Austrian Law Blog:


Who can appoint the managing directors in a company with limited liability?

In Austria a company with limited liability must have at least one managing director. Thereby, the Austrian Act on Limited Liability Companies (“GmbHG”) provides that managing directors are to be appointed by a shareholder resolution (section 15 GmbHG).

However, as the list of issues that can be resolved only in a shareholder meeting (section 35 GmbH) does not mention the appointing of the managing director(s), some scholars have argued by that the shareholders could transfer their competence to another body of the company (e.g. supervisory board). Eventually, in a decision rendered in March 2019 (6 Ob 183/18g) the Austrian Supreme Court (“OGH”) came to a different conclusion. After interpreting the relevant provisions and comparing them with German law as well as with provisions of the Austrian Cooperative Act (GenG), the court clarified that the shareholders’ competence to appoint the managing directors must stay exclusively with the shareholders and cannot be modified in the articles of association. Hence, a provision in the articles of association, which requires the shareholders to appoint as managing director a person nominated by the supervisory board (or by another body) would be void.

Write us your comments