Issuers may only purchase treasury shares for certain purposes.
These include, among others:
- avoidance of severe, imminent damage;
- free acquisition/purchase commission;
- universal legal succession;
- implementation of employee stock programms;
- compensation of minority shareholders;
- lowering of share capital;
- securities trading at credit institutions;
- no special purpose (not for trading in treasury shares).
The relevant statutory provisions can be found in Article 65 para. 1 nos. 1 to 8 of the Stock Corporation Act (AktG; Aktiengesetz).
Pursuant to Article 65 para 1a AktG, listed companies must publish the resolution adopted by the annual general meeting to buy back shares.
The purchase of shares by third parties for the account of the company is equivalent to a purchase by the company itself. In accordance with Article 66 AktG, this is intended to prevent the rules being circumvented.
Safe harbour provision
The safe harbour provision specifies conditions under which share buy-back programmes for certain purposes and price stabilisation measures do not constitute market abuse. The rules in this regard are contained in Commission Regulation (EC) No 2273/2003 of 22 December 2003.
Share buy-back programmes carried out for one of the following purposes do not constitute market abuse as far as the conditions for trading as stipulated in Articles 4 to 6 of the Commission Regulation are met:
- capital reductions;
- conversion of debt securities into equity instruments;
- employee stock programmes.
Price restrictions are intended to prevent any situation in which shares can be bought back at an excessively high price. Volume limits also apply, expressed as a percentage of the daily trading volume.
Price stabilisation measures that, pursuant to Article 8 of the Commission Regulation, can be carried out only for a limited time period and do not constitute market abuse when executed according to the terms laid down in Article 8 – 10 of the Regulation. In respect of shares and securities equivalent to shares, the time period expires after 30 calendar days at the latest. In respect of bonds and other forms of securitised debt, the time period for stabilisation may last up to 60 calendar days.
Disclosure of share buy-back programmes
Issuers of shares that are admitted to trading on the official market or second regulated market must meet the disclosure obligations pursuant to Article 82 para. 9 of the Stock Exchange Act (BörseG; Börsegesetz) with respect to share buy-backs. This provision was defined in more detail by the Regulation of the Federal Ministry of Finance on the content and nature of disclosures in connection with the buy-back and/or sale of treasury shares as well as the granting of stock options (2002 Regulation on Disclosure Requirements – Veröffentlichungsverordnung).
In the event of share buy-back programmes as defined in Article 65 para. 1 nos. 4, 6 and 8 AktG the following must be disclosed:
- the authorising resolution adopted by the annual general Meeting;
- the planned execution;
- the decision of the management board;
- the resulting buy-back programme (particularly its duration);
- the executed transactions;
- any changes to the buy-back programme
- end of buy-back programme
This list is not exhaustive.
The transactions executed at the stock exchange and on an over-the-counter basis must be disclosed in the form of weekly transaction reports. This information must be reported to the FMA and the Vienna Stock Exchange and shall be published (in some cases on the internet).