Setting Up A Business in Greece
Posted with permission from the American Hellenic Chamber of Commerce
Greek law provides for two main structures for the purpose of carrying on a business for economic gain: companies whose principal feature is the absence of personal involvement and partnerships whose main characteristics is the personal element involved. Apart from these business organizations, provision is also made for single traders, joint ventures, and branch offices and foreign companies. These shall be examined in turn.
A. COMPANY LIMITED BY SHARES (A.E.)
Businesses organized as companies limited by shares are more significant economically than those organized otherwise. The internal organization of a company limited by shares includes the General Meeting of Shareholders, the Board of Directors, and the Auditors. The shareholders own shares in the company which are either registered or bearer shares. Shareholders are not personally liable and their liability is limited to the amount of their investment. The General Meeting of Shareholders is responsible for taking the most important decisions, including business decisions that are implemented by the Board of Directors. The Board of Directors is elected by the General Meeting of Shareholders and consists of at least three members charged with the management of the company’s business.
Two shareholders and a minimum share capital of 60,000 euros are required for the formation of a company limited by shares. Persons seeking to do business as a company limited by shares must observe a formal process. The initial step is the execution of the constitutional document (articles of incorporation) before a notary public. A copy of the constitutional document is submitted to the competent tax authority and a special tax charge amounting to 1% of the company’s share capital is payable. The right to use the name of the company must also be confirmed by the Hellenic Chamber of Commerce and Industry. The constitutional document is then filed with the competent prefecture who issues a decision approving formation of the company. The constitutional document and approving decision are then recorded in the Registry of Companies Limited by Shares (which is conclusive evidence that a company limited by shares has been formed) and published in the Official Gazette. Within one month from establishment, the company’s share capital must be paid up and the Board of Directors must convene in order to certify payment. Within two months, the Board of Directors is convened and formed into a body corporate and powers are delegated to its members. The company is also registered with the Taxation Registry.
B. LIMITED LIABILITY COMPANY (E.P.E.)
In a limited liability company, the personal liability of partners cannot be engaged and liability is limited to the amounts contributed by each partner in return for their "parts" of participation. The internal organization consists of the meeting of partners and the management. Although all partners of the limited liability company are entitled to manage the company's business, in practice management is assigned to one or more administrators.
In a limited liability company, the personal liability of partners cannot be engaged and liability is limited to the amounts contributed by each partner in return for their “parts” of participation. The internal organization consists of the meeting of partners and the management. Although all partners of the limited liability company are entitled to manage the company’s business, in practice management is assigned to one or more administrators.
Two partners and a minimum share capital of 18,000 euros are required for the formation of a limited liability company. The share capital must be fully subscribed and paid up at formation and at least half must be paid up in cash. The initial company contract is drawn up in the form of a notarial deed. This is followed by the submission of a copy of the contract to the competent tax authorities and payment of a special tax charge amounting to 1% of the company’s share capital. The right to use the company’s name must also be certified by the Hellenic Chamber of Commerce and Industry. A copy of the company’s contract is then submitted to the Court of First Instance for the obtention of a registration and a summary thereof must be published in the Official Gazette. The company’s establishment is then followed by its registration with the Taxation Registry.
A limited liability company may also be established by one person and in this case the name should include the mention of “one person limited liability company”.
A. GENERAL PARTNERSHIP (O.E.)
General partnerships consist of at least two partners whose liability is unlimited. The partnership agreement affords certain flexibility to partners in determining their relationship. For instance, the parties can determine who will participate in the management of the partnership and may agree on the way profits and losses are to be shared. In the absence of agreement to the contrary, all partners have a right to perform management practices and partners share profits and losses equally. There are also mandatory provisions that cannot be waived by agreement, such as the joint and several and unlimited liability of partners, the authority of partners to bind the partnership to obligations within its apparent scope, the partners’ fiduciary duty and their power to dissolve the partnership.
For the creation of a partnership, there is no minimum share capital requirement. A partnership agreement is drawn up but it is not required to be in the form of a public document. A copy of the agreement is submitted to the competent Court of First Instance for publication purposes and entry in the Company Register. The right to use the partnership’s name must be certified by the Hellenic Chamber of Commerce and Industry and a copy of the agreement is filed with the competent tax authorities where 1% of the capital is payable.
B. LIMITED PARTNERSHIP (E.E.)
The limited partnership consists of one or more partners whose liability is unlimited (general partners) and one or more partners whose liability is restricted to the amount of their contribution (limited partners). General partners are responsible for the management practices whilst limited partners are not allowed to participate in the management practices of the partnership and are typically investors in the business. In the event that a limited partner becomes involved in the management and representation of the partnership or if the partner’s name is include in the limited partnership’s name then he will become jointly and severally unlimitedly liable for the partnership debts.
The partnership contract may be in the form of a private or notarial deed and the procedure for creation applicable to general partnerships is also applicable to limited partnerships.
C. SILENT PARTNERSHIP
A silent partnership is created by an informal agreement between at least two persons, one being a passive partner with capacity to enter into commercial transactions (silent partner) and the other an active partner with capacity to acquire commercial identity. The liability of silent partners is limited to the amount of their contribution, whilst that of active partners is unlimited.
III. JOINT VENTURES
Joint ventures involve an association of natural or legal persons jointly undertaking the prosecution of a particular transaction for mutual profit. Unlike the partnership, a joint venture does not involve a continuing relationship between the members. In practice the legal principles governing the civil company or general partnership are applied to joint ventures.
IV. SINGLE TRADERS
Single traders own their business directly and are fully liable for business debts without limitation of liability. They are entitled to the business profits which may either be taken out or re-invested into the business.
V. BRANCH OFFICES AND FOREIGN COMPANIES
A. BRANCH OFFICES
The establishment of a branch is subject to an approval of the competent Prefect. The following documents are required: parent company’s constitutional documents; minutes of a meeting of the Board of Directors of the parent company authorizing one of its members to grant a power of attorney and appoint a process agent; power of attorney executed before a consular office or a notary public of the registered seat of the foreign company whereby the agent, proxy, and process agent are appointed to proceed with all necessary actions for the formation of the branch and its representation; a certificate confirming that the parent company is in good standing, usually obtained from the Chamber of Commerce; a certificate on the parent company’s share capital (the requirements for Greek companies apply and therefore for instance, a minimum share capital of 60,000 euros is required for a branch of a foreign company limited by shares and a minimum of 18,000 euros for a branch of a foreign limited liability company); and a solemn declaration of the agent, proxy, and process agent as regards the registered seat of the branch in Greece.
These documents must be officially translated into Greek and apostilled in accordance with the Hague Convention.
B. FOREIGN COMPANIES
Foreign companies should preferably opt to form a fully owned subsidiary in the form of a company limited by shares. The documents required for an establishment of a limited liability company are: decision of the Board of Directors (or General Meeting) of the foreign company to establish a company in Greece; foreign company’s constitutional documents as currently in force; certificate issued by the competent authority where the company’s registered seat is located evidencing that the foreign company is in good standing; notarized or consular deed for the appointment of an attorney or one of the company’s officers authorized to proceed with all necessary formalities and to sign the company’s constitutional document; and certificate regarding the individuals vested with the power to represent and bind the company.
Likewise, these documents must be officially translated into Greek and apostilled in accordance with the Hague Convention.
The American Hellenic Chamber of Commerce, is a non-profit, self-supporting organization, and was established in 1932 to promote economic and business relations between the United States and Greece. With a corporate membership today of some 1,000 U.S. companies operating in Greece and major Greek enterprises doing business with the U.S., it continues to encourage and facilitate trade, investments and professional partnerships from both sides of the Atlantic. Additionally, the Chamber is a fully accredited member of the U.S. Chamber of Commerce in Washington, D.C., and affiliated with the European Council of American Chambers of Commerce (ECACC).