comparative guide to business entities in greece for ... · and franchising. he has written...
TRANSCRIPT
COMPARATIVE GUIDE
TO BUSINESS ENTITIES IN GREECE
FOR UNITED STATES BUSINESS PERSONS
April 1, 2016
By: Nicholas G. Karambelas, Esq.
Tribonian Publishing, LLC
In cooperation with Sfikas & Karambelas, LLP
Copyright 2016 All Rights Reserved
TABLE OF CONTENTS
Page
THE AUTHOR. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iii
COPYRIGHT NOTICE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v
OUR OBJECTIVE IN THIS E-BOOK. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vi
NOTE ON WORDS AND SOURCES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii
NOTE ON US FORMS OF BUSINESS ENTITIES.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . viii
DISCLAIMER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . viii
CHAPTER 1 THE CIVIL LAW SYSTEM AND THE COMMON LAW SYSTEM. . . . . . 1
Section 1-1 Differences between Civil Law Systems and Common Law Systems. . . . 2
Section 1-2 Sources of Greek Company Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 1-3 “One Stop Shop”. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 1-4 Conceptual Differences Between US Business Entity Law and GreekBusiness Entity Law.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
CHAPTER 2 TRADITIONAL GREEK BUSINESS ENTITIES. . . . . . . . . . . . . . . . . . . . . . 10
Section 2-1 Corporation (Anonymous Etairia AE). . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2-2 Limited Liability Company (Etairia Periorismenis Euthinis EPE). . . . . 13
Section 2-3 Partnerships. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
CHAPTER 3 PRIVATE COMPANY P.C. (Idiotiki Kefalaiouchiki Etairia IKE). . . . . . . . . 19
Section 3-1 Attributes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 3-2 Name of the Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
i
Section 3-3 Principal Office.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 3-4 Duration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 3-5 Company Records. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 3-6 Company Website. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 3-7 Formation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 3-8 Provisions in the Articles of Association. . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 3-9 Contributions and Membership Interests. . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 3-10 Rights and Powers of the Members. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 3-11 Management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 3-12 Transfer of Membership Interests and Changes in Members. . . . . . . . 29
Section 3-13 Audits and Distributions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 3-14 Dispute Resolution. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 3-15 Dissolution and Liquidation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 3-16 Conversion and Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
CHAPTER 4 FOREIGN BUSINESS ENTITIES IN GREECE.. . . . . . . . . . . . . . . . . . . . . . 32
Section 4-1 Foreign Business Entities.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 4-2 Branch for Doing Business in Greece.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 4-3 Branch for Doing Business from Greece. . . . . . . . . . . . . . . . . . . . . . . . . . 33
CHAPTER 5 BUSINESS ENTITIES AND EUROPEAN UNION COMPANY LAW. . . . 36
Section 5-1 Societas Europaea or European Company (SE). . . . . . . . . . . . . . . . . . . . 36
Section 5-2 European Private Company (SPE). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ii
THE AUTHOR
Nicholas G. Karambelas is a founding partner of Sfikas & Karambelas, LLP and
practices in Washington, D.C., Baltimore, Maryland, New York City, New York with
correspondent offices in Athens, Greece and Nicosia, Cyprus. He practices in the areas of
business entity organization, international law and business transactions, e-commerce, securities,
and franchising. He has written numerous articles on business organization, transactional law
and international law which are available on http://www.ngklaw.com. He has authored a three-
volume treatise entitled “Limited Liability Companies: Law, Practice and Forms” which has been
published in its second edition by Thomson Reuters West Company (www.westlaw.com:
database:llcplf).
Mr. Karambelas is the founder of Tribonian Publishing, LLC. It has published an e-book
which he has written entitled “Guide to the Legal Aspects of Doing Business in the United States
for the Foreign Business Person” which is available at ngklaw.com. He is writing electronic
treatises on contract law, statutory interpretation and international business transactions.
Mr. Karambelas holds a B.A. from Union College, a J.D. from Fordham University
School of Law and a Master of International Affairs (M.I.A.) from Columbia University School
of Public and International Affairs. Mr. Karambelas is a member of the Board of Directors of
the American Hellenic Institute and the American Hellenic Institute Foundation. He chairs the
American Hellenic Lawyers’ Society of Greater Washington, D.C. He is a Trustee on the Board
of Trustees of the American Community Schools of Athens, Inc.
Mr. Karambelas participated in the drafting of the revised business organization laws of
the District of Columbia. He is admitted to practice law in New York, the District of Columbia,
iii
Maryland, the federal courts and the Supreme Court of United States. He was elected as
Secretary of the D.C. Bar and served for 2004-2005. He has served on the Publications
Committee of the D.C. Bar and the Federal Legislation Committee of the Association of the Bar
of New York City. He was Co-Chair of the Continuing Legal Education (CLE) Committee of
the D.C. Bar. Among other CLE courses, he teaches drafting contracts and statutes, business
entity law, franchising, international business transactions and European Union law. Mr.
Karambelas was named Attorney of the Year for 2015 by the Hellenic Lawyers Association of
New York.
CONTACT INFORMATION
Nicholas G. Karambelas, Esq.Sfikas & Karambelas, LLP
1101 Pennsylvania Avenue, N.W. 7th FloorWashington, D.C. 20004
Tel. (202) 661-4614FAX (202) 465-0400
E-Mail: [email protected]: http://www.ngklaw.com
iv
COPYRIGHT NOTICE
This publication is protected under the copyright laws of the United States and the
applicable international treaties. Neither this publication nor any portion of this publication shall
be used, copied or reproduced in any form nor in any language including but not limited to any
electronic form unless the author consents to any such use, copying or reproduction in a signed
writing.
v
OUR OBJECTIVE IN THIS E-BOOK
Since 2009, the Hellenic Republic (Greece) has endured a severe recession caused by
years of reckless borrowing and mismanagement by successive Greek governments. The
European Central Bank (ECB), the European Commission (EC), the International Monetary Fund
(IMF), European Stability Mechanism (ESM) and commentators have demanded that Greece
implement legal, social and economic reforms in exchange for funding to pay its obligations.
There is no question that reforms are necessary. However, one area in which Greece has
implemented significant reforms is its business entity laws. In 2012, Greece fundamentally
revised its business entity laws. This was the first fundamental revision since the business entity
laws were originally enacted in 1920.
Whether by import, export or direct investment, the decision to engage in commerce in
any country starts with understanding the forms of business entities available under the laws of
the host country. The United States (US) and the European Union (EU) are negotiating the
Transatlantic Trade and Investment Partnership (TTIP). The TTIP will form the largest free trade
zone in history. Trade currently occurs between the US and EU member states virtually without
tariffs or other imposts. Trade is, however, hampered by different regulations and other
impediments. Under the TTIP, regulatory regimes will be harmonized, impediments removed so
that trade can be conducted in a more efficient manner.
The purpose of this e-book is to be a beginning of the beginning of the first step toward
encouraging US business persons to do business with Greek business persons and to do business
in Greece. No single publication can or should provide a complete presentation of the legal
aspects of business entities in Greece. No publication of any kind on any aspect of law can
vi
substitute for the counsel of a knowledgeable local attorney. But the US business person must at
least know enough to be able to ask meaningful questions in order to receive meaningful counsel.
We hope that this e-book will assist US business persons to obtain constructive and
useful counsel from their chosen Greek attorney. We urge US business persons to remember the
expression “an educated consumer is our best customer”.
NOTE ON WORDS AND SOURCES
We have used primarily English translations of the Greek statutes which are available in
the public domain or we have used our own translations of relevant Greek statutes. Obviously,
these translations are only tools. The only definitive statement of the business entity laws of
Greece are those which are enacted by the Greek Parliament and published in the Government
Gazette.
This e-book is directed to US business persons. We have sought to use a term or concept
which the US business person will recognize rather than a literal translation of that word or
concept from the Greek language. For example, the word for real property in Greek is “akinita”.
The literal translation of “akinita” is “immovable”. The word “immovable” has no meaning in
the context of property in American legal or commercial usage. As the saying goes “something
is always lost in the translation”. This is especially true when attempting to interpret or transpose
legal terms and concepts between languages and different legal systems. Nevertheless, we are
confident that this e-book sets forth a functional, though not precise, presentation of Greek
business entities to US business persons.
vii
NOTE ON US FORMS OF BUSINESS ENTITIES
When we use the names of US business entities we mean the following:
A. C Corporation or closely held corporation means a corporation formed andoperated under the American Bar Association (ABA) Model CorporationAct.
B. Limited Liability Company (LLC) means a limited liability companyformed and operated under the Revised Uniform Limited LiabilityCompany Act (RULLCA).
C. General Partnership (GP) or Limited Liability Partnership (LLP) means apartnership formed and operated under the Revised Uniform PartnershipAct (RUPA).
D. Limited Partnership (LP) or Limited Liability Limited Partnership (LLLP)means a limited partnership formed and operated under the RevisedUniform Limited Partnership Act (RULPA).
DISCLAIMER
This publication describes only the very basic attributes of Greek business entities.
Nothing in this publication is nor is meant to:
A. Set forth an analysis of any Greek statute or civil law,
B. Advise, advocate or opine on the choice of a business entity,
C. Advise on the internal structure or terms of an agreement among theowners of a Greek business entity,
D. Be an academic or scholarly article or treatise on Greek company law,
E. A research tool for an academic or scholarly treatise or article on Greekcompany law,
F. Substitute for the consultation and advice of a Greek attorney, or
G. Render any opinion or guidance on any law or concept of Greek orinternational tax laws or regulations.
viii
CHAPTER 1: THE CIVIL LAW SYSTEM AND THE COMMON LAW SYSTEM
Most of the nations in the world use a legal system that is based on either the civil law
tradition or the common law tradition. The civil law tradition evolved from the given law of
antiquity through Roman Law, the Codes of Theodosius and Justinian, the Salic Code and the
Code of Napoleon. This tradition is the foundation of the legal systems of continental Europe,
Francophone Africa, Central and South America and Middle Eastern countries that were under
French dominion such as Lebanon and Syria. While the legal systems of China and Japan did not
evolve from the same given law as did the civil law, they developed legal systems that are
functionally similar to the civil law tradition. In the civil law tradition, all law flows from a
coherent and comprehensive set of legal principles contained in a written code provided or
enacted by the sovereign. The civil law tradition has been described as “anything that is not
permitted is prohibited.”
While scholars have found traces of the common law tradition in ancient Roman law, the
common law tradition begins when the Saxon and Norman legal systems were merged after
William I conquered England in 1066. The common law tradition is the foundation of the legal
systems of Great Britain (but not Scotland), the United States (except Louisiana and Puerto
Rico), Canada (except Quebec), Australia, Cyprus, India, Pakistan and Anglophone Africa. In
the common law tradition, principles of law are developed through the decisions that judges
make in resolving actual cases. The common law tradition has been described as “anything that
is not prohibited is permitted.”
In the 21st century, each legal system is increasingly adopting essential features of the
other legal system. The law of the common law systems is becoming codified and more
-1-
statutory. The law of the civil law systems is being made increasingly by judicial decisions and
judicial interpretations of civil code provisions and statutes.
Section 1-1 Differences between Civil Law Systems and Common Law Systems
There are many differences between civil law systems and common law systems. The
fundamental differences between the two systems are as follows:
A. Method of Legal Reasoning
Civil law judges look to a comprehensive code to resolve cases. Their method of legal
reasoning is deductive, i.e., they take a general legal principle from the code and apply it to a
specific case. By contrast, common law judges look to prior cases to resolve present cases (stare
decisis). Their method of legal reasoning is inductive, i.e., they derive general principles of law
from cases which have already been decided and apply those general principles to the specific
case. These general principles are as legally binding as a statute.
B. Role of Judges
Civil law judges are “appliers” of the codified law. Common law judges are both
“makers” of law and “appliers” of law. In many civil law countries the judge performs a function
which is similar to the function which a grand jury performs in common law countries. That
same judge is also the trial judge.
C. Court Structure
Civil law courts are organized into specialty courts, each of which hears particular
categories of cases based on the article heading of the civil code. Civil law appellate courts
generally hear and decide both questions of fact and questions of law. This feature is one of the
most fundamental differences between civil law courts and common law courts. Common law
-2-
appellate courts review and decide errors of law which the lower court may have committed.
The appellate courts accept the facts which the lower court has determined. They do not review
or rule on the accuracy or credibility of any fact which was established at trial in the lower court.
Also, with a few exceptions, common law courts are not specialty courts but rather courts of
general subject matter jurisdiction.
D. Trials
Civil law trials are inquisitorial. The judge is active and in directing the proceedings by
offering evidence and questioning witnesses. Common law trials are adversarial in that the
attorneys are active in presenting and directing the proceedings while the judge acts more as a
referee.
E. Training and Selection of Judges
Civil law judges choose their career while still in law school. They follow a specific
career path with specific examination requirements Common law judges in the US engage in
the practice of law for a period of time. They become judges primarily through political
appointment or election rather than a strictly merit based system.
F. Civil Law Notary
The civil law notary is a specially trained attorney whose function is to authenticate
certain legal instruments. Known as a notaire in France, a notario in Spain and South America
and symvouleographos in Greece, the civil law notary assures that the legal instrument is valid,
that the parties understand the contents and its legal effect, that there is a meeting of minds and
that there is no mistake in the text of the legal instrument. The civil law notary is authorized by
law to represent the transaction rather than a particular party to the transaction. However, the
-3-
civil law notary is prohibited from acting as a notary and, at the same time, an advocate for a
party to the transaction. In the US, Alabama and Florida have enabled the office of a civil law
notary. Several other states are considering enabling the office.
Section 1-2 Sources of Greek Company Law
Greek law is divided between public and private law. Public law governs the structure,
authority and operation of each level of government and the legal relations between the citizen
and the government. Private law governs the legal relations between and among persons.
Private law is further divided into civil law and commercial law. The civil law is
comprehensively codified in the Greek Civil Code and governs contracts, property, inheritance
and family law. Commercial law is codified in the Commercial Code. The Commercial Code
governs relations between and among persons whose primary occupation is commerce and who
are engaged in commercial transactions, (referred to as the law of merchants). Other areas of
commercial law such as company law, intellectual property, bankruptcy, commercial paper,
antitrust, insurance and banking law are governed by statutes enacted by the Greek Parliament.
The statutes governing Greek company law were enacted in the 1920s. The concepts and
policies of Greek company law were heavily influenced by French company law. A business
entity in Greece can be formed and operate only under the authority of and as provided in the
applicable statute of the Greek company law. Greek company law is national legislation. Since
1980, when Greece became a member state of the European Union (EU), Greek company law has
conformed to EU company law directives.
-4-
Section 1-3 “One Stop Shop”
On April 4, 2011, the Greek parliament enacted legislation under which each of the legal
instruments and applications for the necessary approvals to form and operate a business entity are
submitted to a “One Stop Shop”. The One Stop Shop consists of a track for business entities
which are required by law to have their articles of association authenticated by a civil law notary
and a track for business entities which need not be authenticated by a civil law notary. The
business entities which must have their articles authenticated are corporations with a share
capital of euro100,000 or more and limited liability companies. The other track is for private
companies and partnerships which submit their articles and applications for approval to the
relevant chamber of commerce or to the Citizen’s Service Centre (KEP).
A. Functions
Each authority on each track performs the following functions:
1. Receives the articles and other documents necessary for incorporation,
2. Registers the business entity with the General Commercial Registry(GEMi)
3. Issues the value added tax (VAT) number and collect any required initialtaxes on capital,
4. Issues the required social security registration numbers,
5. Receives payment in a lump sum for each necessary except fees for thecivil notary, legal fees and certain other assessments,
6. Pays the fees required by each government authority out of the lump sumso that the founders need not go to each government authority to pay thefees,
7. Complete the formation in one day.
-5-
B. Advantages
Traditionally, founders of a Greek company had to apply to several different government
agencies or authorities for the necessary approvals to form and operate a company. The founders
had to navigate a costly and time consuming bureaucratic maze. This maze discouraged the
formation and operation of new businesses. The advantages of the One Stop Shop are the
following:
1. The primary advantage is that the need to navigate the maze is eliminatedand it simplifies the formation process.
2. It complements the policy underlying the new private company.
3. It establishes the GEMi which is a national registry of information on allbusiness entities.
Section 1-4 Conceptual Differences Between US Business Entity Law and Greek BusinessEntity Law
A. The US Concept
No National Law of Business Entities
There is no national law of business entities in the US. Business entities are formed
under and operate under the business entity laws of the states. A business entity which is formed
in one state and seeks to do business in another state must register in that other state as a foreign
business entity. A business entity formed under the laws of a state is an American business entity
for all purposes without regard to the citizenship or nationality of the owners. It has the trade
benefits and obligations set forth in any free trade agreement to which the US is a party.
The business entity laws can differ from one state to another state. For example, an oral
operating agreement of an LLC is enforceable in every state except for New York and Wisconsin.
-6-
Only a written agreement can be enforced in the courts of New and Wisconsin. Only fourteen
states enable the formation of series of membership interests or cell companies in an LLC.
Legal Instrument for Formation v. Agreement as to Legal Relationship Among Owners
The legal instrument which is filed with the state government authority to commence the
existence of the business entity differs from the legal instrument which sets forth the legal
relationship between and among the owners. To form the business entity, the owners must file:
1. Articles of incorporation to form a corporation,
2. Articles of organization to form an LLC,
3. Statement of limited liability to form an LLP, and
4. Certificate of limited partnership to form a limited partnership.
The legal instrument which sets forth the legal relationship between and among the
owners and which the owners do not file with any state government authority is:
1. Shareholder agreement for a corporation,
2. Operating agreement for an LLC, and
3. Partnership agreement for a general partnership and a limited partnership.
Legal Relationship between Owners
Except for certain regulatory issues which apply to publicly traded business entities, the
owners of a business entity have the maximum flexibility and widest discretion to agree on the
rights and obligations which the owners have to one another and to the business entity. Almost
all of the provisions of the state business entity laws are default provisions and not mandatory
provisions. The default provision of a particular issue governs only if the owners have not
otherwise agreed on that issue. For example, the owners may allocate financial and management
-7-
rights between and among the owners in any way they so agree. However, if the owners do not
agree, then the relevant default provision governs. The default provisions on any issue assumes
that decisions on issues are made by a majority of the membership interests. Therefore, even if
the owners intend that a different vote margin be used, the majority in interest will be used unless
the owners affirmatively agree otherwise.
Limited Liability
Except for a sole proprietorship, a general partnership which has not chosen to be an LLP
and a limited partnership which has not chosen to be an LLLP, the owners of business entities are
afforded limited liability. The limited liability can be disregarded if:
1. Owners are not legally and factually separate from the business entity,
2. Business entity is merely the alter ego of the owners,
3. Limited liability protection is used for a fraudulent or criminal purpose,
4. An owner personally guarantees an obligation of the business entity, or
5. Person who manages does not pay taxes incurred by business entity.
B. The Greek ConceptNational Law of Business Entities
The Greek law of business entities is a national law. Business entity laws are enacted by
the Greek National Parliament. The Council of Ministers, which is the same as the cabinet in the
executive branch of the US government, issues ministerial decisions which complement or
implement the business entity laws. Ministerial decisions perform a function which is similar to
but not the same as federal and state regulations issued by US and state agencies.
-8-
Legal Relationship Between and Among Owners
Traditionally, the owners did not have as much discretion in ordering the internal affairs
of the business entity. The internal affairs of a Greek business entity were largely set by statute
and Ministerial Decisions. The revisions to the business entity laws have loosened and even
eliminated many of these traditional restrictions. Owners have much more discretion and
flexibility in agreeing on the management and governance issues of the business entity.
Articles of Association
Greek law does not distinguish between the legal instrument which the business entity
files with the government authority to commence the existence of the business entity and the
legal instrument which sets forth the legal relationship between and among the owners. The
articles of association serve both purposes.
Limited Liability
The principles of limited liability are generally similar to the US principles. One
difference is that an owner of any percentage in a business entity, which is not a corporation, is
personally liable for total dollar amount of the unpaid social security obligations if the business
becomes insolvent or otherwise fails. Commentators have recommended that the law be
amended so that owners are personally liable only to the extent of their percentage ownership in
the business entity.
-9-
CHAPTER 2: TRADITIONAL FORMS OF GREEK BUSINESS ENTITIES
Section 2-1 Corporation (Anonymous Etairia AE)
A. Attributes
The basic business entity is the anonymous etairia (referred to as AE). The AE is the
functional equivalent of a C Corporation. The two types of AEs are Listed Companies (publicly
traded corporations) and Non Listed Companies (closely held corporations). A Listed Company
is an AE whose shares are publicly traded on the Athens Stock Exchange (ATHEX). A Non
Listed Company is an AE whose shares are held by private persons and are not traded on the
ATHEX. The Listed AE and the Non Listed AE have many attributes in common. A Listed AE
must comply with certain special rules set forth by the ATHEX and which are enforced by the
Hellenic Capital Market Commission (HCMC), a government agency which is similar to the
Securities and Exchange Commission (SEC).
US business persons which are large concerns and seek to make a substantial direct
investment in Greece will form an AE. Similar to the C Corporation, the AE is designed to
conduct large businesses or highly regulated activities. Management is usually separate from
ownership. The AE usually has a number of shareholders, many of whom are passive and do not
substantially participate in management. Other than large concerns, most US business persons
will choose to conduct business through a business entity other than an AE. But many US
business persons may choose to do business with an AE. Therefore, it is important to understand
at least the most fundamental attributes of an AE.
A. Limited Liability
Shareholders in an AE are afforded limited liability. The concept and application of the
-10-
doctrine of limited liability is essentially the same as it is under US law, although the laws of the
states as to limited liability differ in certain details. The term “a company limited by shares”
means a business entity in which the owners have limited liability.
B. Shares
Shares (metoches) are the unit of ownership. The concepts of shares and shareholders are
the same as in the US. Shares can be divided into classes of shares. The shares of a Listed AE
are freely transferable on the ATHEX. The shares of a Non Listed AE can be freely traded
among private persons. However, like closely held corporations in the US, Non Listed AEs can
and usually do restrict the terms and the circumstances under which a shareholder may transfer
its shares. An AE can have a single shareholder.
C. Separate and Distinct
An AE is a legal person in its own right. It is separate and distinct from the shareholders.
Like a C Corporation, an AE can hold property, enter into contracts and sue or be sued in its own
name.
D. Management and Governance
Management and governance are vested in the shareholders. The shareholders appoint a
board of directors. The board must consist of at least three directors. The directors need not be
shareholders and can be other legal entities. The AE can have one board with both executive
authority and supervisory authority or effectively two separate boards, one which has executive
authority and one which has supervisory authority. The two-board system is used by large AEs.
The shareholders must meet at least once in each fiscal year. The shareholders have
ultimate authority over fundamental issues of governance such as amendment of the articles of
-11-
association, election of directors and appointment of auditors. An AE can merge, acquire or be
acquired by another business entity.
For the first time since 1920, in 2007 the AE law was substantially amended. The
amendments enhance the rights of minority shareholders, allows the board to declare and pay
dividends if the shareholders so authorize, allows the board to set the share price for capital
increases with the approval of the shareholders and allows for remote voting and
teleconferencing of shareholder meetings.
E. Formation
The requirements to form an AE are:
1. One or more founders,
2. Approval of AE trade name,
3. Articles of association filed with the appropriate prefecture and chamberof commerce,
4. Minimum capital Euro 60,000 which can be partially paid at formation,
5. Shares must be paid for in cash and are freely transferable,
6. Payment of fees for formation,
7. Publication of a summary of the articles of association in the GovernmentGazette which is similar to the Federal Register an state registers, and
8. Registration with tax authority.
C. Articles of Association
The articles of association serve the functions of articles of incorporation, by-laws and
shareholder agreements all in one. The articles must set forth the following:
1. Name and business purpose,
-12-
2. Registered office,
3. Duration which can be perpetual,
4. Euro amount and manner of payment for shares,
5. Number, class and par value of shares,
6. Appointment of company auditors,
7. Rights of shareholders,
8. Duties of directors, and
9. Signatures of founders which must be authenticated by a civil law notary.
Section 2-2 Limited Liability Company (Etairia Periorismenis Euthinis EPE)
Traditionally, small or medium size businesses and retail enterprises have been formed as
EPEs. The EPE has attributes which are similar to the attributes of both a closely held
corporation and an LLC. Unlike an LLC which is an unincorporated association, the EPE is a
corporate body.
A. Attributes
The EPE has the following attributes:
1. Limited liability,
2. Capacity to hold property in its own name,
3. Capacity to sue and be sued in its own name,
4. Management and governance vested in the members,
5. Percentage interest is the unit of ownership referred to as a part(meridia)which are not freely transferable,
6. Taxed as a corporation, and
-13-
7. Merge, acquire or be acquired.
B. Formation
An EPE is formed as follows:
1. One or more founders whom or which can be either an individual oranother business entity,
2. Name of the EPE which must include either the name of a founder orreflect the business purpose,
3. Filing of articles of association with the appropriate court and chamber inplace of establishment,
4. No minimum capital requirement,
5. Payment of fees for formation,
6. Publication of a summary of the articles of association in the GovernmentGazette, and
7. Registration with tax authority.
C. Articles of Association
The articles of association are like articles of organization/incorporation and the
shareholder/operating agreement all in one. The articles must state:
1. Name and business purpose,
2. Registered office,
3. Duration which must be a fixed time and not perpetual,
4. Appointment of company auditors but not necessary for small EPEs,
5. Rights of members,
6. Duties of managers, if appointed,
7. Signatures of founders which must be authenticated by a civil law notary.
-14-
D. Management and Governance
The management and governance are less regulated by statute than are the management
and governance of an AE. However, the EPE is more regulated than is a closely held corporation
or an LLC. The EPE is managed by the members. The management and governance are
conducted in a manner similar to a partnership without many of the formalities and restrictions to
which AEs are subject. The EPE can hire a manager to manage the business. The manager need
not be a member. Subject to a reserve requirement, net profits of an EPE are fully distributed in
each fiscal year.
The members must meet at least once in every fiscal year. Each one percentage point of
ownership has one vote. Management and governance decisions are made by a vote margin of a
simple majority. However, any amendment to the articles of association must be made by a vote
margin of 75% of the percentage interests.
Section 2-3 Partnerships
Greek company law recognizes general partnerships (omorrythmi etairia, OE) limited
partnerships (eterorrythmi etairia, E.E.) and silent partnerships (afanis etairia). The OE and the
EE are similar in concept and operation to a general partnership and a limited partnership,
respectively. In a silent partnership, only one partner need be disclosed.
A. US General Partnerships and Greek General Partnerships Compared
The fundamental concepts of US general partnerships and Greek general partnerships are
the same.
1. Must be formed by two or more partners who engage in a business forprofit,
-15-
2. Formed by contract and separate and distinct from its partners,
3. Each partner is personally liable for the debts and obligations of thepartnership,
4. The partners have maximum discretion and flexibility in agreeing on themeans and methods by which the partnership is managed and governed.
5. The partnership is managed and governed by an agreement between andamong the partners. In a US partnership the agreement is a partnershipagreement. In a Greek partnership the agreement is in the articles ofassociation.
6. The general partnership terminates only by the agreement of the partnersand certain events specified by law. The withdrawal of a partner does notterminate a general partnership.
US general partnerships differ from Greek general partnerships as follows:
1. A US general partnership can choose to be a limited liability partnership(LLP). This means that the partners are not personally liable for the debtsand obligations of the general partnership solely by reason of being apartner.
2. If a partner has acted or omitted to act in a way that guarantees apartnership obligation or injures a third person, then that partner ispersonally liable to the third person.
3. The act or omission can be a personal guarantee, malpractice or a civilwrong.
B. US Limited Partnerships and Greek Limited Partnerships Compared
The fundamental concepts of US limited partnerships and Greek limited partnerships arethe same.
1. Must be formed by and operate with two or more partners, at least one ofwhom is a general partner and personally liable for the debts andobligations of the partnership. The limited partners are afforded limitedliability.
2. It is a business entity formed by contract and separate and distinct from itspartners,
-16-
3. The general partner manages the business. The limited partners need notbe entirely passive and can participate in certain management andgovernance issues.
4. Managed and governed by an agreement between and among the partners. In a US limited partnership the agreement is a limited partnershipagreement. In a Greek limited partnership the agreement is in the articlesof association.
5. The limited partnership terminates only by the agreement of the partnersand certain events specified by law. The withdrawal of a partner does notterminate a limited partnership. If the withdrawing partner is the generalpartner, the limited partners must either choose another general partner orterminate the partnership.
US limited partnerships differ from Greek limited partnerships as follows:
1. An LP can choose to be a limited liability limited partnership (LLLP). This means that the general partner is not personally liable for the debtsand obligations of the limited partnership solely by reason of being thegeneral partner.
2. If the general partner acts or omits to act in a way that injures a personwho becomes a creditor of the limited partnership, then the general partneris personally liable to the creditor.
3. The act or omission can be a personal guarantee, malpractice or a civilwrong.
C. Greek Silent Partnerships (Afanis Etairia)
Greek law enables the formation and operation of silent partnerships. The word “silent’
does not mean that the silent partner is not identified or somehow hidden from view. “Silent”
simply means that the partner is totally passive. It is the general partner who manages the
business of the silent partnership. The silent partner essentially invests in the business skills and
acumen of the general partner. The attributes of a silent partnership are:
1. There must be at least two partners one of whom is a general partner.
-17-
2. It is not a legal entity and cannot own property, enter into contracts or sueor be sued as an entity.
3. Only the general partner can manage the business and bind the silentpartnership to third persons.
4. The silent partner does not participate in management nor can the silentpartner bind the silent partnership to third persons.
5. It is governed by an agreement between and among the partners whichmust be in writing.
6. The partners receive distributions and allocations of losses as set forth intheir agreement.
7. It is not registered in the GEMi.
8. It dissolves and terminates by agreement or by the death, bankruptcy ordisability of a partner.
A US partnership can be structured to have the attributes of a silent partnership.
However, because a GP and an LP can be an LLP or LLLP, partners would rarely choose to form
and operate silent partnership.
D. Joint Venture (Koinopraxsia)
A joint venture is essentially formed and structured as a partnership. The business
purpose is a specific venture which is limited in scope and time. Once the business purpose is
accomplished, the joint venture dissolves and is terminated.
-18-
CHAPTER 3: PRIVATE COMPANY P.C. (Idiotiki Kefalaiouchiki Etairia IKE)
Enabled in 2012, the IKE is the newest form of Greek business entity. The IKE is
patterned after the European Private Company. Of all of the Greek business entities, the IKE is
most similar to an LLC. It is comparatively simple to form and efficient to manage and govern.
The term for a membership interest translates from Greek to English as a “part”. The term for a
member translates from Greek to English as a “partner”. For the benefit of the US business
person, we use the LLC terms “membership interest” and “member”.
Section 3-1 Attributes
The IKE has the following attributes:
1. Limited liability,
2. Corporate body,
3. Contributions in the form of cash, services or a guaranty(ies),
4. No minimum paid in capital,
5. Discretion and maximum flexibility of the legal relationship of members,
6. One or more members,
7. Merge into, acquire or be acquired by any other business entity,
8. Another form of business entity can convert into an IKE,
9. A summary of the articles of association need not be published in theGovernment Gazette.
Section 3-2 Name of the Company
The name may be:
1. The name of one or more of the members,
-19-
2. A name which describes the business, or
3. A fictitious name,
The name must:
1. Be composed of any of the words “private company”, “IKE” or PC. If thename is in English it must contain the words “private company” or PC,and
2. Be composed of the words “Single Member Private Company” or “SingleMember IKE” if the IKE is a single member IKE.
3. The name can be set forth in Latin characters or in a foreign language.
Section 3-3 Principal Office
The principal office of the IKE is the location which the members specify in the articles
of association. The IKE need not have a principal office in Greece and may set up offices in any
location in Greece or in foreign countries.
The IKE may move the principal office to another Member State of the EU or the
European Economic Area. If the IKE moves, it need not dissolve but must comply with the
following:
1. The manager must deliver a report to the members, employees andcreditors which sets forth the effects of the move,
2. The IKE must apply to the GEMi to move the principal and file the reportand the financial statements of the IKE with the GEMi.
3. All of the members must agree to move the principal office.
4. The move cannot occur until no less than two months have elapsed afterthe date on which the report is duly recorded.
5. The GEMi can reject the application to move the principal office if itdeems such rejection to be in the public interest.
-20-
Section 3-4 Duration
The duration of the IKE must be a definite time although there is no limit on the length of
that time. The duration must be set forth in the articles of association. If the articles do not set
forth a time then the time is 12 years.
Section 3-5 Company Records
The IKE must maintain the following items in its company records:
1. Name,
2. Total value of contributions,
3. GEMi registration number,
4. Principal office,
5. Identity of the manager, and
6. Whether it is in bankruptcy.
Section 3-6 Company Website
No later than one month after the date on which the IKE is formed, it must put up a
website. More than one IKE may share a website as long as the information for each IKE is
distinct from the information of each other IKE on the website. If an IKE does not form or
maintain a website, then it must deliver, at its sole cost, the information to any person who
requests the information. The website must contain the following information:
1. The information which the IKE is obligated to maintain in its records,
2. The names and addresses of each member,
3. The type of contribution of each member, and
4. The URL must be filed with the GEMi.
-21-
Section 3-7 Formation
The requirements to form an IKE are:
1. One or more founders who can be either an individual or another businessentity,
2. Articles of association which must be filed through the “One Stop Shop”but need not be authenticated by a civil law notary nor published in theGovernment Gazette,
3. Duration is a fixed time but if no time specified then duration is 12 years
4. Register in the General Commercial Registry (GEMi),
5. Payment of registration and other fees,
6. Company name can be in any official EU language and can include thenames of one or more founders or be a logo name,
7. Must create a website which sets forth the information Section 3-6, supra.within one month after formation,
8. The principal office can be in Greece or in any other country.
Section 3-8 Provisions in the Articles of Association
A. Required Provisions
At a minimum, the articles of association must set forth:
1. The name of the IKE,
2. The names, domiciles, addresses and emails of the members,
3. Principal office,
4. Statement that the company is an IKE,
5. Business purpose,
6. The type and value of the contribution of each member,
-22-
7. The membership interests,
8. Whether the IKE is member-managed or manager-managed, and
9. Duration.
B. Recommended Provisions
Decision Making
The articles of association can and should set forth the terms and conditions of the legal
relationship among the members. These issues include the following:
1. Vote margin and method
a. Per capita basis,
b. Percentage interest basis, or
c. Whether voting rights vary depending on the issue
2. Authority to transfer IKE property,
3. Dispose of the good will of the business,
4. Borrow money in the IKE name or use IKE property as collateral,
5. Sale, lease or exchange of all or substantially all of the IKE assets,
6. Merge into or acquire another business entity,
7. Reclassify membership interests,
8. Restrictions on transfer of membership interest,
9. Bank Account - signatories, and
10. Protection of proprietary marks and intellectual property.
Management
1. Designate manager or method for choosing manager.
-23-
2. Matters or actions over which manager has discretion and matters oractions that require approval or ratification by members.
3. Authority of manager to bind IKE.
4. Duties of manager, standards for performance and compensation,
5. Hire and fire employees,
6. Confidentiality/non-disclosure agreements for manager,
7. Removal of manager and appointment of new manager,
8. Responsible for tax matters,
Withdrawal of a Member
1. Notice period,
2. Mandatory or discretionary purchase of membership interest,
3. Timing, calculation and form for purchase of membership interest.
Dissolution and Liquidation
1. Events causing dissolution,
2. Agreement to continue,
2. Terms of liquidation,
3. Distributions on liquidation.
Indemnification
1. Euro limit on liability,
2. Type of liability.
-24-
Section 3-9 Contributions and Membership Interests
A. Contributions
A contribution is an item of value which a person transfers to the capital of the IKE in
exchange for a membership interest and for becoming a member. A contribution can be any one
of the following:
1. Cash,
2. Services,
3. Guarantee of an IKE obligation(s) for which the member is personallyliable, or
4. A combination of 1-3.
Each contribution must be assigned a euro value. The value of a cash contribution is
simply the euro value. The members must agree on the euro value of property and services or
personal guaranty(ies). The method for valuing property and services must be set forth in the
articles of association.
B. Membership Interests
A person becomes a member by purchasing or otherwise obtaining a membership interest
in exchange for a contribution to the capital of the IKE. The euro value of a contribution is
transposed into a percentage that the euro amount bears to 100% of euro value of the total
contributions. The more euros or euro value that a member contributes to the capital of the IKE
in proportion to the contributions of the other members, the greater is the percentage membership
interest of that member. In a single member IKE, the member holds 100% of the membership
interests. If there is more than one member, each member holds some percentage of the 100% of
-25-
the membership interests.
The members can agree that a contribution be made in installments. If the members agree
on installment payments they should agree on:
1. The chronological schedule for payment of the installments,
2. Whether the installments must be of the same type as the type ofcontribution which the LLC has agreed to accept as a contribution, and
3. Remedies of the LLC if a member does not pay the installments.
The members can agree that the members must make additional contributions to the LLC
if the business of the LLC requires capital in addition to the total capital which the members
originally contributed to the LLC. If the members agree to compel the members to make
additional contributions, they should agree on:
1. A method to calculate the euro amount or value of the additionalcontribution(s),
2. The circumstances under which the IKE can compel additionalcontributions,
3. The rights and remedies of the IKE against a member who does not makethe additional contribution(s), and
4. The rights and remedies of the other members who make additionalcontributions against a member who does not make the additionalcontribution(s).
Section 3-10 Rights and Powers of the Members
One percentage point of the membership interest entitles the member to one vote in the
management and governance of the IKE. The default provision of the IKE statute states that the
members decide management and governance issues by the vote of a majority of the membership
interests. However, the members can agree that management and governance decisions are made
-26-
by different vote margins. The members may agree to allocate different rights and obligations to
each member without regard to the numerical percentage which the membership interest of a
member bears to numerical percentage of each other member. Although the IKE law is not
entirely clear, the members appear to be able to agree to make decisions on a per capita basis
rather than on the basis of the membership interests.
Each member is entitled to examine the business information and finances of the IKE and
copy the information. Each member may appoint a representative of conduct any such
examination. Any agreements between the IKE and a member(s) or with a manager(s) must be
memorialized in the records of the IKE.
A member may dissociate from the IKE and is entitled to receive the euro value of
his/her/its membership interest. If the articles of association do not specify a method to value the
membership interest, then the members must submit and decide the issue according to the dispute
resolution procedure of the IKE or in court.
Section 3-11 Management
Like an LLC, the management of the business is vested in the members. The members
may delegate management to one or more managers as long as the members have agreed to such
delegation in the articles of association.
A. Appointment and Powers of Managers
A manager must be an individual but need not be a member. If the members appoint
another business entity as a manager, that business entity must appoint an individual to manage
on behalf of the business entity. The business entity is liable for the acts and omissions of that
individual. The manager is appointed by a majority of the membership interests. The term of the
-27-
manager can be limited to a particular time or indefinite. If the manager fails to act to protect the
interests of the IKE, a member may act to protect the interests of the IKE with notice to the other
members.
The members may delegate to the manager such powers and authorities as the members
so choose. Such powers and authorities must be set forth in the articles of association. Unless
the members otherwise agree, the managers must act unanimously. The IKE must notify the
GEMi that the IKE has appointed a manager.
The manager must create and maintain the books and records of the IKE. Books and
records include the identity of the members, value of their contributions, financial information
and a record of the acts and decisions of the members.
B. Fiduciary Duties and Liability of Managers
The managers have the same fiduciary duties to the IKE as does a manager of an LLC.
These fiduciary duties include the duty of loyalty, duty not to usurp an IKE opportunity, duty not
to use IKE assets to his/ her/its own advantage and the duty not to compete with the IKE. Where
a manager has violated a fiduciary duty and third person benefits from that violation, the IKE
may seek restitution from the third person for the value of any such benefit.
The managers are liable to the IKE for any act which violates the articles of association or
the law. The managers are not liable for any act which is within the scope of the business
judgment rule. A manager acts within the scope of the business judgment rule if:
1. The act derives from a lawful decision of the members or
2. The act was reasonably made in good faith based on the availableinformation and in the interests of the IKE,
-28-
3. The manager did not benefit from the act.
C. Removal of a Manager
The members may remove any manager by a vote of a majority of the membership
interests or by a lesser margin if the members so agree. The members may agree on a procedure
by which one member may remove a manager. For good cause shown, members holding 10
percent or more of the membership interests may petition a court to remove a manager. The IKE
must notify the GEMi whenever a manager is removed or replaced.
Section 3-12 Transfer of Membership Interests and Changes in Members
A. Free Transferability or Restrictions
A member may freely transfer its membership interest to another member or a third
person. The members may restrict or prohibit the transfer of membership interests as long as the
restriction or prohibition is set forth in the articles of association. A member cannot transfer its
membership unless it has made its total contribution to the IKE. The manager shall enter the
transfer in the books and records of the IKE. The entry is notice to third persons that a transfer
has occurred.
There are always 100% of the memberships interests issued and outstanding to the
members. The IKE cannot hold any membership interest in its own name nor can membership
interests be held in treasury. If another business entity acquires all or any portion of the
membership interests as the result of a merger, the manager must notify the GEMi of any
reduction of the membership interests.
B. New Member
A new member is any person who is admitted as a member by acquiring a membership
-29-
interest after the IKE has been formed. A person can be admitted as a member and make a
contribution as long as all of the members consent to admitting the person. If the members
cannot agree, then any member may petition a court to admit the member as long as such
admission is material to the interests of the IKE.
Section 3-13 Audits and Distributions
The manager must cause financial statements of the IKE to be prepared at least once a
year and prepare an inventory of IKE assets. The financial statements must be published in the
GEMi.
If the IKE distributes profits to the members it must do so in proportion to the
membership interest of each member. The members may agree to vary the terms and conditions
for distributions to the members. In each year and before any distribution, the IKE must retain a
percentage of the profits as a capital reserve.
Section 3-14 Dispute Resolution
In causes of action between members or between the members and the IKE, the cause of
action is filed in the court which has jurisdiction in the place in which the IKE has its principal
office. The members may agree to submit any dispute between them or between them and the
IKE to mediation or arbitration.
1. The members may choose mediation as long as the articles of associationcontain a mediation clause. The terms of mediation must satisfy theexisting law of mediation.
2. The members may choose arbitration as long as the articles of associationcontain an arbitration clause. An arbitration clause cannot be inserted inthe articles of association by amendment unless each member consents tosuch amendment.
-30-
Section 3-15 Dissolution and Liquidation
A. Dissolution
The IKE dissolves when any one of the following events occurs:
1. A time specified by the members,
2. The statutory 12 year time of duration expires,
3. Bankruptcy proceedings begin, or
4. Any event specified in the articles of association or by law.
B. Liquidation
When the IKE dissolves the liquidation process begins. The liquidator, who can but need
not be the manager, performs such acts as are necessary to protect the interests of the IKE in
liquidation and satisfy the creditors of the IKE. The law sets forth a detailed procedure for
liquidation. Although it is not entirely clear, the members appear to be able to continue the IKE
after dissolution rather than liquidate as long as the articles of association so state.
Section 3-16 Conversion and Merger
An IKE may convert to another type of business entity by a majority vote of the
membership interests or by whatever vote margin and method to which the members have
agreed. To accomplish the conversion, the IKE must comply with the same process as is
required to form a new business entity into which it seeks to convert. Any other type of business
entity may convert into an IKE.
An IKE may merge with another IKE or with any other type of business entity. The
concept and procedure is essentially the same as the concept and procedure under the Model
Entity Transaction Act (META).
-31-
CHAPTER 4: FOREIGN BUSINESS ENTITIES IN GREECE
Section 4-1 Foreign Business Entities
A business entity that is validly organized and existing under the laws of a nation other
than Greece is a foreign business entity. A foreign partnership generally cannot establish a
branch. To operate a business in or from Greece, a foreign business entity must establish a
branch office in Greece. If the foreign business entity desires to do business in Greece, then it
establishes the branch in Greece and is subject to Greek law except that the internal affairs of the
foreign business entity are governed by the laws of the jurisdiction in which it was formed. If the
foreign business entity desires to do business from Greece, then it can choose to establish the
branch under a special law. Foreign persons and foreign business entities can always establish a
wholly owned Greek business entity without establishing a branch. The IKE makes this
alternative particularly attractive.
Section 4-2 Branch for Doing Business in Greece
If the foreign person or foreign business entity does not desire to form a Greek business
entity but desires to do business in Greece, the foreign entity or person must establish a branch in
Greece. The branch itself is not a business entity but merely an extension of the foreign business
entity. The internal governance of the foreign legal entity is governed by the laws under which
the foreign legal entity is organized. The foreign business entity may engage in any legal
business in Greece in which it is empowered to engage under its founding document. With
respect to taxation, labor and commercial relations with third persons, the foreign business entity
has the same rights and obligations as does a Greek business entity.
To establish a branch, the foreign business entity must produce the following:
-32-
1. Founding document(s) of the foreign business entity, which for a USbusiness entity would be the articles of incorporation for a corporation orarticles/certificate of organization for an LLC.
2. Resolution authorizing the foreign business entity to establish a branch inGreece including a statement of the business purpose in Greece,
3. Certificate from a “competent” authority in the country of formation thatthe foreign business entity has paid in capital of at least Euro 60,000 for acorporation and Euro 18,000 for a limited liability company. Since USbusiness entities have no paid in capital requirements, this item can bewaived.,
4. Certificate of good standing,
5. Certificate that the persons representing the foreign business entity inGreece are duly authorized to do so by the foreign business entity,
6. Power of Attorney empowering persons who the foreign business entityhas chosen to act on behalf of the foreign business entity in Greece,
7. Submit Items 1 through 6, supra. to the proper Ministerial authority andpay the fees,
8. Decision of the Ministerial authority to approve establishment of thebranch
9. Publication of Ministerial Decision in the Government Gazette.
Each of the foregoing documents must be original, notarized, apostilled according to the
Hague Convention and translated into Greek. Once established, the foreign business entity must
inform the appropriate authority as to any changes in any of the information in the foregoing
documents, submit a balance sheet of the foreign business entity for each fiscal year and a record
of operations in Greece for each fiscal year.
Section 4-3 Branch for Doing Business from Greece
A foreign business entity which desires to do business from Greece but not in Greece may
-33-
choose to establish a branch under a special law euphemistically called an “off-shore” law.
Traditionally, such branches were referred to as “Law 89 companies” after the original Law
89/1967. Law 89/1967 has been fundamentally amended by Law 3427/2005. To be eligible
under the new law, the branch must provide services exclusively to either the head office of the
foreign business entity which must be located outside of Greece or to an affiliate of the foreign
business entity which is located outside of Greece. The branch must provide services which
must be any one of consulting, centralized accounting, quality control of goods and services,
preparation of studies, designs or contracts, advertising/marketing, data and information
processing and dissemination and research/development. Foreign employees of the branch who
are not EU citizens are granted work and residence permits.
The profit margin must equal at least 5%. The profits from the operations of the branch
are calculated by adding on a profit margin to operating expenses and depreciation minus the
income tax. The profit margin is determined based on the type of services rendered, the category
of business activity and applicable OECD Guidelines on intragroup charges. The tax and
customs exemptions under the prior Law 89/1967 are repealed.
The requirements for establishing this kind of branch are:
1. The branch must employ at least four individuals within 12 months afterthe date on which the establishment is approved,
2. For each fiscal year of operations the branch must incur a total of at leastEuro 100,000 in operating expenses,
3. Apply with supporting documentation similar to the documentationrequired for a branch,
4. Letter of guarantee securing the obligations of the branch, and
-34-
5. Obtain a permit issued by Ministry of National Economy and published inGovernment Gazette.
-35-
CHAPTER 5 BUSINESS ENTITIES AND EUROPEAN UNION COMPANY LAW
Section 5-1 Societas Europaea or European Company (SE)
The SE was enabled under the laws of the European Union (EU) on October 1, 2001. An
SE may operate and conduct business activities in any EU Member State without having to
establish subsidiaries or re-registering in each EU Member State in which it does business, (See
EE 2001 L.294 p.1; Council Regulation (EC) No. 2157/2001).
An SE can be formed in any one of the following ways:
1. Merger of two or more existing companies from tow or more EU MemberStates.
2. Forming a holding company whose shareholders are two or morecompanies from two or more EU Member States.
3. Forming a subsidiary by two or more companies from two or more EUMember States.
4. Conversion of a company that has had a subsidiary in another EU MemberState for at least two years.
The SE will be required to satisfy certain worker involvement provisions. The SE will be
taxed by each EU Member State in the same way that a multi-national company is currently taxed
under the national legislation of each of the EU Member States. The minimum subscribed (but
not paid in) capital is Euro 120,000. Greece and Cyprus have enacted implementing legislation
which allows for the creation and operation of SEs.
Section 5-2 Societas Privata Europaea or European Private Company (SPE)
The SPE is meant for small and medium size enterprises. The SPE is a flexible and
simple form of business entity. The SPE can have its principal office in one EU Member State
and do business in another Member State without formally establishing itself in the other EU
-36-
Member State. The SPE has many of the attributes of an LLC. The IKE is based on the SPE.
* * * *
-37-