Recent changes in commercial companies & simplification – acceleration – digitization of incorporation procedures
(Published on forin.gr)
In 2018 major changes took place for commercial companies (mainly for SAs and LTDs) and in corporate law in general. The purpose of this newsletter is to present in general the new corporate status quo. One of the most important changes is that Law 4548/2018 reformed and modernized the Société Anonyme (SA) institutional framework, a century after the entry into force of Law 2190/1920. Also, Law 4541/2018 brought significant changes in the legislation of LTD (ΕΠΕ) companies (with the amendment of several articles of Law 3190/1955), as well as minor changes in the legislation of Private Companies (IKE), General Partnerships (ΟΕ) and Limited Partnerships (EE) (with the amendment of some of the articles of Law 4072/2012). Additionally, pursuant to Law 4441/2016, the Joint Ministerial Decision no. 63577/2018 was published in June 2018, which further simplified the commercial companies’ incorporation procedures.
A. CHANGES IN S.A. COMPANIES
The majority of articles of L. 4548/2018 are coming into force from 1.1.2019, with the exception of some provisions that came into force from the publication of the Law on 13.06.2018 (e.g. the prohibition on the issuance of shares to the bearer), while there are transitional provisions on certain issues (e.g. for the adjustment of the minimum share capital). The main changes that have been made to the SAs are the following:
1) Share capital– Shares
The new law increases the minimum share capital of the SA from €24,000 to €25,000. SA companies with a lower capital must by 31.12.2019 either adjust their capital by decision of the General Assembly, which should be taken by simple quorum and majority, or be converted into a company of another form; otherwise the sanction that will be imposed is that the General Commercial Registry (GEMI) shall refuse to register any new corporate entries.
In addition, for the valuation of the contributions in kind, the valuation report of the Committee of Experts of the Ministry of Finance & Development is abolished and, apart from two auditors, the valuation report can also be issued by an audit firm or by two independent certified valuators. The following major changes are identified in the payment of capital (during the incorporation or after a capital increase): Cash may be deposited in a company’s account in a credit institution in Greece or in an EEA country. Certification of capital’s payment is also carried out by an auditor or audit firm, except for very small or small companies that are not listed on a regulated market, for which the certification can be done by the BoD.
As regards the nominal value of the shares, it cannot be less than €0.04 (until now it was €0.30) or more than €100. Additionally, the new law permits the co-existence of shares of different categories or classes that may have different nominal value.
One of the most important changes, in the sense that it affects the core of the SA, is the prohibition of issuance of bearer (anonymous) shares. Already since the publication of Law 4548/2018 in the Greek Government Gazette, on 13.06.2018, SAs cannot issue bearer shares. Companies with (partially or entirely) bearer shares before the publication of the Law, are obliged to proceed with their nominalization until 1.1.2020. Additionally, the BoDs of these companies are obliged no later than 1.7.2019 to communicate through GEMI or with other means how the holders and beneficiaries of the bearer shares should announce their rights to the company.
2) Other securities
The new law records and specifies the securities other than shares that a SA may issue.
First of all, the new law completely reforms the system of bonds. In particular, when a SA issues a bond loan, it also proceeds with the issuance of tangible or intangible, nominal or anonymous bonds (except for those convertible into shares that are always nominal). The new law gives effect to the Assembly of Bondholders, the constitution of which in some cases is mandatory, as in the case of loans listed on a regulated market. There are special provisions for common bonds and loans with exchangeable bonds.
Except for the common founding titles, Law 4548/2018 provides, also, for extraordinary founding titles, which may be issued not only during the incorporation of the company but also later as an exchange for the offer of certain items in kind by shareholders or by third parties.
The new law also devotes a separate chapter on warrants. By the acquisition of such titles, the holders have the option to acquire shares to be issued by the company. With the exercise of the right of shares’ acquisition, a share capital increase takes place.
3) General Assembly
It is no longer obligatory for a Notary Public to be present and co-sign the Minutes of the General Assembly (GA) in case only one shareholder is present. Also, article 135 of Law 4548/2018 permits the GA decisions that are taken without a meeting of shareholders under the following conditions: the shares are not listed on a regulated market; there is an explicit provision in the company’s articles of association; a minority of 1/5 of the capital is not opposed to these procedures and the shareholders have already communicated their electronic communication data to the company. This procedure cannot be followed when a decision has to be taken on matters for which competent is the ordinary GA. Article 136 offers the possibility of drawing up a GA Minutes without a meeting, provided that it is signed by all shareholders or their representatives. Signatures may be exchanged by e-mail or other electronic means if the articles of association permits so.
With regard to the interests of the shareholders’ minority, shareholders representing 1/10 (instead of 1/5 under the previous regime) of paid-up capital may, upon their request, oblige the BoD to inform the GA on the course of corporate affairs. Also, at the request of any shareholder, the BoD has to provide information on the company’s capital, the categories of shares, the number and the rights they provide, if such information is not provided on the company’s website. The rights of the shareholders’ minority can also be exercised by associations of shareholders.
4) Board of Directors
As regards the number of BoD members specified in the articles of association, the new law maintains the minimum of 3 members but adds a maximum of 15 members. One of the innovative regulations is the statutory provision for one-member management body, the Manager-Consultant, who is always a natural person being elected by the GA. The articles of association may include a provision for direct appointment of members of the BoD by certain shareholder(s), but not more than 2/5 of the total number of members.
The discussions and decisions of the BoD are registered in a special book, which can also be kept electronically. The innovative regulation of Article 94 provides that the drafting and signing of the minutes by all members of the BoD is equivalent to a decision of the BoD, even if no meeting is held, while the signatures of the members can be replaced by an e-mail exchange if such a provision exists in the articles of association.
5) Financial and other changes
The new law specifies the persons who must sign the financial statements of the company, i.e. the Chairman of the BoD, the Managing Director (or one Member of the Board, in case the Managing Director is also the Chairman) and the accountant of the company (who should hold an A’ class license). Very small SAs are exempted from the obligation to publish a management report.
In addition, it is no longer possible to solve a SA with a court order if the total equity becomes less than 1/10 of the share capital and the GA does not take any measures.
B. CHANGES IN LTD COMPANIES (ΕΠΕ)
The changes introduced by Law 4541/2018 in Law 3190/1955 are in force from the publication of the first law in the Greek Government Gazette, on 31.5.2018. Particularly:
As to the trade name of the LTD, apart from the names of one or more partners or the business activity, it can also be formed by other verbal indications and may be attributed in whole or in part in Latin characters. For international transactions, the type of company will be referred to as the “Limited Liability Company” and the acronym “L.L.C.” or “LTD”. If the company is single-member, the name must contain the words “Single-Member Limited Liability Company” or “Single-Member LTD/LLC”.
The new law sets 1€ as the minimum price of the nominal value of the LTD shares, while the nominal value must be the same for all the company’s shares.
A minimum period of eight (8) days is set for the convention of the Meeting of the Partners by the director; the invitation may also be sent by e-mail. The Meeting of the Partners may convene outside the company’s headquarters, even abroad, or via teleconference if a partner is a foreign resident.
As regards the profits distribution, partners have rights thereon according to the percentages of their shareholdings, unless otherwise provided in the articles of association.
Another crucial amendment is the one of article 45 of Law 3190/1955, which states that if the company’s own funds fall below ½ of the share capital, the director is obliged to convene the Meeting of the Partners in order to decide on necessary measures (without excluding the dissolution of the company or reduction of capital).
For the dissolution of the LTD, a decision with a majority of 2/3 of the partners representing 2/3 of the capital is required, except as otherwise provided in the company’s articles of association, instead of ¾ as previously in force. Furthermore, the articles of association may change with a decision by the majority of at least 1/2 (instead of 3/4) of the total number of the partners representing at least 65% (instead of 3/4) of the capital. The director may also amend the articles of association (without a decision of the Meeting of the partners with the abovementioned quorum and majority) in cases of judicial revocation of management, transfer of shares in life or as a result of death and in the event of exit or exclusion of a partner.
C. CHANGES IN OTHER COMMERCIAL COMPANIES
With regard to other commercial companies, i.e. IKE, GP and LP, Law 4541/2018 brought changes regarding their trade name. Particularly:
IKE’s trade name cannot be imaginary but it may consist of “other indications” (different from the names of the partners or the company’s activity). IKE can, also, form its trade name (in whole or in part) with Latin characters. Finally, the director’s ability to remove the indication “Single-Member IKE” without amendment of the articles of association is abolished.
As regards GP (ΟΕ) and LP (ΕΕ), the new law permits formation of their trade name (in whole or in part) with Latin characters. For their international transactions, the trade name must be respectively «General Partnership» or/ and «G.P» and «Limited Partnership» or/and «L.P.».
D. SIMPLIFICATION – ACCELERATION – DIGITIZATION OF INCORPORATION PROCEDURES
The Joint Ministerial Decision no. 63577/2018, pursuant to L. 4441/2016, specified the simplified incorporation procedures before the One Stop Shops in the light of acceleration and digitization, which are the imperatives of modern economic and commercial life.
One Stop Shop (OSS) is the natural person or legal entity qualified to commence, process and complete the procedures of the incorporation of companies and in particular:
– Services of GEMI (S-GEMI);
– Notary publics certified as OSS and
– Electronic One Stop Shop (e-OSS), which was provisioned for the first time under Law 4441/2016 and was instituted with the above Joint Ministerial Decision.
The criteria for the selection of the competent OSS by the founders are determined by the type of the company to be incorporated and the type of articles of association to be selected.
1) In case of standardized articles of association, the incorporation of any corporate type can take place through any OSS and through the institutionalized Electronic One Stop Shop (e-OSS).
2) In case the standardized articles of association are not selected, then the incorporation of SA and LTD is mandatorily effected by a Notary Public, whereas the incorporation of PC, GP and LP can be made via S-GEMI or Notary Public.
3) In case a notarial deed is required (e.g. contribution of real estate) then the incorporation is mandatorily effected by a Notary public.
In particular, with regard to the new incorporation procedures, the following are noted:
1. Acceleration of the procedure
The same day or the next working day after the submission of the required (legalization and incorporation) documents, the OSS (regardless of kind) checks the legalization of the founders as well as the completeness and correctness of the articles of association and other documents. If the legal requirements are met, the incorporation procedure is completed.
2. Simplification of the procedure
The OSS after the revision of the documents creates a file for the company at GEMI and
a) provides the company with the GEMI number and passwords;
b) issues TIN and grants access to taxisnet for passkey issuance (“kleidarithmos”);
c) sends the incorporation’s certificate as well as the partners’ data to the Single Social Security Entity (EFKA),
d) registers the company with the competent Chamber;
e) issues digitally signed copies of the articles of associations and the incorporation’s certificate.
Additionally, the accumulation of all incorporation fees in the Unified Incorporation Bill, which can be paid through e-banking, further reduces bureaucracy.
3. Digitization of the procedure
The incorporation process before e-OSS is exclusively digital. By using the special platform of GEMI the incorporation is summarized as follows:
-the standardized articles of association are completed electronically by a representative authorized by the founders;
-the articles of association are then digitally signed by the founders (with certified digital signature);
-the founders’ legalization as well as the rest incorporation documents (e.g. the representative’s proxy, the certification of capital’s payment, where necessary etc.) are submitted digitally;
-the Tax Office declarations (Μ3, Μ6, Μ7, Μ8) are completed digitally in electronic form.
 Members of the European Economic Area (EEA) are the 28 EU countries, Iceland, Liechtenstein and Norway.
 Companies of this category must not exceed the limits of at least two of the following criteria: a) total assets 350,000€, b) net turnover 700,000 €, c) average number of employees during the year: 10 persons.
 Companies of this category must not exceed the limits of at least two of the following criteria: a) total assets 4,000,000€, b) net turnover 8,000,000 €, c) average number of employees during the year: 50 persons.
 The standardized articles of association contain the absolutely necessary references and for the remaining issues refer to the provisions of the relevant laws. In case standardized articles of association are adopted, the document is concluded as a private agreement. In any case, the document will have to be notarially attested (and therefore the standardized articles cannot be adopted) when the property contributed to the company requires the type of notarial act (e.g. offer of real estate).
 It includes: a) the Incorporation Bill of the OSS, b) the GEMI entry fees and c) the fees for the reservation of the trade name and the distinctive title.
 Until today (October 2018), the platform supports the incorporation only of IKE companies. The rest corporate forms will be able to be incorporated digitally until the end of 2019.
 The completion of data and the upload of documents through e-OSS serve as Solemn Declaration of Article 8 of Law 1599/1986.