, changes to the articles of association are of major importance and affect the following aspects: Company name, company's object, registered office, share capital, majority of resolutions.

Tip:

The articles of association may deviate from the statutory simple majority and stipulate an increased majority of votes (up to unanimity) and other requirements. It is also sometimes possible to deviate from the increased voting majorities stipulated by law.

Our articles of association contain a catalogue of certain measures that require the approval of a qualified majority (according to the percentage you have determined above). This catalogue is merely a suggestion, which our lawyers will be happy to finalise with you in your specific case.

Non-disclosure agreement (NDA)

Business and trade secrets are an essential asset of many companies. Know-how and a specific skill set are often decisive factors in the daily competition between companies, which must be protected. NDAs are therefore always used when information worthy of protection is to be disclosed to a third party - for example in the context of M&A transactions, other (major) projects, start-ups, etc.

Place of jurisdiction

The place of jurisdiction should in any case be in the country whose applicable law has been agreed (e.g. Vienna in the case of Austrian law). Discussions about the specific place of jurisdiction usually arise when the parties are geographically somewhat further apart (e.g. Vienna - Innsbruck). Please note: In the absence of an agreement between the parties, the place of jurisdiction is determined by the domicile (or habitual residence) / registered office of the defendant.

Alternatively, the possibility of agreeing on arbitration would be available. In this case no state court but an independent panel of selected experts will decide. Should this option be attractive to you, please indicate arbitration court above and our lawyers will subsequently agree a suitable arbitration clause directly with you.

You can find the competent court for your company here: Your competent company register court (German only)

Liability (OG/KG)

In contrast to corporations (e.g. GmbH), the liability of the shareholders of an OG towards creditors of the company is not limited. Deviating from this, a different liability regime can of course be agreed internally between the partners or between partners and creditors.

Deposits (OG/KG)

With regard to deposits, a distinction can essentially be made between cash deposits and contributions in kind. The articles of association determine whether or which contributions are to be made. Contributions in kind can be assets of any kind (e.g. IP rights, receivables, land, securities, companies or even services).

Minimum capital: Unlike corporations, there are no minimum capital requirements for OGs (as partnerships).

Capital share: The partner making a contribution receives a share in the company (capital share) as consideration. This is particularly relevant for the voting right, the right to receive profits and the calculation of a settlement credit balance when leaving the company. A separate capital account is maintained for each shareholder, from which the amount of the capital share can be taken.

Minimum Viable Product (MVP)

A Minimum Viable Product (MVP) is basically a stage in the development of a product/service. It is the smallest feasible or realizable product. In such a case, not a sophisticated and fully developed product, but a simple version is brought to the market as quickly as possible. This version is continuously further developed on the basis of customer feedback.

The term MVP has its roots in the start-up ecosystem and corresponds to the lean start-up idea.

Liability limitation

The sole proprietor as well as the shareholders of an OG are personally liable (= with their private assets) for the debts of the company. In the case of a GmbH, the liability of the shareholders is generally limited to the amount of the capital contribution. In the case of a KG, there are two types of partners: on the one hand, the personally and unlimitedly liable general partner and, on the other hand, the limited partner, who is only liable up to the limited liability amount entered in the commercial register.

Apartment category

A: if it is in a usable condition, its usable area is at least 30 m2, the apartment consists at least of a room, kitchen (kitchenette), anteroom, toilet and a bathing facility (bathroom or bathing niche) that meets the contemporary standard and has a common heat supply system or floor heating or equivalent stationary heating and hot water preparation;

B: if it is in a usable condition, it consists at least of a room, kitchen (kitchenette), anteroom, toilet and bathing facilities (bathing space or bath niche) in accordance with modern standards;

C: if it is in usable condition and has at least a water tap and a toilet inside;

D: if it does not have a water point or toilet inside or if one of these two facilities is not usable.

Year of construction of a property in the MRG

The year of construction of the building is important to determine which legal aspects of the Austrian Tenancy Law (MRG) apply. The Tenancy Law Act differentiates between the years of construction of apartments and sets a time limit for this.

We clarify this question in more detail in the course of drawing up contracts and providing legal advice.

Limitation of the rental period in the MRG

Indefinite contracts can, if the provisions of the AustrianTenancy Law Act (MRG) apply, only be terminated by the Landlord for good cause. These are regulated in particular in § 30 para. 2 MRG. In practice, the most common reasons are unpaid rents (rent arrears) or the significantly disadvantageous use of the rental property by the lessee.

Fixed-term contracts cannot be terminated without further ado before the end of the agreed term. However, if the provisions of the Austrian Tenancy Act (MRG) apply, the lessee shall have the option, after one year of the originally agreed or extended term of the tenancy, to terminate the tenancy agreement before the end of the agreed period, in each case at the end of the month, either in court or in writing, giving three months' notice.

If the Austrian Tenancy Law (MRG) is applicable, a temporary tenancy agreement must be concluded for at least 3 years. The rental relationship ends automatically at the end of the agreed rental period. Tenants may, however, terminate a limited rental agreement prematurely. This is possible after one year and under observance of a period of notice of 3 months.

Security deposit

The security deposit serves to cover all claims of the landlord against the tenant arising from the tenancy in question. If such landlord's claims arise already during the upright tenancy (e.g. unpaid rents), the landlord is entitled (but not obliged) to cover all arrears from the deposit amount.

At the end of the rental agreement, the lessee will be refunded the deposit (including any interest), provided that no landlord claims arise.

Rent indexation

A value guarantee for the rent is included in most rental agreements in Austria. This allows the landlord to adjust the rent to the inflation rate. A value protection clause must be included in the contract. As a rule, the value assurance clause is based on the monthly consumer price index published by Statistik Austria. Different variants can be agreed upon (e.g. adjustment from a threshold of 5%, annual adjustment, etc.)

Tip:

The value guarantee also applies in the event that deflation would occur and the rent is adjusted downward accordingly.

Subletting

Subletting makes sense if, for example, you rent to a student flat share (rental agreement with the main tenant, who then rents rooms to the other residents) or if you want to give the tenant more flexibility.

In any case, the landlord must be informed about the beginning and end of a sublease.

The subletting of the rental object can also be contractually prohibited to the tenant. If the lessee subleases the object, a penalty may be due or the lease may be terminated by the lessor.

This is especially the case if:
- the lessee subleases the entire leased object and no longer lives in it himself
- the sub-rent is disproportionately high (50% higher than the main rent)
- the number of subtenants is too high (more residents than rooms)
- the peace of the house is disturbed by subletting

Tip:

In any case, the landlord should be informed before signing a sublease contract.

Subletting could be one way of organizing a student flat share.

Inheritance law

Spouses/registered partners have a statutory right of inheritance. If there are descendants (children, grandchildren, great-grandchildren), the spouse/registered partner inherits one third of the assets. If there are no descendants, the spouse/registered partner receives two thirds in addition to the parents of the deceased. In all other cases the spouse/registered partner inherits the entire estate.

Legal succession means that certain relatives of the deceased inherit his or her assets by law. The order of succession is based on the so-called parentel system. There are four parenteles in total. The first parentel comprises the direct descendants (children, grandchildren, great-grandchildren etc.). If there is no one in the first parentel, the second parentel (parents and their descendants) is the one to take over. If there is no one left alive in this parentel either, the grandparents and their descendants inherit in the third parentel. In the fourth parentel the great-grandparents of the deceased inherit.

If the legal succession is to be deviated from, a last will and testament is required (e.g. a will).

Statutory share

Despite of what is stated in a tesatemt, certain persons - not considered in the will - have a legal claim to a part of the inheritance. This entitlement is half of what would be due in the case of legal succession and must in any case be paid out in the form of cash.

Spouses/registered partners and descendants of the deceased are entitled to a compulsory portion.

Inheritance contract

Spouses/registered partners can conclude an inheritance contract with each other in the form of a notarial deed. However, both spouses can still dispose of a quarter of the estate in accordance with their wishes, as this cannot be legally regulated by an inheritance contract ("free quarter").

Attention: Despite an inheritance contract, the deceased can freely dispose of his or her assets during his or her lifetime. The contractual heir only receives what is left over at the time of death. Furthermore, the dissolution of an inheritance contract is only possible with the agreement of both parties. In the event of divorce or dissolution due to fault, it should also be noted that, in the absence of an agreement to the contrary, the partner without fault will receive the share provided for in the inheritance contract despite divorce or dissolution.

Life partner

As life partner/life companions are considered persons who have lived in the same household for at least 3 years. According to the law, they only inherit if there are no other legal heirs (especially children/spouse/parents). If in such cases the partner is to receive a share of the assets, this must be decreed by last will.

Bequest

One speaks of a bequest (legacy) when certain assets (real estate, car, jewelry, etc.) are to be transferred after death.

Place and start of employment

In principle, the employment relationship can be started on any day of a month.

The place of employment is the place where the employee has to perform his work. In most cases, this will be the location of the company when the employment relationship is concluded. The place of employment shall be determined by reference to the regular center of the employee's actual place of work.

Tip:

The registration of the employee must, without exception, take place before the start of work!

Trial month (Employment contract)

During the trial month, both the employer and the employee may terminate the employment relationship without notice, deadlines or reasons. The trial period can be agreed for a maximum of one month.

Tip: Some collective agreements require shorter trial periods. It is therefore recommended to check the applicable collective agreement in advance.

Time limitation (Employment contract)

Fixed-term employment contracts are concluded for a fixed period of time. The employment relationship ends on the calendar date agreed in the employment contract. No further agreement or termination is required.

Tip:

If the employer does not wish to continue to employ the employee after the end of the fixed-term employment relationship, he should nevertheless inform the employee. Some collective agreements require the employer to inform the employee in advance.

All-In agreement (overtime flat rate)

In the case of an all-in agreement, the overtime hours worked are compensated by overpayment on the minimum wage stipulated in the collective agreement. The "overtime flat rate" does not appear as a separate remuneration component in payroll accounting and must be taken into account as a dependent component of the salary when calculating the special payments. Please note: Even if less overtime is worked than agreed, the overtime flat rate is to be paid in full!

Termination

The employer and employee are bound to the agreed upon duration by the limitation of the employment relationship. The time limit therefore basically excludes the possibility of termination by one of the contracting parties before the end of the agreed duration.

In order that a termination at an earlier point in time is still possible, a possibility of termination must be expressly agreed between employer and employee. However, there must be an appropriate relationship between the total duration of the employment relationship and the possibility of termination.

Collective agreement and minimum basic salary

The minimum basic salary depends on the applicable collective agreement. Here you can find all collective agreements: WKO Collective work agreements

After completion of the service contract, we will compare the contract used with the applicable collective agreement.

It is customary to pay out the salary either on the 15th or at the end of the respective month. A deviating agreement can of course also be made.

Working hours

Employees can hire the employee for any number of hours per week, but for a maximum of 40 hours. We will of course check the maximum working hours per week for you on the basis of the applicable collective agreement.

The law assumes a normal working time of 8 hours per day or 40 hours per week. However, many collective agreements provide for a shorter normal working time (e.g. 38.5 hours per week). Collective agreements can regulate a daily working time of up to 10 hours. Even with the 4-day week, the daily normal working time can be extended to 10 hours. In principle, however, the daily working time may not exceed 9 hours.

Vacation

In principle, employees in full-time employment are entitled to 5 weeks of vacation per year (collective agreements may determine otherwise). This also applies to part-time employees. To calculate the vacation days to which the employee is entitled, the number of working days / hours per week is multiplied by five:

Example calculation: 4 days x 5 = 20 vacation days or 20 hours x 5 = 100 hours (100 hrs / 8) = 12.5 vacation days.

Secondary activities

In order to ensure that the employee dedicates his entire work force to the activities of the employer's company, any secondary employment should be restricted. In particular, the employee should only be allowed to work part-time if the employer has given its prior consent. Furthermore, there should be no impairment of the employer's interests. For part-time employees, a general prohibition of secondary employment is not permissible. If the employee violates this provision, this constitutes grounds for dismissal.

Non-competition clause

Under the non-competition clause, the employee undertakes not to engage in any self-employed or dependent gainful activity in the employer's line of business for a period of one year after termination of the employment relationship - with the exception of authorized activities. In case of violation of the non-competition clause, a contractual penalty is payable.

The amount of the contractual penalty is limited to six times the net monthly salary due for the last month of the employment relationship. No compensation for damages can be demanded from the employer beyond the agreed contractual penalty. Furthermore, the contractual penalty is subject to the right of judicial mitigation. This means that the degree of fault of the employee and his income and financial circumstances will be taken into account by the court when calculating the contractual penalty.

Collective agreement

Which collective agreement is applicable depends on which employer's association the employer belongs to. The learned or practiced profession of the employee is irrelevant in this context. For example, an accountant who works in a hotel is subject to the collective agreement for employees in the hotel and restaurant industry.

For the proper calculation of the minimum basic salary, vacation entitlements, etc., the applicable collective agreement must be consulted.

Periods of prior service (Collective agreement)

In many collective agreements, the amount of the salary entitlement is also based on any previous periods of service. This is particularly the case if the employee was employed by another employer to perform the same or similar activities.

Tip:

Employers should request written proof of any previous service.

Employee pension fund

Every company is obliged to conclude an accession agreement with a company pension fund. In contrast to the old severance payment, the money does not remain in the company when the new severance payment is made, but is outsourced to the company provident fund.

Vesting

A "vested right" refers to a "securely established right". This arrangement is intended to ensure that beneficiaries (e.g. employees) are rewarded for their loyalty and ongoing commitment to the Company by having their virtual share grow only proportionately over time (e.g. 1/24 per calendar month, thus over a vesting period of 2 years). The vesting period is usually between 2 and 5 years, but can also be agreed otherwise.

Exit-Event (Phantom Stock)

The determination of the exit event is of great importance, as the payment claim of the beneficiary is linked to the occurrence of this event. Usually, the phantom stock program provides for the sale of the majority of the shares in the Company or the majority of the assets of the Company. In addition, an IPO (Initial Public Offering) of the Company may also be considered as an exit event.

Personal data

Personal data is all information relating to an identified or identifiable natural person (data subject).

Examples: name, address, credit card number, account number, age, IP address, etc.

Data protection officer

According to the GDPR, a data protection officer must be appointed in certain cases. Such a person can either be an internal company person or an external third party.

The specific data protection officer must be reported to the competent data protection authority.

Controller vs. Processor

Controller (data protection authority): any natural person (private individual) or legal entity (company), public authority, institution or other body which alone or jointly determines the purposes and means of the processing of personal data.

Processor (service provider under data protection law): Any natural person (private individual) or legal entity (company), authority, institution or other body that processes personal data on behalf of the controller (e.g. agencies, e-mail services, hosting providers, external call centres, etc.).

Technical and organizational measures (TOMs)

Technical and organizational measures (TOMs) are those measures that a responsible person or order processor has implemented to protect personal data from unauthorized access and loss (e.g. access controls, video surveillance, IT guidelines, password management, VPN, protected WLAN, encryption, authorization concept, etc.).

The documentation of the TOMs must be created internally, be available at all times and be continuously adapted to technical progress.

Data protection coordinator

A "data protection coordinator" is an employee who is responsible for the implementation of data protection regulations within the company and is the primary contact person for all data protection issues. However, this person only acts internally and is not reported to the relevant supervisory authority as data protection officer.

Blue-collar and white-collar workers

In principle, a distinction must be made between blue-collar and white-collar workers in Austria - an essential distinction in many areas, especially in data protection. There is no exact legal definition of this, but the following distinction can be made:

Worker: A person who performs predominantly physical work (e.g. craftsmen, waiters, warehouse workers, fitters).

Employee: A person who mainly performs office work and commercial services (e.g. clerk, programmer, receptionist, accountant).

Work (Service Contract)

A work is a work if the performance to be rendered is a concrete object or result.

Examples: Furnishings, creation of a website, performance of a study, construction work, tailoring work, programming of a software, etc.

Client and contractor

The client and contractor can be natural persons, legal entities and partnerships. Thus, both private persons and companies can enter into a contract for work and services.

The client is whoever orders the provision of a service or the production of a work/project. The client can be either a natural person or a legal entity (e.g. GmbH).

Contractor is whoever is commissioned to provide a service or to produce a work/project. Contractor can be either a natural person or a legal entity (e.g. GmbH).

Trade

In Austria, a trade may only be carried on if a corresponding trade licence is available. Therefore, if the contractor does not have a trade licence, he is not authorized to carry out the order. In the event of a violation, administrative penalties in particular may be imposed.

We therefore recommend checking in advance whether a trade licence is necessary for the contractor to perform the contract for work and services.

You can find out more here: WKO - Which trades are there?

Here you will find the complete list of the Federal Ministry for Digitalization and Business Location for Regulated Commerce: List of regulated trades

Number of representatives (Power of attorney)

In principle, any number of persons can be authorized. However, it is advisible to only select persons you trust (e.g. co-partner, lawyer, other person of trust). Effective representation is also achieved by a single authorised representative. Therefore, not too many persons should be authorized; however, it is advisable to make provision for the case of prevention (e.g. illness, accident) of an authorized representative.

Individualization of a power of attorney

Some powers of attorney (e.g. a GmbH incorporation PoA) must be a special power of attorney. The power of attorney must be designed in such a way that sufficient individualization (e.g. by means of the company name, registered office, corporate purpose, share capital) of the company to be formed is provided.

Transfer of power of attorney / sub-power of attorney

The right granted to the authorized representative to transfer the power of attorney to third parties or to grant sub-proxies may be useful in the event that one or more authorized representatives are prevented from attending (e.g. illness, accident).

Self-dealing

There are two forms of self-dealing:

1. self-contracting: both acting in one's own name for oneself and as a representative (e.g. the authorized representative of a logistics GmbH concludes a contract for marketing consulting for the GmbH and at the same time himself as a consultant).

2. double or multiple representation: simultaneous representation of two or more natural or legal persons (e.g. as in the example above, only the authorized representative acts both for the logistics GmbH and for his advisor GmbH)

Since such transactions are only permitted under certain conditions, it is recommended to include a corresponding authorization clause in the power of attorney.

Intern

Interns are employed on a short-term basis in a company for the sole purpose of expanding their practical knowledge and skills without remuneration and work obligation.

If, on the other hand, the focus is on work in the interest of the company, this is considered an employment relationship and not a voluntary service.

Tip:

Before the start of the intern program, the field of activity should be clearly defined between the intern (holiday volunteer) and the employer. The educational relationship is always in the focus!

Legal age

A person who has reached the age of 18 is considered to be of full age. Younger persons are called minors.

Legal representative

If apprenticeship or other training contracts are concluded between an employer and an adult minor (14 to 17 year olds), these always require the consent of the legal representative. Furthermore, the employment of children (minors up to the age of 14) is prohibited with few exceptions.

Both parents of legitimate underage children are considered legal representatives. In principle, each parent alone is entitled to represent the child. In the case of illegitimate children, the legal representation is basically the responsibility of the mother.

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