Conversion of a corporation into a sole proprietorship or a partnership
When a corporation is converted into a sole proprietorship or partnership, the transferor corporation is wound up without liquidation provided the statutory conditions are fulfilled.
In general, these rules apply to all entrepreneurs from EU Member States in Austria.
There are two types of conversion:
- Conversion by establishment of a new company: Shareholders who jointly hold at least 90% of the shares of the corporation to be converted, establish a general partnership or a limited partnership to which the existing business is transferred.
- Conversion by merger: The business is transferred from the corporation to be converted to the main shareholder. Main shareholders are partnerships, natural persons or legal entities which hold at least 90% of the shares. The other shareholders receive compensation in cash.
It is not possible to convert by merger to Austrian private and public limited companies or EU corporations with a registered office in an EU or EEA state.
The conversion transfers all of the rights and obligations to the new legal entity by universal succession.
A conversion decision must be made and a conversion contract signed during conversion; official approval may also be needed and a closing balance sheet must be prepared for the company to be converted; an extensive reporting obligation must also be met.
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