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).
Accounting Period, Accounting Books and Records
For Greek tax purposes an accounting period is one of twelve months.
However, on the initiation of activity the first accounting period may extend over a period up to 24 months. The fiscal year must either end on 30th June or on 31st December. Corporations are required by the Code of Books and Records (C.B.R.) to keep double entry accounting books, inventory books, General Assembly minutes’books and director’s resolutions books (article 7 of Presidential Decree 186/1992). In addition to the books provided by the C.B.R., the Law 3190/1955 in article 25 also provides that the managers of the Limited Liability Company are obliged to keep a Book of the Partners, where the names of partners, their nationality and address, as well as their contributions are recorded. The structure of the accounts must follow the principles of the Greek General Chart of Accounts or, if the entity is a bank, the Banking Chart of Accounts. Both the Greek company law and the Chart of Accounts prescribe the form of presentation of financial statements, which is in line with the EU Fourth Company Law Directive.
The annual financial statements
Law 3190/1955, in article 22, provides that the annual financial statements of a Limited Liability Company (balance sheet, operating results etc.) are drawn once by the director(s) of the Company, based upon the inventory of assets and liabilities of the Company, at the end of the fiscal year. These annual financial statements , along with the relevant reports of the directors and the auditors of the Company, are subject to the publicity formalities, as provided in article 8 of Law 3190/1955.
While the General Assembly of Partners and the Director or Directors are the two main decision making organs of a Limited Liability Company; a third organ, which is the auditors shall be added in the event of a“large”Limited Liability Company. According to article 23 par. 2 of Law
3190/1955 in combination with 42a par.6 of Law 2190/1920 , in order for a Limited Liability Company to be considered as large, two of the following conditions must be fulfilled: a) total assets over €2.500.000;
Entities, which satisfy two of the three criteria must be audited by a recognized auditing firm of certified auditors (i.e. a member of the Institute of Certified Auditors“SOEL”). Auditors are appointed by the Assembly of Partners and their appointment is subject to the publicity formalities of article 8 of Law 3190/1955.
Tax Audit Certificate and “Annual Certificate”
The Annual Certificate provided by par.5 article 82 of Law 2238/1994, applies also on Limited Liability Companies , whose annual financial accounts must be audited by Certified auditors as provided by Law 3693/2008. The tax certificate is issued after an audit conducted in the same time with a control of the financial management, concerning the implementation of tax provisions. Tax violation, as well as non-attribution or even incorrect attribution of taxes, which are recorded by the Audit, based on books and data of the audited companies, are reported in detail on this Certificate. In cases that the Certificate does not include observations and findings of tax law violation, then the annual regular tax audit is not conducted, with the reservation of the provisions of article 80 of Law 3842/2010 (system of selection of cases for audit). The audit focuses on specific tax issues, that are defined in a specific audit program which is published by the Ministry of Finance in cooperation with the Greek Accounting and Auditing Oversight Board (ELTE), is updated annually and is in accordance with everything defined by the International Standard on Assurance Engagement -ISAE 3000.
According to article 109 of Law 2238/1994 (Income Tax Code), as recently amended by Law 3943/2011, for the legal entities of article 101 par. 1 (that includes the domestic limited liability companies), the tax imposed is calculated at the 29% upon their total taxable income. Under special provisions of article 10 of Law 3943/2011, the above mentioned rule applies for the income of the fiscal year 2016. Furthermore, the Law 2238/1994 in article 55, as amended by Law 3943/2011, provides that for profits that are distributed by domestic limited liability companies to individuals or legal entities, both domestic and foreign, a tax of a rate of 15% is withheld. By this withholding, the tax obligation of the beneficiaries, as far as this income is concerned, is exhausted. These provisions apply to distributed profits as from 01.01.2017 and after. Especially for profits distributed within the year 2016, the withholding of tax is defined at the rate of 10%.
Knowledge of the state of the corporate affairs
In article 34 of Law 3190/1955 it is provided that each partner is entitled, during the first ten (10) days, after the end of each calendar trimester, to be informed in person or by a proxy of the state of the corporate affairs and to examine the Company’s books and documents. Any conflicting provision of the Statute is invalid.
Financial relations of the Company
According to article 32 par.1 of Law 3190/1955, loans to the Company by the partners, which are secured with a charge upon the company’s assets, are prohibited. The provision for such a security (charge), despite the above-mentioned prohibition, is invalid. According to settled case law of Greek courts, this prohibition results to the nullity of the security and not of the loan itself. Moreover, payment by the Company of loans to the partners is considered to be void, in the cases that this payment annuls, partially or in total, the satisfaction of third parties’claims that exist at that time (article 32 par. 2 of Law 3190/1955). Finally, in the case of the Company’s dissolution for any reason, other than bankruptcy, the claims of partners, deriving from loans, are satisfied after the payment of other debts of the Company.
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”.
What is the main legislation regarding the Greek LTD?
The main legislation is Greek Law No. 3190/1955 as amended by Presidential Decree 419/1986, Presidential Decree 279/1993, Law 2339/1995, Law 2842/2000, Law 3419/2005, Law 3640/2006, Law No 3661/2008, Law 3769/2009 and Law 3853/2010 and Ministerial Decision Κ1-802/23.3.2011. Some provisions of the legislation regarding the Greek S.A. (A.E.) are also applicable regarding the annual financial statements of the company (Codified law 2190/1920 as amended). In this publication, all Articles refer to the main Law 3190/1955.
What is the main legal principle of the Greek LTD regarding partners’
liability for the company’s affairs? What are the main exceptions to this rule?
A Greek LTD shall only be liable for its corporate obligations through the company property (Art. 1 para. 1). The partners shall in principle have no personal liability whatsoever regarding the company’s affairs, obligations, responsibilities and liability towards third parties or towards the authorities.
What can be the object of the company? Are there any legal restrictions?
The Greek LTD is a commercial company by law, even if it is not stated in its Articles that its object is commercial and irrespective of the object actually pursued by the company’s directors and partners (Art. 3 para. 1). The object cannot be illegal or contrary to the public order, or else the company may be annulled by a competent court (Art. 7 para.
1). In addition to the above, a Greek LTD may not carry on any business required by law to be carried on exclusively by another type of company, usually a Societe Anonyme (A.E.) (Art. 3 para. 2).
How many parties are needed to incorporate a Greek LTD and how are they called?
The Greek LTD can be formed by one or more natural or legal persons.
These persons are called “partners” and not shareholders.
If the Greek LTD is formed by one person, does this person have additional personal liability for the obligations of the company?
No, as it is specifically provided in Article 43a the sole partner of the single-member Greek LTD has no personal liability whatsoever regarding the liability of the company due to the mere fact that he/she is the sole partner. Nevertheless, the possibility to lift the corporate veil on the basis of Article 281 of the Greek Civil Code which forbids the abuse of rights cannot be excluded, according to the specific circumstances of the specific case.
If the Greek LTD has only one partner, does it have to abide by any exceptional rules?
If either the company is formed by one partner or at a later stage after its formation all company participations are concentrated in the hands of one partner, then it shall observe the following exceptional rules (Art. 43a):
It shall obligatorily include in the company name the phrase “sole – membered limited liability company”.
It shall have the Minutes of the “Partner Meeting” endorsed by a notary public, having been present at the Meeting.
The same partner is not allowed to be the sole partner of another Greek LTD.
A sole-membered Greek LTD is not allowed to have as its sole partner another sole-membered Greek LTD.
Contracts signed and executed between the company and the sole partner shall be include in the Minutes or executed in writing, unless they refer to any matter included in the current company transactions which are executed under normal circumstances.
What is the minimum capital requirement to form a Greek LTD and how is the company capital divided?
The minimum capital requirement is four thousand five hundred (4.500) euros (Art. 4 para. 1). The company capital is divided in “portions of participation”. The nominal value of each portion of participation can only be defined at an amount of thirty (30) euros or a multiple thereof (Art. 4 para. 1 and 2).
Is it possible to have authorized company capital, wholly or partially?
No, the company capital can only be wholly paid up, and shall have already been wholly paid:
at the time when the contract of its incorporation is concluded (Art. 4 para. 1), or
at the time when any contract for the increase of the company capital is concluded (Art. 40 para. 4).
Shall the company capital be paid only in cash?
No, the company capital can also comprise contributions in kind on condition that:
At least half of the capital is paid in cash (Art. 4 para. 1), and
The procedure defined in law is followed (Art. 5).
Is there a possibility to represent the company’s portions of participation by shares?
No, the Greek LTD cannot issue shares, nor can it issue any other kind of document incorporating the rights of participation in the company (Art. 1 para. 2). The only document, which the company is allowed by law to issue and deliver to its partners, can be a certificate, which shall only verify the capacity of the person as a partner. The company cannot issue a separate document representing each of the multiple portions of participation of a partner, but only one document for the whole participation of each partner. In such a certificate it shall explicitly be declared that it does not constitute a security. (Art. 27 para. 2).
How is a Greek LTD incorporated? What is the procedure to be followed?
Incorporate the company;
Register the company in the General Commercial Registry (GEMH);
Publication in the Official Gazette;
Registration in the competent Chamber;
Registration in the relevant social security organization;
Registration with the relevant tax authorities and granting of Tax Registration Number (AFM).
The name, surname, profession, domicile and nationality of the partners;
The registered name of the company;
The registered office, which shall be within the limits of the Greek territory;
The object of the company;
The nature of the company as a limited liability company;
The overall company capital, the participation of each of the incorporating partners as well as the number of the portions of participation of each partner;
A declaration by the founders that the overall company capital has been paid up;
The contributions in kind, if any, their evaluation, the name of the contributing partner and the total value of all contributions in kind; and
The duration of the company.
Supplamentary contributions and other ancillary contributions not constituting not constituting contributions in money or in kind;
Prohibition of competition by the partners;
Total prohibition of transfer of the company participation of a partner or transfer only after fulfillment of certain provisions;
Withdrawal of a partner from the company;
Dissolution of the company for any reason not provided for by law; or
Procedures for audit of administration.
Who may be the administrator and legal representative of the Greek LTD and how do they act?
The administrator of the Company’s affairs and the legal representative of the Company is called “Director”. There can be one or more Directors.
In case there is no specific provision in the Articles, then all partners of the Company shall act as Directors by law (Art. 16). In case the Directors are more than one, they shall act collectively, unless otherwise provided by the Articles or by a resolution of the Company’s Meeting of Partners (Art. 17).
What is the liability of the Director(s)?
The Director(s) shall be liable for compensation against the company, each partner or any third party, in case they have violated any of the provisions of Law 3190/1955 or of the Articles of Association or in case they have acted in fault during their administration or the representation of the company (Art. 26).
What is the supreme organ of a Greek LTD, how is it formed and what powers does it have?
14 para. 1).
Amendments of the Articles of Association;
Appointment or revocation of Directors, or discharge of their responsibility;
Approval of the financial statements and the appropriation of profits;
Bringing an action against the organs of the company or against any of the partners as individuals to enforce company claims for compensation regarding their acts or omissions during company incorporation or operation;
Extension of duration;
Dissolution as well as appointment and revocation of liquidators; and
Any other matter specifically provided for in Law 3190/1955.
Who can convene a Meeting of Partners? What is the procedure?
By the Directors in writing with a notice to be served to them at least eight (8) days before the date of the Meeting (Art. 10 para. 2).
By the minority of partners holding at least 5% of the company capital, after application to the Directors, non action by the Directors, petition to the competent court and a relevant court decision granting them the authority to convene the Meeting themselves (Art. 11).
By any partner, irrespective of its participation in the company capital, in case the Directors have not convened the annual Meeting for approval of the company financial statements within three (3) months after the end of the fiscal year, to which these statements refer, and after petition to the competent court and a relevant court decision granting to the partner the authority to convene the Meeting (Art. 10 para. 3 and art. 11).
Can a Meeting be held without any procedure?
Yes, on condition that all partners of the company representing 100% of the capital agree on that (Art. 10 para. 4).
How are the resolutions passed in a Meeting of Partners? What is the principle of double majority?
A resolution can only be passed in a Meeting of Partners by a majority of more than one half of total number of partners representing more than one half of the total capital of the company (Art. 13). In the Greek LTD there are no quorum rules. The principle of double majority means that no resolution can be passed, unless there is, at the same time, a majority on the number of partners (majority of partners) and a majority on participations on the company capital (majority of capital). There are also certain important matters, regarding which an extra-ordinary majority or unanimity is required by law. The Articles may also provide for extra-ordinary majority or unanimity.
How are the company profits distributed?
At least 1/20 of the net profits shall be reserved each year as a reserve fund obligatory by law, until the reserve reaches an amount equal to 1/3 of the company capital (Art. 24). The Articles may provide for an additional reserve fund. After the above amount has been deducted from the net profits as these are evidenced by the annual financial statements for the preceding fiscal year, each partner has a right to the remainder, equal to his/her percentage in the company capital, unless otherwise provided for in the Articles (Art. 35).
How can the company be dissolved?
The company may be dissolved in one of the following cases (Art. 44):
Whenever the Articles so provide;
By a resolution of the Partners Meeting with a majority of at least ¾ of the partners representing at least ¾ of the overall capital;
By a court decision after petition filed by partner(s) holding at least 10% of the capital and upon serious grounds;
If the company is declared bankrupt.