LEGAL ASPECTS OF DOING BUSINESS

IN GREECE

1 LEGAL AND JUDICIAL SYSTEM

Greek law is primarily based on written law. The influence of French and German legislation on Greek law is fairly pronounced. The impact of EU Directives towards legal convergence in Europe is also readily apparent in Greece, particularly in the fields of company law and indirect taxation.
The judicial system consists of a Supreme Judicial Court and a Special Supreme Tribunal.

2.1 Requirements of a Greek ANONYMOS ETERIA (AE)

Capital. The minimum share-capital requirement of an AE, or corporation, is €60,000.

Shareholders. No limitations on nationality or residence. Minimum of two shareholders, either physical persons and/or legal entities.

Directors. Minimum of three; no nationality or residence requirements.

Management. Except as specified in the byelaws, the board of directors represents the company in all matters.

Reporting Companies meeting two of the three following criteria in two previous accounting years-- assets of more than €1.5m, gross revenues of more than €3m or more than 50 employees--must have their annual accounts audited by certified chartered accountants.

Types of shares. Registered and bearer shares are permitted, although shares of banks, health and education companies, insurance companies and leasing companies, telecommunications companies, utilities and companies engaged in manufacturing defence equipment must be registered. (Companies intending to tender for government contracts worth more than €2.9m must also have registered shares.) Preferred shares without voting rights may be issued, as may privileged shares. The nominal value of shares may range from €0.30 to €100.

Listings. Companies wishing to list on the main board of the Athens Exchange must have equity of at least €12m and on the parallel board for smaller-cap stocks of €3m. The establishment of a bank requires minimum capital of €18m (€9m for non-EU companies that seek to establish four or fewer branches).

Articles of incorporation for an AE must be executed before a notary public and approved and registered by the relevant prefecture, which issues a registration number (known as an armae in Greek). The corporation must be registered with the local chamber of commerce, which transmits the articles for publication in the government gazette. For an EPE, the clerk of the local court of first instance must register the articles of association, with a summary published in the government gazette. Only after these procedures are completed will the tax authorities hole-stamp the company's invoice and account books (the registration number is punched through the entire book, and only such documents are accepted by auditors as legitimate records of income and expenses).

Taxes and fees. Costs of incorporation include the following:

Tax of 1% related to "the concentration of capital"--that is, €600 on a minimum share capital of €60,000.

A levy of 0.1% in favour of the Competition Commission--that is, €60 on a minimum share capital of €60,000.

Notarial fees (fixed), of €735-1,027 (of which €191 is payable to the Lawyers Welfare Fund), depending on the size of the document and the number of copies involved (minimum five).

Lawyers' fees (negotiable).

A fee of €508 for publishing the summary of the articles of incorporation in the government gazette, and €563 for publishing the minutes of the board meeting that constituted the company and that confirmed payment of its initial share capital in the government gazette.

A pre-registration fee of €30 with the Athens Chamber of Commerce. Annual subscription fees depend on the size and type of company. If the company is registered during the second half of the year, the annual fee is reduced to half.

Excluding lawyers' fees, which are negotiable, costs associated with incorporation generally amount to 5% of the minimum capital of €60,000. The higher the capital, the lower the percentage.

Foreign firms almost invariably choose the corporation, or Anonymos Eteria (AE).

2.2 Requirements of a 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.

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”.

An Eteria Periorismenis Efthinis (EPE), or limited-liability company, has lower minimum capital requirements of €18,000 to be paid fully at the time of establishment, at least half in cash with the capital divided into shares (owned by the investors) of an amount not less than €30 per share. The EPE does not declare dividends but is taxed on its entire net profit at the company level whether the net profit is distributed or retained. EPEs may not issue bonds.

The OMORRYTHIMI ETAIRIA (general partnership) and ETERORRYTHMI ETAIRIA (limited partnership) are permissible under Greek law. In a limited partnership, one or more partners may be limited in their liabilities to the extent of their paid-in capital. They lose their limited- liability status, however, if they join the management, if their names appear in the title of the firm or if they represent it in business transactions.

A written deed attesting to formation of the partnership must be filed with the clerk of the court of first instance in the district where the partnership has its registered office. The deed must detail names and addresses of the partners, the firm's name, its objectives, each partner's capital contribution and profit/loss shares, duration of the partnership, its management, and terms and conditions under which business is to be conducted.

A new type of pan-EU company registration became effective in October 2004, the SOCIETAS EUROPAEA (SE). Under the statute, a European corporation can be established by the creation of a holding company or a joint subsidiary, or by the merger of companies located in at least two EU member states or the conversion of an existing company set up under national law. With headquarters in a country of its choosing, an SE will be able to operate throughout the EU under laws applicable in all 25 countries.

2.3. PARTNERSHIPS

2.3.1 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.

2.3.2 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.

2.3.4. 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.

2.4. 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.

Joint Ventures must file a written agreement with the Greek tax authorities before beginning operations. Each of the members must be either a legal person or entity, and the joint venture must have an address. It must have been formed for a specific transaction, unless its purpose is to sell Greek goods and services outside Greek territory or to promote sales of Greek products. Joint ventures do not constitute legal entities but do constitute fiscal entities for the purpose of income tax and taxation in general.

2.5. 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.

2.6. BRANCH OFFICES AND FOREIGN COMPANIES

2.6.1. BRANCH OFFICES

A branch may be established if it meets the minimum capital requirements applicable to Greek companies--that is, if the branch's parent company is a limited-liability company, the branch must meet the requirements of a Greek limited-liability company. The procedures are the same as those to establish a corporation, but the company must also have an approval of establishment/installation, which is issued by the directorate of commerce of the relevant prefecture. Representatives must be named who will be responsible before the Greek courts (a plenipotentiary representative and an attorney resident in the region). The registration and the names of the representatives must be published in the government gazette. This might not be necessary if the establishment is for a limited period (as for a construction project) or is regulated by a special intergovernmental accord. A branch must also register with the local chamber of commerce.

Foreign companies used to be entitled to establish offshore companies that were exempt from tax on all income earned in trading activities outside Greece. But since January 2002 it is no longer permitted to establish such firms, with the exception of shipping companies. All benefits afforded to such companies will be discontinued on December 31st 2005.

These documents must be officially translated into Greek and apostilled in accordance with the Hague Convention.

2.6.2. 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.

3 OTHER LEGAL ISSUES