Apostolos Georgiades & Associates

GENERAL OVERVIEW OF GREEK CORPORATE FORMS

Greek law, containing many mandatory substantive provisions, provides for four basic forms for regulating business associations classified as follows: i) Commercial Partnerships divided in General and Limited Partnerships; and ii) Capital-based Companies divided in Companies limited by shares and Companies with limited liability.

To all the aforementioned corporate forms, generally referred to as companies (1), the basic principle of the separate legal entity, granted to the company distinctively from its members, is applied.

The statutory scheme applicable is rather complicated since the relevant legislation is not incorporated in a single text.

However, the legal status of the aforesaid companies could be presented in a summary and necessarily oversimplified way as follows:

1. General Partnership (Omorrythmi Etairia, “OE”)

Basic relevant legislation: the Commercial Code

It is established, for a definite or indefinite period, with the conclusion of a deed, either private or notary, by at least two persons, the partners. No minimum capital is required. The partnership deed contains the statutes of the partnership and must be made public. Unless otherwise agreed, the partners are obligated to an equal contribution to the company and enjoy the corresponding right of equal participation in profits. Alongside with the company’s liability there is unlimited joint and several personal liability of the partners established ex lege. Partnership creditors may pursue partners individually and even primarily, and the partners are bound and subject to direct execution for the company’s liabilities. Control, management and representation of the company’s interests rests upon all partners unless otherwise agreed. Unless otherwise agreed, death, judicial support, retirement or bankruptcy of a partner leads to company dissolution.

2. Limited Partnership (Eterorrythmi Etairia, “EE”)

Basic relevant legislation: the Commercial Code

It is in essence a general partnership with the interjection of one or more limited partners who are liable only to the extent of their contribution to the company. Participation of the limited partner in the management and representation of the company embodies the risk of being treated as a general one. Apart from the aforementioned, the legal status of a Limited Partnership is the same as the General’s.

3. Company limited by shares [Anonymi Etairia, “AE” (SA)]

Basic relevant legislation: Law 2190/1920 as amended

An SA is required to have a minimum paid up capital of EUR 60,000.00 and a fixed duration which can be extended by the members. Shares are issued which can either be registered or to the bearer, preferential or not. They are covered by the founders and are freely transferable. Apart from the coverage of their shares, the shareholders carry no other responsibility for the company’s liabilities. Share repurchases by the company are in principle not permitted.

To form an SA, articles of association have to be drafted in a notary deed containing standard material concerning name, business, objects, share capital, registered office, etc. The notary deed must be signed by at least two founder members. It has a substantive character and is subject to authorization by the competent authority (usually the local prefecture) and publication at the relevant section of the Official Gazette.

A unitary board model is followed, the Board of Directors which must meet at least once a month. The directors enjoy full managerial powers. Contracts between the company and the directors or founders of the company are either void or subject to previous authorization by the General Assembly of the Shareholders.

The General Assembly of the Shareholders constitutes the supreme body of an SA, which must be called at least once a year and whenever it is regarded as necessary by the Board of Directors. The shareholders’ right of vote and participation in the General Assembly are corresponded to the shares they posses. Specific issues, restrictively recited in law such as capital raise or reduction upon specific conditions, alteration of the company’s activities, change of the distribution rules on dividends etc., are subject to special resolutions passed by a majority of not less of 75% of the votes cast in person or by a proxy at the General Assembly representing at least a percentage of 75% of the paid-up share capital. Resolutions concerning all other issues are passed by a simple majority, unless otherwise provided for in the articles of association.

Minutes of all proceedings at General Assemblies must be entered in books kept for the purpose and shareholders have statutory rights to inspect and to request copies of them.

The General Assembly’s resolutions can, subject to the preconditions set by the law, either be declared void or be invalidated upon

Special provisions are provided for the protection of the minority shareholders’ rights. Upon request of the shareholders representing a percentage of 5%, an extraordinary General Assembly of the Shareholders must be called and following corresponding request of a percentage of 33%, information on the company’s affairs as well as its economic status must be given. Furthermore, the aforementioned minorities of shareholders (of the 5% and 33% - depending on the specific conditions set by the law) are entitled to request by the competent court the invalidation of Resolutions of the General Assembly, as well as an inspection of the company.

A mandatory capital reserve must be established by using 5% of the net annual profits.

Financial statements must be drawn usually at an annual basis and published according to the relevant legislative provisions and there also applies a system of statutory in house auditors. Dividends are distributed at the end of each fiscal period.

The dissolution of the company is followed by liquidation. The reduction of the members’ number down to one does not constitute a reason for dissolution of the company. There is a mandatory liquidation provision for serious losses of capital.

Specific provisions are set for the consolidation, transformation and division of an SA.

4. Company with limited liability. [Etairia Periorismenis Efthinis, “EPE” (Ltd.)]

Basic relevant legislation: Law 3190/1955 as amended

An Ltd. is required to have a minimum paid up capital, half of which paid in cash, of EUR 18,000.00 and a fixed duration. The articles of association must also be drafted in a notary deed containing standard material regarding name, business, objects, share capital, registered office, etc. An Ltd. can be established by one person. Instead of shares, an Ltd. issues parts. Transfer of parts is usually restricted by the articles. Normally a unitary board structure is adopted, although the management of the company can be assigned to certain members or third persons. Otherwise, control and management of the company affairs rests upon all members who act unanimously. Personal liability of the directors may be established.

An Ltd. can be dissolved by court’s order on application of the holders of 10% of the parts if serious complaints are established. Further specific provisions are set for the dissolution, consolidation, transformation and division of an Ltd.

FOOTNOTES

(1) The term “company” encompasses best the broad generic meaning of the Greek term “etairia” as the basic corporate form.(go back)

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