Which is the key piece of legislation governing Greek Société Anonymes?

A Greek Société Anonyme operates under the provisions of codified statute 2190/1920 and the provisions of the company’s Articles of Association (AoA).

What is the liability of the shareholders of a Société Anonyme?

The company is solely liable for its debts and obligations towards third parties only by recourse to the company assets. The liability of shareholders is limited to the amount they contributed to the share capital of the company. Nonetheless, under certain circumstances, shareholders can be directly liable for debts of the Société Anonyme, if pursuant to the doctrine of “lifting the corporate veil”, it is established that they have abused the legal personality of the Société Anonyme for the mere purpose of circumventing personal liability.

Which are the accounting books that a société anonyme (SA) is obliged to keep?

The obligation of the S.A. to keep accounting books is derived from the Commercial Law provisions (articles 8 and 9), from the Codified Law (CL) 2190/1920 on Companies Limited by Shares (Sociétés Anonymes) and the Greek Code for Accounting Books and Records (CBR). In specific, pursuant to article 4 of the CBR all SAs, irrespective of their turnover and activities, must keep C’Class accounting books.

Do minority shareholders have specific rights as per Law 2190/1920?

Yes. Apart from the rights that each share grants to the shareholders (for example, right to participate in the General Meetings of the Shareholders (GMS), voting right, right to receive dividends, right to participate in any increase of the share capital), specific rights are granted by law to minority shareholders provided that they hold a certain percentage of the Share Capital of the company i.e. 1/20, 1/10, 1/5, 1/3). The higher the shareholding, the stronger the right provided for it. The goal of the minority rights is to put a barrier to the authority of the majority shareholders, who elect the Board of Directors, thus having full control over the Company. It is a counter-balance against the dominance of the majority shareholder(s). The tendency is to grant more rights and lower the thresholds (what recent laws such as 3604/2007 and 3884/2010 have done). The Articles of Association of the company may increase the protection of the minority shareholders by decreasing the required percentage (see below).

What are the territoriality rules?

The Greek income tax system taxes Greek SAs on their worldwide income. They may, however, offset the tax that they actually paid to a foreign jurisdiction, but not exceeding the amount payable in Greece. Foreign legal entities are taxed on their income deriving from a source in Greece (actual or deemed). Foreign legal entities are also taxed on their income from their “permanent establishment” in Greece. Article 100 of the Greek Code of Income Taxation (“CIT’) has a list of cases in which a foreign entity is considered to have a permanent establishment in Greece, which is a factual issue. In case the country of origin of the foreign entity has entered into a Bilateral Treaty for the Avoidance of Double Taxation with Greece, the provisions of the Bilateral Treaty regarding permanent establishment will prevail.

What are the main legal provisions regulating SA corporations with securities listed on the ATHEX?

Societe Anonyme, S.A. (Anonymos Etairia) is a company subject to increased state supervision, incorporated by one or more shareholders and governed by a board of directors. SA company is regulated by Law 2190/1920, as it has been modified. In terms of the Greek Law, SA is the type of company mainly listed on the Stock Exchange, due to its basic characteristics and particularly due to the fact, that the shareholders of a Societe Anonyme are not liable for the company’s debts with their own assets. This close relationship between stock market and societe anonyme is also evident in the legislation, as the regulation on listed companies is a combination of the law on SA companies and of Capital Market and Stock Exchange law. More specifically, Law 2190/20 on SA companies, with its recent amendment by Law 3884/2010 which implemented the EU Directive 2007/36/EC, regulates the exercise of certain rights by shareholders of listed SA companies. On the other hand, Capital Market and Stock Exchange regulations also apply to listed SA companies and especially:

- Law 3371/2005 (implementing Directive 2001/34/EC) on capital markets;

- Law 3401/2005 (implementing Directive 2003/71/EC) on the prospectus to be published when securities are offered to the public or admitted to trading;

- Law 3340/2005 (implementing Directives 2003/6/EC, 2003/124/EC, 2003/125/EC, 2004/72/EC) on the protection from abuse of privileged information and market manipulation;

- Law 3556/2007 (implementing the Transparency Directive 2004/109/EC) on certain reporting obligations of listed companies.

Can we describe the Greek EPE as the equivalent to the English LTD? Is there any kind of confusion regarding the above terminology translation?

An LTD according to the terminology used in the jurisdictions influenced by the English law is a company limited by shares or by guarantee, namely a company, in which the participating members are called shareholders and are not by principle liable for the company’s obligations. This English term covers also the equivalent to the French Societe Anonyme (S.A.), to the German Aktiengesellschaft (A.G.), as well as to the Greek Anonimi Etaireia (A.E.). On the other hand, the Greek L.T.D. is the equivalent to the German Gemeinschaft mit beschraenktem Haftung (GmbH). As a conclusion, all the E.P.E.’s are L.T.D.’s. But not all L.T.D.’s are E.P.E.’s. Some L.T.D.’s can also be A.E.’s. Therefore, the term “L.T.D.” can only be used as a translation of the wording, but not as an accurate translation of the term L.T.D. of the English law, and it is preferable to use the term “Greek LTD”.

Publicity formalities

Both upon establishment and during its entire duration, a Limited Liability Company is subject to publicity formalities, as provided in article 8 of Law 3190/1955 (Law about Limited Liability Companies). The Articles of Association, as well as any amendments thereof must be filed, according to the newly established One Stop Shop procedure and be published in the Government Gazette. The financial statements of a Limited liability company (with the exception of the notes to the financial statements) and the auditors’report (where applicable) are published annually in the Government Gazette and in selected political and financial newspapers (articles 22 par. 4 of Law 3190/1955, as well as 43b par.5 and 26 par.2 of Law 2190/1920 (Institutional Law about S.A Companies). The Company cannot plead against third parties actions or data for which the publicity formalities have not been respected, unless their knowledge can be proved. Acts or information published cannot be brought against third parties within fifteen (15) days of their publication, in case that those third parties prove that their knowledge was not possible (article 8a of Law 3190/1955).

GENERAL AND LIMITED PARTNERSHIPS (O.E. and E.E.) Basic characteristics of a general partnership

A general partnership is a company with legal personality, whose partners are jointly responsible against third parties for company’s obligations. Such responsibility is considered as personal, direct and unlimited.

Basic characteristics of a limited partnership

A Limited partnership is a company with legal personality, which consists of at least one (unlimited) partner responsible against third parties for all company’s obligations and at least one (limited) partner whose responsibility is considered as limited.

What is an agency?

Agencies or agents are legal or natural persons, appointed by contract to carry out specific operations as part of the principal’s circle of operations. Agencies can take various forms, and are often used by maritime, travel or insurance companies. An agency can also be a captive third-party owned company performing ancillary functions. The possibility is not excluded for a sales representative or a certified dealer to be used. The difference between agents and branches is that the latter must employ personnel or are regarded as permanent establishments in Greece, while agencies are the principal’s representatives or auxiliary organs in Greece. Provisions on sales representatives were harmonised at European level by Directive 86/653/EC, which was transposed into the Greek law by adoption of presidential decree 219/1991. The provisions on data disclosure for Share Company branches shall also be applicable to agents.

Greece provided a reasonably hospitable climate for foreign investment through the use of offshore companies in past. Presently new tax legislation has limited the use and renders such an investment not profitable . In this respect professional advice should be sought in oder to appraise the investment opportunity and choose the appropriate investment scheme.

A. FOREIGN CORPORATIONS

1. Establishment by a foreign corporation of a branch office in Greece

Foreign Corporations may establish a branch in Greece. There is no distinction on whether the country of origin is a low or high tax jurisdiction. An application is filed at the Department of Commerce of the local Prefecture. Documents that must be submitted are:

• Articles of incorporation;
• Corporate resolution for the establishment of the branch of the company in Greece;
• Power of attorney to the person who is appointed director of the Branch in Greece;
• Certificate of Incorporation in the country of origin;
• Certificate of good standing from the country of origin;
• Certificate of fully paid-up capital (minimum amount of fully paid up capital 60.000 Euros for S.A. and 18.000 for limited liability Companies , or the equivalent in any other currency ) issued by a public authority in the Country of origin (this rule does not apply to companies from an EU country.

This kind of branch is liable to the corporate tax rate and has all tax deductions and obligations as normal Greek Société Anonyme. It is advised that foreign companies under the Société Anonyme status are preferred, as they need no other special authorization. Once the approval has been obtained, the registration is then published in the Government Gazette.

MUTUAL FUNDS What is a “mutual fund”?

A mutual fund (“MF”) is a pool of assets, consisting of transferrable securities, money market instruments and cash, whose assets are divided into“units”owned by more than one unit holders. Each unit’s value is the sum of the MF’s assets divided by the total number of units.

Which are the MF’s key persons/entities?

(a) The unit holders which subscribe to the MF, acquiring units which represent the fraction of each unit holder’s share in the MF’s assets; (b) the management company which manages and represents the MF; and (c) the depositary, to which the MF’s assets are entrusted.

What is a banking enterprise?

The credit institutions and the financial institutions are the two categories of banking enterprises eligible to be established and to operate in Greece. The Bank of Greece is the competent national authority that supervises and monitors the establishment and the operation of both the credit and financial institutions pursuant to the applicable Greek and European Union legislation.

What is a Credit Institution?

A Credit institution is an enterprise entitled to receive deposits or other repayable funds from the public and to grant loans or other kind of credit on its own account. Natural or legal entities which are not credit institutions are prohibited by Law to carry out the business of receiving deposits or other repayable funds from the public, while carrying out the business of granting loans or other kinds of credit to the public is subject to special authorization by the Bank of Greece.