Austria: Mergers and Demergers - Documents Equivalent to Prospectus

Last Updated: 7 December 2010
Article by Peter Feyl
Most Read Contributor in Austria, September 2019

In the event of a public offer of securities, in order for the securities to be offered legally to investors, a prospectus must be prepared, approved by the competent authority and published. However, Article 4 of the EU Prospectus Directive (2003/71/EC) contains certain exemptions from the obligation to publish a prospectus. For several recent mergers in Austria1questions have arisen as to whether they constituted public offers of shares in the transferee companies and, thus, whether prospectuses should have been published.

It is well established that in such instances an exemption from the obligation to publish a prospectus applies. Pursuant to Article 4(1)(c) and (d) of the directive, the obligation to publish a prospectus does not apply if securities are offered, allotted or to be allotted in connection with a merger, provided that a document is available containing information which is regarded by the competent authority as being equivalent to that contained in the prospectus, taking into account the requirements of EU legislation.

Allocation of shares in the course of a merger

It is debatable whether the allocation of (newly issued or, in case of a downstream merger, existing) shares in the transferee should be considered a public offer at all. While shareholders vote in shareholders' meetings of the transferor and the transferee on whether to approve the merger, the shares issued in the course of the merger are allotted exclusively to the existing shareholders of the transferor. Those shareholders have no choice on whether to accept the allotted shares (if the merger is approved). Consequently, no subscription statement is required or made. Therefore, it could be argued that in such cases no offer of shares is made to the public.

This would also be consistent with the opinion of the Austrian regulator, the Financial Markets Authority, that an offer of new shares in a rights issue exclusively to the existing shareholders and with no trading of subscription rights is not to be considered a public offer. Still, in light of the wording of Article 4(1)(c) and 4(2)(d) of the directive and of Austrian legislation implementing the directive, the prevailing opinion in Austria is that the allotment of (new or existing) shares in the course of a merger should be considered a public offer, but that due to the above-mentioned exemption, no prospectus is required. The reasoning is that no exemption would be required if there were no public offer in the first place. This is also the prevailing opinion in Austrian legal writing.

Exemption and equivalent documents

Austrian law has implemented the exemption under the directive both in the Capital Markets Act regulating public offers of securities and in the Stock Exchange Act regulating the listing of securities on the stock exchange. The relevant exemptions are set out in Section 3(1)(8) of the Capital Markets Act and Section 75(1)(4) of the Stock Exchange Act. Hence, both the allocation of shares in the course of the merger and the admission of the newly issued shares to trading on the stock exchange are exempt from the obligation to publish a prospectus. In accordance with the directive, the Financial Markets Authority has issued a regulation on the requirements for equivalent documents in case of mergers. Section 3 of the regulation provides that the equivalent documents consist of all the merger documents which must be made available to the shareholders of the transferor and the transferee according to corporate law. The equivalent documents consist of the (draft) merger agreement, including:

  • the merger balance sheet;
  • the financial statements;
  • annual reports and corporate governance reports for the last three years;
  • the merger report(s) of the managing boards;
  • the audit report(s) of the auditors of the merger;
  • the reports of the supervisory boards; and
  • the interim balance sheets (if required).

In each case the reports of both the transferor and the transferee must be provided, unless joint reports have been prepared.

In practice, the merger reports of the managing boards of the participating companies are the most important documents as they will describe the transaction in great detail and, in particular, elaborate on the exchange ratio. This document is the most 'prospectus-like' document.

Neither the directive nor Austrian legislation provides for any restriction on the exemption from the obligation to publish a prospectus if the transferee is not listed. In other cases where the exemption is availed of, the directive and Austrian legislation explicitly state shares of the same class must already be admitted to trading (eg, see Article 4(2)(a), (2)(b) or (2)(e) of the directive). For this reason, the exemption should also apply in situations where the shares of the transferee are not yet listed on the stock exchange. However, the exemption will apply only to those shares which are allocated to the shareholders of the transferor as a consequence of the merger; existing shares of the transferee which remain with the existing shareholders of the transferee cannot be listed without a prospectus.

Passporting of equivalent documents

According to the Committee of European Securities Regulators (CESR)2, the directive passporting regime does not apply to the exemptions listed in Article 4 of the directive. Therefore, the evaluation of equivalence must be made in each member state where the exemption is to be availed of. If the competent authorities so wish, they may refer to the work previously carried out by another authority when assessing equivalence, and authorities are encouraged to cooperate in assessing equivalence.

This means that no real passporting is possible with respect to equivalent documents according to Article 4(1)(c) and 4(2)(d) of the directive and issuers cannot rely on passporting in that regard. Even though CESR encourages competent authorities to cooperate in such instances, experience shows that some authorities take a rather restrictive approach and request significantly more in-depth documentation than is required in the home member state (eg, a document which is similar to a full prospectus and/or a full translation into the local language). In that regard, a single European market has not yet developed.

Application of exemption to demergers

In September 2007 CESR took the position that the exemption should also apply in the event of demergers, provided that the documents are essentially the same as for a merger. The proposed amendment to the EU Prospectus Directive will explicitly include demergers (divisions) in the exemption.


1 For example, the IMMOEAST/IMMOFINANZ merger and the RZB/CEMBRA/Raiffeisen International merger.

2 "Frequently asked questions regarding Prospectuses: Common positions agreed by CESR Members 11th Updated Version - July 2010" (Question 30).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions