In Limited Liability Companies, the Shareholders may establish an optional Supervisory Board (“SB”) by amending the Company´s Articles of Association (“AoA”). However, the establishment of a SB is mandatory if:

(i) the registered share capital of the Limited Liability Company exceeds EUR 70,000 and there are more than 50 Shareholders; or

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(ii) the annual average number of employees of the Limited Liability Company exceeds 300 (except in case the Limited Liability Company (a) is uniformly controlled by a company having a mandatory SB or (b) is controlled by a company holding a direct share participation in the controlled Limited Liability Company exceeding 50 % of the controlled Limited Liability Company´s registered share capital, in each case provided that the annual average number of employees of the controlled Limited Liability Company does not exceed 500); or

(iii) the Limited Liability Company (a) uniformly controls Joint Stock Corporations, Limited Liability Companies with a mandatory SB or Limited Liability Companies whose annual average number of employees exceeds 300 or (b) has share participations in any such companies exceeding 50 % of such companies’ registered share capital, in each case provided that the annual  average number of employees of all involved companies exceeds 300; or

(iv) the Limited Liability Company is the sole General Partner of a Limited Partnership and the annual average number of employees of both the Limited Liability Company and the Limited Partnership exceeds 300; or

(v) the body representative of employees of a Limited Liability Company resulting from a cross-border merger is entitled to elect or appoint members of the SB or to recommend or reject the appointment of members of the SB.

Division of Duties:  The SB controls the management of the Company. Certain management decisions by the Managing Directors (“MDs”) require prior approval by the SB (e.g. the purchase and sale of real estate plots or the establishment or closing of branches). The SB is entitled to review the Company books and records as well as to demand reports from the MDs. Moreover, the SB reviews the annual financial statements of the Company.

Composition: The SB consists of at least 3 members and no maximum applies. Only physical persons with full legal capacity can be SB members. The SB members elect their Chairman and at least one Deputy Chairman. The Chairman represents the SB vis-à-vis third parties and coordinates its actions. Decisions by the SB require a simple majority vote of its members. In general, the Chairman of the SB has no casting vote (in German: “Dirimierungsrecht”). MDs, their alternates and employees in charge of the management of the Company cannot be members of the SB. Moreover, a person is not eligible to be appointed an SB member if he/she (i) is already an SB member of 10 other companies or (ii) is the legal representative of a subsidiary of the Limited Liability Company in which he/she shall become an SB member or (iii) is the legal representative of a company with an SB one of whose members is at the same time an MD of the Limited Liability Company in which he/she shall become an SB member, except in cases in which the involved companies are part of a multi-corporate enterprise.

Appointment/Dismissal Competence:  The members of the SB are appointed by way of a Shareholders’ Resolution (simple majority vote) at a General Meeting (“GM”) or nominated by individual Shareholders on grounds of the AoA. Furthermore, pursuant to the Austrian Labor Constitution Act, the body representative of employees is entitled to nominate one SB member for every 2 members appointed by the Shareholders. An SB member´s term of office ends with the issuance of a Shareholders’ Resolution deciding on his/her discharge for the fourth financial year after his/her appointment. The term of office of a member of the first SB, however, ends with the decision on his/her discharge for the first financial year after his/her appointment. Dismissal of an SB member requires a Shareholders’ resolution to be passed with a majority of 75 % of votes cast (unless the AoA provide otherwise). The members of the first SB may be dismissed by simple majority vote. 10 % of the registered share capital may demand dismissal of an SB member by the competent court in case of existence of an important reason (e.g. inability to perform his/her duties, gross violation of duties etc.). Moreover, SB members who were appointed by individual Shareholders may be dismissed by such Shareholders at any time.

Alternates: The rights of an SB member cannot be exercised by a third party. However, an SB member may authorize another member in writing to represent him/her in the course of a single SB Meeting. If the Chairman is unable to fulfill his/her obligations, he/she is represented by the Deputy Chairman.

For a description of how to change the respective board members, please see the individual steps in the "Step-by-Step"-schedules below. As all information on how to change board members in Austria on the CBM Site by nature is generic (i.e. does not include specific requirements for listed companies, special requirements in statutory documents or as otherwise stipulated in any type of special law), we strongly recommend seeking legal advice with Cerha Hempel Spiegelfeld Hlawati Partnerschaft von Rechtsanwälten before actually changing any board members in Austria.