GENERAL AND LIMITED PARTNERSHIPS (O.E. and E.E.) Basic characteristics of a general partnership
A general partnership is a company with legal personality, whose partners are jointly responsible against third parties for company’s obligations. Such responsibility is considered as personal, direct and unlimited.
Basic characteristics of a limited partnership
A Limited partnership is a company with legal personality, which consists of at least one (unlimited) partner responsible against third parties for all company’s obligations and at least one (limited) partner whose responsibility is considered as limited.
How many parties need to concur in order to establish a general / limited partnership?
In order to establish a general / limited partnership, it is necessary to have an agreement of at least two parties (natural or legal persons).
Natural Persons are required to be at least eighteen years old. In order for a minor to get involved in the establishment of such company, there is an extra requirement of getting a judicial permission.
Liability of the general partner
All general partners are jointly responsible with their personal assets.
Therefore, company’s creditors are able to claim the partnership’s debts directly from the partners. Such liability is imposed by the Law and is not possible the partner’s agreement to exclude such liability or to include different content. General partners are jointly and personally liable along with the company. Thus, company’s creditors are not obliged initially to request their claims by the partnership company, but they can immediately request their claims by the general partners. A general partner’s liability is unlimited. Thus, each partner is liable with all his personal assets and not up to a fixed amount. Additionally, all partners are jointly liable, id est each creditor may pursue payment, either by the company, by any partner or by all (partners and company).
A general partner as he obtains corporate status is able to become bankrupt, independently from the company if he personally fails to pay his debts, or he may become bankrupt along with the company, if the company becomes bankrupt. Moreover, if there is a judicial decision against the company, then the creditor can enforce it against the general partners too. Therefore, it is possible for the creditor to take legal action only against the company, but afterwards to enforce such decision against all the general partners.
General’s partner liability begins at the time he obtains the corporate status. Moreover, the partner that ceases, in any way, to be partner of the company, then from the moment that this is published, the general partners ceases to be liable for the company’s debts arising after such publication. However, the partner is still liable for previous debts, even if such debts get overdue after he ceased to be partner. Such liability is terminated five years after the above mentioned publication. The general partner that has personally paid a company’s debt to a creditor, is able to request by the rest (company or partners) the money that he was obliged to pay to the creditor, as at that time he simultaneously becomes creditor of the company. However, in accordance with the principle of good faith, in such cases the partner should firstly request the money by the company, and if he is not able to get paid, then to claim such amount by the other general partners. In that case the partner is not entitled to claim by the rest partners the full amount paid by him, but only the percentage that the rest partners have in the company in accordance with the agreement they have signed.
Liability of the limited partner
The limited partner has the same rights and obligations as the general partner. Thus, limited partner shares the profits and the proceeds arising on liquidation. Moreover the limited partner has the right to participate in the general meeting of the company, where he has the right to vote, to monitor the progress of company’s affairs and to request information. Limited partners are also obliged to contribute to the company’s objectives. In any case, events that occur in the limited partner, such as death, bankruptcy etc may influence the company itself, as they may lead to the dissolution of the company. Moreover, the limited partner reserves the right to terminate the company, as the same right is also reserved by the unlimited partner. Limited partner’s liability is altered compared with unlimited partner’s liability.
Basically, limited partner’s liability is limited. Nevertheless, the limited partner is liable with all his personal assets, but such liability is limited up to the certain amount of his contribution to the company. Therefore, in case that such contribution has already been paid to the company, then the limited partner is no longer liable even against third parties. Limited partner’s liability is direct. Thus, in case that limited partner’s contribution (to the company) has not been paid, the limited partner is responsible for the payment of such contribution not only against the company, but against third parties
(creditors) that may claim money by the company. Therefore, in that case a creditor may directly request by the limited partner to get paid for a company’s debt, and if the limited partner pays such money to the creditor, then if such payment reaches the limited partner’s contribution, the limited partner is no longer liable against anyone (the company and rest creditors). Such liability against third parties is also joint (along with the company). Limited partner’s liability is terminated five years after he ceases to be a partner. As a result of the limited liability of the limited partner, the loss of the limited partner is up to the amount of his contribution to the company.
Therefore, if there is no other agreement, the limited partner is not obliged to pay additional contribution in order to cover other company’s losses.
What is the required form, so as for a general / limited partnership to get established?
In order to establish a general or a limited partnership, there is a need of a partnership agreement that should be in writing. Such agreement is called Articles of Association and contains (indicatively) partners’ names, the purpose of the company, company’s name, the place of establishments, the management and the way of termination. The Articles of Association are not required to be in a contractual (notarius) form, unless the law requires so.
What is the minimum capital required for the establishment of a general / limited partnership?
There is no minimum capital required by law for the establishment of a general / limited partnership, as the assets of the company are not distinguished by the partner’s assets, as the partners are liable with their personal assets for all the obligations of the company.
Where should I register a general / limited partnership?
General and limited partnerships that are established by 04th of April 2011 onwards, are registered to the One Stop Shop.
Which are the One Stop Shops?
One stop shops are the Services of G.C.R. (G.E.MI. = General Commercial Registrar) that operates at Chambers and the certified KEP centers (Citizen Service Centers).
In special cases that the Articles of Association are drawn up by a public notary, then the public notary that have drawn up the notarial deed is considered as the one stop shop.
Initially the cost for the Company Establishment Note is fifty (50,00) to seventy (70,00) Euros. Such cost is not refundable. Moreover, in case that the establishing partners are more than three (3), then the cost is increased by five (5,00) Euros per additional partner. Additionally, there is an extra cost:
The Registration fee in the One Stop Shop is ten (10,00) Euros
The Chamber registration fee (this depends on the Chamber)
Contribution to the Lawyers Fund (0,5% of the company’s capital)
Lawyers Fund fee of Athens. (For capital more than 586,94 Euros is 1% of the capital stated in the Articles of Association plus 3,6% of the above mentioned 1% for the stamp)
Registration Fee to OAEE (Insurance Organisation for the self-employed [approximately one hundredth ten ( 110,00) Euros]
Capital Accumulation Tax (1% of the capital stated in the Articles of Association)
Annual Fee for having electronic Access in the database of G.E.MI.15,00 Euros)
Where can I find the forms needed to be completed and submitted to one stop shop?
The forms of declarations and of Tax Capital Accumulation are available on the website of the Ministry of Finance. Other forms may also be found in the website of the General Commercial Registrar (G.E.MI.)
How does a general / limited partnership is registered in General Commercial Registrar (G.E.MI.)?
The one stop shop registers online in its database the company’s records and its Articles of Association. In this company a G.E.MI. number is provided.
Is it possible to transform a general partnership into a limited partnership or vice versa?
Converting a general partnership into a limited partnership and vice versa is always possible with an amendment in the company’s Articles of Association.
How does a general partnership is managed?
The company’s Articles of Association may provide the way that the general partnership is managed. The Articles of Association may set all the partners, some of the partners or even third parties as managers. In case that the Articles of Association do not include the type of management, then the management of the company is exercised by all partners.
How does a limited partnership is managed?
The management of the limited partnership is exercised only by the general partners. The limited partner cannot be included in the management of the company or deal with company’s affairs, either on his own initiative or as a proxy of the other partners, or as a manager. In case that there is a violation of this rule, then this limited partner is jointly liable for all the obligations of the company, with all his personal assets. Therefore, in that case, limited partner’s liability becomes unlimited and that partner will be treated as a general partner (as concerns the liability).
How does a general / limited partnership is terminated?
The termination of a general / limited partnership usually occurs because of the following events:
The lapse of time for which the company has been established
Completion of the purpose of the company or failure to complete
Decision of partners
Bankruptcy of the company
Complaint by partner
Death, declaration of obscurity, bankruptcy, loss of corporate status for one of the partners
Reduction of the number of partners to one
When does a general / limited partnership enters into liquidation and what happens in the liquidation period?
The general / limited partnership after its termination is entered into the stage of liquidation. During the liquidation stage, the company still exists but only for the purpose of liquidation. The liquidators of the company can no longer be engaged in management acts or to continue company’s commercial activity. Instead, the liquidators are obliged to maintain company’s assets and to make all actions that are necessary for achieving the aim of liquidation.
JOINT VENTURES What are the basic characteristics of a joint venture?
Under Greek Law joint ventures are not regulated as a particular type of legal entity. Joint ventures constitute an association of two or more persons, in order to complete a common purpose in their joint contribution. The intented purpose of the joint venture (and hence its duration) differs compared with the purpose of other companies in the sense that is not constant but unique and is usually associated directly with a certain project.
Does the term joint venture always include the concept of corporate partnership?
Sometimes the term joint venture covers simple partnerships between companies, that do not include the elements of corporate partnership (consortiums). The same also applies internationally, where the term joint venture, means different kinds of collaborations among businesses.
Mostly, such term is used in international collaborations among companies that belong in different states.
Do joint ventures always seek a commercial objective?
The objective pursued by the joint venture may be either commercial or not. If the objective of joint venture is not commercial, then such joint venture would probably be a civil-law company or an unincorporated legal person. If such joint venture has a commercial objective then it should necessarily be regarded as one of the types referred to under Greek Law. Therefore, if the manager of the union operates under the corporate name, then this is a general partnership, which is usually not published and therefore it will be characterized as “de facto” general partnership. If, on the other hand side, the manager operates in his own name and on behalf of the other members, then it will be a silent partnership.
What are the common purposes of a joint venture?
The purposes of a joint venture usually include a) execution of a public or a private project by an association of companies, b) buying a land and its partition in more pieces of land or c) export of goods or services.
What is a joint venture of shipowners?
Joint ventures of shipowners is consisted by people that jointly own ships and exploit them. The ship of each shipowner is considered as his share in the joint venture. Such joint venture has no legal personality.
The establishment of this joint venture is not necessary to be in writing. However, is proposed to be in writing in order to have a proof for the terms of the agreement.
What provisions apply to joint ventures?
The provisions that apply to joint ventures depend on the company’s type under which the joint venture operates. Therefore, it may operate under the law that regulates civil-law companies, or the law that regulates general partnerships, or the law that regulates the silent partnerships.
Is it necessary to have specific form in order to establish a joint venture?
The agreement for the establishment of a joint venture is necessary to be in written form. In any case a private agreement is sufficient.
What is the minimum capital required for the establishment of a joint venture?
Under Greek Law there is no need to have a capital for the establishment of a joint venture.
When does a joint venture is dissolved?
After the completion of the joint venture’s objective the joint venture is automatically terminated. Moreover, depending on the type of the company under which the joint venture operates, the joint venture can also be terminated for the same reasons that this type of company under which it operates can get terminated.
Does the joint venture has the right of legal participation?
In accordance with the prevailing opinion, the joint venture has the right of legal participation, apart from the cases that the joint venture operates in the form of a silent company.