Greek law provides for two main structures for carrying out business: capital companies (Company Limited by Shares, Limited Liability Company and Private Capital Company) and partnerships (General Partnership and Limited Partnership). This article presents the principal features of these main types of legal entities. Note that special provisions apply to certain kinds of activities.
Company Limited by Shares - Societe Anonyme (S.A.) - Anonymi Eteria (A.E.)
An A.E. is a legal entity in which the liability of the shareholders is limited to the amount they have contributed to its capital. An A.E. is similar to the French “Societe Anonyme” and is usually used by the largest enterprises in Greece. Companies with certain kind of activities can be formed only as an A.E. i.e. banking and insurance companies. Only entities of this type can apply to be listed on the Athens Stock Exchange. An A.E. is established by one or more individuals or legal entities through (a) a notarial deed (public document) or (b) a private document using the standard Articles of Association, Model ΑοΑ, with no deviation. The minimum capital requirement for an A.E. is 25,000 euro (in some cases a larger amount is required). The share capital may be formed in cash or by contributions in kind. The capital of an A.E. is divided into shares, and the shares must be registered. Pursuant to the provision of law different categories of shares may exist. The duration of an A.E. can be definite or indefinite. The General Meeting of the shareholders is the supreme governing body of an A.E. and it has the right to decide on all matters. An A.E. is administrated by a Board or Directors (three to fifteen members) or (only for non-listed small and/or micro-sized A.E.) by a single member management body. The Board members are elected by the General Meeting. Exceptionally, the first Board of the A.E. is determined in the AoA. Any shareholder or third party, individual or legal entity, can be a Board member. Board members are freely recalled and may be reelected.
Limited Liability Company (L.L.C.) – Eteria Periorismenis Efthinis (E.P.E.)
An E.P.E. resembles an A.E. in that the liability of the partners is limited to their contribution to the capital and it also resembles a partnership in the way decisions are made (a majority of both the number of partners and of the capital is required). An E.P.E. is established by one or more individuals or legal entities through (a) a notarial deed (public document) or (b) a private document using the standard Model ΑοΑ with no deviation. The capital is determined by the partners with no restriction. The duration of an E.P.E. is definite (defined in years). An E.P.E. is administered by one or more persons (administrators), partners of the E.P.E. or not. The administrators are appointed either in the AoA or by a decision of the partners. In recent years this type of company has been supplanted by another type (I.K.E), which has become more popular for small and medium size operations due to the flexibility it provides to the partners.
Private Capital Company (P.C) – Idiotiki Kefaleouxiki Eteria (I.K.E.)
An I.K.E. is formed by one or more individuals or legal entities through a private document (a notarial deed may be required by special provisions of the Greek law). The minimum capital is 1 euro. Partners may participate with capital, non-capital, or guarantee contributions. At least one contribution must be in the form of capital. Capital contributions are contributions in cash or in kind. Non-capital contributions refer to benefits (specified in the AoA), which cannot be the subject of a capital contribution. Guarantee contributions are contributions which take responsibility against third parties for the company’s debts up to the amount defined in the AoA. The value of each guarantee contribution cannot exceed the 75% of the liability undertaken by the partners against creditors of the I.K.E. The I.K.E. is managed and represented collectively by all partners unless otherwise provided in its AoA. The partners are entitled to choose the management structure they find appropriate.
General Partnership (G.P.) - Omorythmos Eteria (O.E.)
An O.E. is the association of two or more individuals or legal entities. The partners are jointly and severally liable against third parties for the company’s debts. This type of company is normally used by small enterprises where the personal element overpowers the capital factor. An O.E. is formed by a private agreement. There is no minimum capital requirement. The capital may be contributed in cash or in kind, or in the form of personal services to the partnership. The O.E. is administered by one or more administrators.
Limited Partnership (L.P.) - Eterorythmos Eteria (E.E.) An E.E. is similar to an O.E. The main difference is that the liability of the limited partner (eterorythmos eteros) is limited to the capital he contributed. At least one partner must have unlimited liability (omorythmos eteros).
PROCEDURAL ISSUES All parties participating in the formation of a company in Greece must have or obtain a Greek Tax Registration Number. The competent authority for the establishment of a company in Greece is the One Stop Shop which under certain conditions may be: i) the General Commercial Registry (GE.MI.). ii) a notary public iii) the Electronic One-Stop Shop service (e-YMS). The typical time required for the establishment of a company is 2-3 days after the filing of all required documents at the One Stop Shop. Foreign documents must be duly apostilled and accompanied by an official translation into Greek prior to filling.
TAXATION A company with a registered office in Greece is usually a Greek company, even if all its members are foreign. The Corporate Tax Rate in Greece for all types of companies, with the exemption of credit institutions, is 29% for the financial year 2018, 28% for the financial year 2019, 27% for the financial year 2020, 26% for the financial year 2021 and 25% for the financial year 2022 and onwards. Distributed dividends/profits are subject to a withholding tax at the rate of 10%. This does not apply to companies where the books are held in a single entry system. The legal representatives of a company are liable with their personal property for the company’s tax and social insurance obligations. Under certain circumstances the shareholders of a (non-listed) capital company may also be liable for the tax and insurance obligations provided that their participation in the company is at least 10%. Such liability is limited to the amount of profits distributed to the partners as profits during the past three years.
OTHER TYPES OF ESTABLISHMENTS Joint Venture (Consortium) - Koinopraxia (J.V.) A J.V. is a company without a legal personality. When registered at the GE.MI, the J.V. acquires legal and bankruptcy capacity. If the J.V. performs commercial activities, registration with the GE.MI is mandatory and the provisions regulating O.E. apply to it.
BRANCHES Foreign companies can establish a branch in Greece. Said branch must have a legal representative in Greece. The establishment of a branch in Greece by a company based in a non-EU country requires the approval of the competent authority.
OFFICE/BRANCH LAW 89/1967 AS AMENDED BY LAW 3427/2005 Foreign companies may establish an office or a company in Greece under the provisions of Law 89/1967 as amended by Law 3427/2005, for the sole purpose of providing to their head offices or to their foreign affiliates certain services listed in the aforementioned law. The personnel of such entities must include at least four persons and the annual operating expenses incurred in Greece must be at least 100,000 euro. A license granted by a decision of the Minister of Economy and Development is required for such an establishment.
Elli Assimakopoulou, attorney at law at the Supreme Court of Greece, is a partner at Vassilogeorgis & Partners Law Firm.
Disclaimer: Τhis text is prepared for informational purposes only; it is not intended to provide, and should not be relied on for tax, legal, or accounting advice; readers are advised to seek independent tax, legal and accounting advice prior to acting.