RECENT DEVELOPMENTS – COMPANY FORMATIONS IN GREECE

The Greek Private Capital Company and recent legislative initiatives to meet current business requirements.  

According to the Greek legislation, the following types are the main capital company formations for conducting business in Greece and are usually preferred over entrepreneurships, in principal due to the limited liability of their shareholders : (i) the Greek limited liability by shares company (“Societe Anonyme” – “SA”), (ii) the limited liability company (“EPE”), (iii) the Private Capital Company (“PCC”- “I.K.E.”) and (iv) the European company (“Societas Europea” -“SE”). While the SA has been for years the most common company formation in Greece, recently the P.C.C. has started to gain significant ground due to fewer formal requirements for incorporation that enable its operation literally few days after its registration at the Business Register.

Introduced in Greece in virtue of the law n. 4072/2012, the P.C.C is incorporated pursuant to a simple private agreement signed by its founders. The articles of association are included in the agreement and can be customized according to the special needs or objects of the desired business. The agreement for the company’s incorporation should then be filed with the competent – determined by the place of the company’s registered seat and main business activity – Business Register and the whole procedure for the company’s establishment is completed at the One-Stop-Shop department of the Business Register, within 10-15 days after the submission of the required documentation. Simultaneously with the company’s registration at the Business Register, the company is also directly registered at the Greek Tax Authorities, obtaining a Tax Identification Number, which is necessary for starting conducting business according to its objects. For any amendments to the articles of association or for any shares sale and purchase agreements thereof during the lifetime of the company, a simple private agreement suffices; amendments to the articles of association should be also filed with the Business Register and they come into force upon their registration.

The articles of association of a P.C.C, any amendments thereof and the shareholders’ resolutions could be drafted in one of the official EU languages, but the Greek version shall prevail concerning relations between the company and its shareholders on one hand and third parties on the other hand. The founders of a P.C.C. resolve upon the amount of the share capital, without any limitation as per its minimum amount (this could be even zero). Since the previously imposed tax of 1% on the company’s initial share capital has been abolished (according to law n. 4254/2014, yet remaining for any share capital increase), actually there are not any restrictions towards determining the initial share capital, apart from that this should be deposited at the company’s treasury or bank account within 30 days of registration.

Regarding management, the P.C.C. is managed by one or more administrator(s), whose powers of representation are determined in the articles of association and by the shareholders’ resolutions. The administrator should be a natural person/individual, Greek or European citizen holding a Tax Payer Identification number in Greece, and in case of a non-European resident, a Visa is normally requested (Visa-D for business executives), according to the provisions of law n. 4251/2014 (Greek Immigration and Social Integration Code). The administrator should be also registered at the Greek social security system and pay the respective social security contributions. The administrator is liable towards the company for any breach of the company’s articles of association, of the law or of the shareholders’ resolutions, as well as for any damage caused as a result of breach of duties. Such liability does not exist in case of actions or omissions based on a lawful resolution taken by the shareholders or on reasonable business decision, conducted in good faith, based on sufficient information and only towards the corporate interest. If more managers acted together, they are jointly and severally liable. The shareholders may discharge the administrator(s) from any and all liability during the annual General Meeting of the shareholders which resolves upon the approval of the financial statements of the previous fiscal year.

As per the reporting requirements, apart from obligation to file with the Business Register any amendment to the articles of association as well as any resolution taken by the shareholders or the administrator that should be filed according to the law, the annual financial statements should be also filed with the Business Register and then approved by the shareholders. Greek Law n. 4403/2016, which incorporated into the Greek legal system the EU Directive 2013/34/EC, has recently introduced several developments concerning the commercial companies’ financial statements by regulating their preparation and publication based on their classification, aiming at the facilitation of cross-border investment and the improvement of Union-wide comparability and public confidence in financial statements and reports through enhanced and consistent specific disclosures. This regulation, which is applicable to all capital –by shares – companies, attempts to balance between the interests of the addressees of financial statements and the interest of undertakings in not being unduly burdened with reporting requirements.

The main advantages of the P.C.C. and the flexibility for its incorporation and operation are obvious when compared with the corresponding legal requirements for the incorporation of a Societe Anonyme (“SA”); governed by mandatory legislation (“ius cogens”), i.e. the codified law n. 2190/1920, the Greek SA is incorporated through a notarial deed, executed before a notary public in Greece, which includes the company’s articles of association. The share capital should be always indicated in money even if the shareholders’ contributions consist in kind. The share capital, which should be at least 24.000,00 Euro, must be paid either in cash or in kind within two (2) months after registration. After the execution of the notarial deed for the incorporation, the company should be registered at the competent Business Register and upon its registration, it acquires legal personality. The rest of corporate documentation (minutes of General Meetings of the shareholders and minutes/resolutions of the Board of Directors) do not have to be notarized, except for the General Meetings of the Shareholders in case of one sole shareholder. The SA is managed by a Board of Directors, consisted of at least three members, which may be either individuals or legal entities (in such case for the exercise of management a representative should be appointed). There is not any restriction as per the nationality or residence of the members of the Board of Directors. It should be noted that for some specific activities, SA is the only available company type according to the law and several parameters, beyond the abovementioned basic framework, should be taken into consideration in order to decide upon between P.C.C. and S.A.

The Business Register in Greece has been recently reformed providing access to the existing data base via its website (www.businessregistry.gr), which can be used both by the registered businesses and the public. Until the full integration of all Greek companies/businesses at the general Business Registry at the end of year 2012, different registration systems and registers existed for each company/business type. Thereupon, the reformation of the Business Register has facilitated significantly the capability of the companies to comply with their reporting obligations under the law through its portal (www.businessportal.gr) but has also enhanced the actual publicity of the companies’ data, as required by the law, and thus has reinforced the transparency and the security of the transactions.  Through the platform www.businessportal.gr any business can carry out the entire procedure for submitting a registration request to the Business Register, filing the necessary documents and payment of the relevant fees. The processing and verification of any request as well as the completion of registration are also conducted electronically through the system.

Recently in virtue of Greek Law n. 4441/2016, “e-One Stop Shop” has been introduced. This new, modern institution aims at the incorporation of the most popular types of companies in Greece, through a procedure completed entirely on an electronic platform practicing techniques like “e-ID Authentication Process” (EU REG 910/2014), links between other e-platforms like “TAXIS” (Greek Tax Online Platform) and taking all necessary actions in order for a company to be incorporated online, thus accelerating and facilitating business and corporate activity in Greece.

The combination of a single general Business Register with the establishment of the one-stop-shops for the incorporation of companies constitutes a major step towards simplification of the basic procedures of the Greek business environment, aiming to meet the needs and requirements of the parties involved and the effective use and exploitation of information collected.

In 2017, Greece while being at the heart of the economic recession affecting all financial markets globally and especially EU, struggles to keep up with the current requirements in business activity, by amending its relevant legislation towards the modernization of its corporate, tax and business system thus making great efforts to further promote productivity, investment and employment. Newly introduced, flexible, corporate forms like P.C.C, new institutions and platforms like the Business Register where most of the ordinary corporate actions are completed online, constitute the modern ‘’tools” provided to any entrepreneur who wishes to make business in the country, forming an effective solution by putting in place a flexible framework which can reduce obstacles to the smooth functioning of the market, hoping to make Greece an attractive country not only to visit and explore but also to invest.