In the elegant ambience of the Rothschild Hall at Schoellerbank’s Vienna branch Dr. Johannes Prötzner (Schoellerbank) und Dr. Michael Walbert provided an update on the current status of the planned reform of the Private Foundation Act.
Following publication of the ministerial draft amendment act of 30th June 2017, a heated debate arose on many of the proposed amendments. Critiques focused inter alia on incompatibility rules applicable to members of a foundation’s board, which are considered too strict also in the form proposed in the draft amendment act. Furthermore, the proposed amendments on strengthening of creditors’ rights and extension of disclosure obligations are considered as too far reaching by many experts.
It remains to be hoped that the ministerial working group in charge of the draft amendment act considers and takes up the expressed criticism and that soon a revised version of the draft amendment act can be presented, which will be passed in parliament.
At Loft Salzburg Dr. Johannes Prötzner (Schoellerbank), Dr. Berndt Zinnöcker (BDO) and Dr. Michael Walbert provided an overview on the key issues of the planned reform of the private foundation act and summarized the ongoing discussion about proposed amendments, which are highly disputed.
The tenor of the discussion with the participants was: The draft amendment’s provisions do not meet expectations for a modern and flexible foundation governance. In particular, the proposed provisions on strengthening of beneficiaries’ rights of influence and on their participation in the foundation management remain stuck on half way. In contrast, the proposed provisions in relation to accounting and protection of creditors’ rights appear as too far reaching and overstepping the mark.
It remains to be hoped that a fruitful discussion on the disputed amendment proposals takes place in the next couple of months and that a revised draft amendment act can be passed in parliament soon.
In a panel discussion on 21 September at Hotel Palais Hansen Kempinski Vienna I discussed current issues of management liability with district attorney Sonja Herbst, public accountant and tax advisor Michael Schlenk (KPMG) and insurance expert Brigitta Schwarzer.
How much Compliance does an Organisation need?
The explicit inclusion of the Business Judgment Rule in Austrian corporate law at the beginning of 2016 has certainly contributed to the recognition of managers’ discretion in taking business decisions. At the same time however, a veritable compliance hype can bee seen in corporate organisations, which must be questioned critically. The decisive question is: How much compliance does an organisation need and has the bow not already been overdrawn?
One is always wiser in Hindsight
The experts’ discussion also touched upon the highly controversial judgment of the Regional Court of Munich in the matter Siemens vs. its former board member Heinz-Joachim Neubürger. The Regional Court of Munich handed down its judgment against Heinz-Joachim Neubürger with the knowledge of hindsight after extensive investigations. However, the court should have based its decision on an ex ante perspective from the point in time the management decision under scrutiny has been taken.
Reversal of Burden of Proof requires Documentation
Managers are well advised to produce documentation on business decisions to minimize risks. The creation of a paper trail documents the basis and considerations underlying a business decision. In a litigation on management liability the burden of proof is reversed, as a result of which a manager has to proove that by his conduct under scrutiny he has not breached his duty of care. Such proof can only be furnished on the basis of comprehensive documentation.