January 24 2011
Greek law provides for several types of legal entity. It is customary for them all to be considered by lawyers as 'companies', as they are all incorporated and can deal in their own right - even if they cannot be strictly characterised as such in respect of limitation of their members' liability. Some are genuine partnerships in terms of English law; some do not even provide for limited liability of their members. All are treated differently from a tax perspective.
The Greek corporate tax system classification is based on the type of corporate entity rather than its actual economic size. So, for example, a société anonyme with lower revenue than a partnership is more heavily taxed than the latter. The main perception is that partnerships (or 'personal companies') are used as a medium for commercial entrepreneurs or service providers, whereas significant business is mainly undertaken by sociétés anonyme and limited liability companies.
Several laws provide that the capital of the company must be paid up. Unlike in other jurisdictions, corporate capital must either be deposited in a corporate bank account or be paid into the company's cash register. The issued capital is not a 'promise to pay', but an actual payment.
Where the law provides for limited liability, this means that each member's liability is limited to the amount that it has paid into the company. A member's limited liability is - generally speaking - respected, even though it may be eroded by specific laws that impose personal obligations and liability on the company's managers, mainly in favour of the government and social security funds.
Every corporation is seen by Greek law as a contract between its members. As such, the company's statute (or the articles of incorporation - both English terms define the same thing in Greek law) caters for the agreement on how the company should be run and the specific rights and obligations of the parties. All agreements are subject to judicial control and should be deemed enforceable (in case of dispute) if the courts consider them to be 'fair' when agreed.
Greek law provides for extensive regulation on the content of the agreement between the parties and for registration and disclosure obligations in order to safeguard third parties dealing with the company. In general, Greek company law is fully aligned with EU company directives. However, in most cases, procedures (eg, payments of dividends on a set date) that have been agreed by parties are respected and enforced by the courts.
A general partnership is an incorporated legal entity that is distinct from its members, in which all partners are liable for the losses and debts of the partnership with their personal property jointly and severally. The name of a general partnership may be composed of either the names of two or more partners or the name of one partner followed by the words 'and partners'.
The law provides that each partner is permitted to (and should) take part in the management of partnership affairs. The partners, however, may assign all management to one of them, provided that this is recorded in the company statute. The main characteristic of a general partnership is that all partners are jointly liable - via their personal property - for the company's debts, to an unlimited extent.
A general partnership must be evidenced in a written agreement which must also be included on the statute of the company (detailing the way in which the partners' relationship is regulated). This must be evidenced in writing. A notarial deed is not obligatory. The establishment of a general partnership requires that this agreement be filed with the competent court. The statute must specify:
There is no minimum capital requirement. The capital may be contributed in cash, in kind or as personal services to the firm.
A general partnership may be dissolved due to the following reasons:
A limited partnership is a company in which the partners have a different degree of personal liability for the company's debts. One or more partners are liable for the losses and debts of the partnership (general partners) and one or more partners' liability is limited to the amount of their personal contribution (limited partners).
The limited partnership is subject to most of the rules governing a general partnership, in respect of its registration and dissolution. A limited partner may participate in management without losing his or her status as a limited partner (in contrast to English law), but on an internal basis only, not by representing the company in its dealings with third parties.
The establishment and operation of limited liability companies is subject to Law 3190/1955. A limited liability company may be formed by one or more natural persons or legal entities. However, if (on establishment or at any time thereafter) the entire capital of the limited liability company is concentrated in the hands of one partner, the company's name must include the words 'one member limited liability company'.
The structure and operation of a limited liability company are governed by its statute, which must be executed before a notary public and filed with the competent court. A summary of the statute is then published in the Government Gazette. The statute must include the following information:
A limited liability company has two component units:
General assembly of the company's members
The supreme authority of a limited liability company is the general assembly of its members, which is convened by the administrator(s) and has the right to take decisions on all issues concerning the company. In particular, the general assembly is the only authority responsible for:
The general assembly must be convened at least once a year and within three months of completion of the company's accounting period. The resolutions to be adopted at the meetings generally must be passed by a majority of more than half the partners, representing more than half of the total capital of the company.
The management of a limited liability company may be entrusted under the statute, or by resolution of the general assembly, to one or more administrators that may or may not be members of the company. The administrators represent the company against third parties and act on its behalf with regard to its operations. Their details must be filed with the competent court and published in the Government Gazette.
The establishment and operation of a société anonyme is regulated by Law 2190/1920. Participation in the capital of a société anonyme gives shareholders the right to participate in the distributed profits. A shareholder's liability extends only to the amount of its participation - in other words, a shareholder is not liable with its personal property for any of the company's debts. Sociétés anonyme are supervised by the Ministry of Development - all filings are made with the relevant local authority office, where a copy of the records is held. Amendments and filings with this office are published in the Government Gazette.
The share capital of a société anonyme is formed exclusively from the contributions of its members in cash or in kind. The minimum share capital required for the establishment is €60,000, which must be fully paid (into a special corporate bank account), according to the law. The law provides for the possibility of a partial payment of the share capital when shares are issued in cash for consideration, but also sets strict conditions in such cases. Partial payment is prohibited when contribution is in kind. The share capital can be increased by new contributions, drawing from the company's own resources or by converting company bonds to shares. A société anonyme's shares may be classified as:
The procedure for incorporating a société anonyme commences with agreement on the statute. The statute is the legal document for the establishment of the company, which defines all the main issues on the relations of the shareholders, the company's management, its duration and dissolution. The statute must be in the form of a notary document and include the following information:
Similar to a limited liability company, a société anonyme has two component units:
The highest body in the company is the general assembly of the shareholders which, apart from electing the board of directors, has the exclusive authority to decide on important issues affecting the company, such as:
Within six months of the end of the year, the annual general assembly of the shareholders must meet in order to approve the company's financial statements and decide on the distribution of its profits. Extraordinary general meetings may be convened by the board of directors, as necessary.
Board of directors
The board of directors is responsible for the management of the company. Its members are elected by the general assembly of the company's shareholders for a term of up to six years. The board of directors must consist of at least three members (no maximum number of board members is specified under the law), which can be individuals or even legal entities, if so provided in the company's statute. A quorum is achieved when half the board members, plus one, are present or represented at the meeting, with a minimum of at least three directors physically present. The board can also convene by teleconference (audio or video), if this is provided for by the company's statute or if all members agree.
Dissolution and liquidation
A société anonyme, as specified in the statute, may be dissolved due to the following reasons:
The decision must be taken by a qualified majority or by virtue of a court decision following a relevant application, for specific reasons given either by shareholder(s) representing at least one-third of the company's capital or by a third party with a legal interest. The company continues to exist as a legal entity for the purposes of the liquidation and the general assembly of shareholders retains its powers. However, the board of directors becomes inoperative and is replaced by the liquidators, as appointed by the shareholders' assembly.
For further information on this topic please contact Evangelos Katsikis or Aspasia Papadaki at Katsikis - Kalamatianou & Co by telephone (+30 210 822 4775), fax (+30 210 822 3881) or email (firstname.lastname@example.org or email@example.com).
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