If you are planning on doing business in Greece knowledge of the investment environment and information on the legal, accounting and taxation

Transcription

1 If you are planning on doing business in Greece knowledge of the investment environment and information on the legal, accounting and taxation framework are essential to keep you on the right track

2 Doing business in Greece Contents Page Foreword 1 Regulatory environment 6 Finance 9 Imports 14 Business entities 16 Labour 23 Financial reporting and audit 30 Contact details 44

3 Doing business in Greece 1 Foreword Grant Thornton International is one of the world's leading organisations of independently owned and managed accounting and consulting firms providing assurance, tax and specialist advice to independent businesses and their owners. The strength of each local firm is reflected in the quality of the international organisation. All Grant Thornton International member firms share a commitment to providing the same high quality service to their clients wherever they choose to do business. If you require any further information, please do not hesitate to contact your nearest Grant Thornton member firm. This guide has been prepared for the assistance of those interested in doing business in Greece. It does not cover the subject exhaustively but is intended to answer some of the important, broad questions that may arise. When specific problems occur in practice, it will often be necessary to refer to the laws and regulations of Greece and to obtain appropriate accounting and legal advice. This guide contains only brief notes and includes legislation in force as of 31/12/2009. Grant Thornton International is not a worldwide partnership. Member firms of the international organisation are independently owned and operated. Services are delivered nationally by the member and practising correspondent firms of Grant Thornton International, a network of independent firms throughout the world. Grant Thornton International is a non-, international umbrella organisation and does not deliver services in its own name.

4 Doing business in Greece 2 Country Profile Summary Greece s official name is Hellenic Republic, a member of the European Union, since 1981, is a developed country, which originates from the civilization of ancient Greece. It is famous for giving birth to democracy, Olympic Games, Western philosophy and mathematical principles. Although the country was for many years under foreign rule (Roman, Ottoman), it has managed to maintain its homogeneous population and language. It has been an independent nation since the Geography and population Greece is situated in southeastern Europe, and borders Albania, FYROM and Bulgaria in the north, Turkey in the east, Egyptian Sea in the south and Ionian Sea in the west. There are approximately 1,400 islands (19% of the total area) in Aegean and Ionian Sea, 227 of which are inhabited and over of 15,000 kilometres of coastline. According to the population census in 2001, by the National Statistical Service of Greece (NSSG) the Greek population numbers 10,964,020 inhabitants. Approximately 3,761,810 inhabitants live in the Attica basin area of around 3,808 km2 which includes, primarily, the capital of Athens and the most significant merchant port of Piraeus. The recent years, Greece is the destination of about 762,191 immigrants; two- thirds of them come from Balkan countries. Political and legal system Greece is a Presidential Parliamentary Democracy since The head of the State is the President, elected by the Parliament on a five-year term basis and the members of the parliament are being elected directly by the people on a four-year term basis. The functions of the State are divided into three branches, the executive, the legislative and the judicial. Executive power is exercised by the President of the Republic, whose role is only representative and the Government. Head of Government is the Prime Minister, the leader of the political party that is elected by popular mandate. The Legislative power is exercised by a 300-member elective Parliament. Finally, the Judiciary is independent of the above powers and comprises three Supreme Courts: the Court of Cassation, the Council of State and the Court of Audit.

5 Doing business in Greece 3 In the last 35 years, the Greek political system is dominated by the liberal-conservative New Democracy and the social-democratic Panhellenic Socialist Movement. The other parties of the Greek Parliament are the Communist Party of Greece, the Coalition of the Radical Left and the Popular Orthodox Rally. Courts in Greece are authorised to resolve any restriction of law and to provide legal protection to the citizens. There are civil courts, penal courts and administrative courts. The supreme court of the civil and penal justice is the Court of Cassation, while the supreme court of the administrative justice is the Council of State. Only professional and regular judges dispense justice. These judges are professional, permanent and irremovable, enjoying full personal and functional independence. In Greece there are approximately 1,560 judges and 524 prosecutors, who are all graduates of the National School of Judges. Judges are appointed by a presidential decree and they are dismissed only after a juridical decision. The presidents and the vice-presidents of the three Supreme Courts as well as the Prosecuting Attorney of the Court of Cassation are chosen by the Cabinet. The presidents of the three supreme courts serve for a maximum three-year term. Language A large majority of the native population use Greek as their first or only language, whereas English is understood, as it is more frequently spoken in universal trade. The Muslim minority in Thrace (northeast Greece), which amounts to approximately 0.95% of the total population, consists of speakers of Turkish, Bulgarian (Pomak) and Romani. Greek dates are written DD/MM/YYYY and as far as numbers are separated by a dot for thousands and comma for decimals. Business hours/time zone Greece is located in time zone GMT+2, along with Bulgaria, Cyprus, Estonia, Finland, Latvia, Lithuania, Romania and Turkey. Greek standard time is set forward for one hour from late March to late October. Business in the private sector operate all weekdays from 9.00 a.m. to 5.00 p.m. Businesses in the public sector operate all weekdays from 7.30 a.m. to 2.30 p.m. and shops are open from 9.00 a.m. to 3.00 p.m. and 5.00 p.m. to 9.00 p.m. on Tuesdays, Thursdays and Fridays and from 9.00 a.m. to 3.00 p.m. on Mondays, Wednesdays and Saturdays. Although, some department stores are open every weekday from 9.00 a.m. until 9.00 p.m. Banks are open from a.m. to p.m., apart from Fridays, which are open until and some retail banks are open also on Saturday mornings.

6 Doing business in Greece 4 Public holidays 1st January 6th January (Holy Epiphany) Monday in Lent (moveable) 25th March (National Holiday) Second day of Easter 15th August 28th October (National Holiday) 25th December (Christmas Holiday) 26th December (Day after Christmas Holiday) Economy Greece has a mixed capitalistic economy. In recent years, the service industry makes up the largest (about two-thirds of the gross domestic product), most vital and fastest-growing sector of the Greek economy, followed by industry and agriculture. The tourism industry is a major source of foreign exchange earnings and revenue accounting for 15% of Greece s total GDP. The next most profitable activity is the shipping industry, which accounts for 4.5% of GDP. Most of such activities being centralised around Athens, as there is most of the country s population. Other important business centres are Thessaloniki, Patra, Crete, and Kavala. According to National Statistical Service of Greece, in 2008 the Gross National Income at market prices 234,221 million euro, a growth of 5.66% in relation to 2007 and the inflation in 2008 was +2.0%. Economic growth In the last few years Greek economy has shown considerable progress. According to National Statistical Service of Greece, the Gross Domestic Product at market prices increased by 6.47% in 2008 amounted million euro, in relation to million euro in Also, the country s fiscal deficit was 3.5% of GDP in 2007 and fell to 2.5% of GDP in Overall, the Greek economic growth was 3.1% in Employment Levels Employment people in Greece were 4,463,286 in December 2008, whereas the unemployment people arose to 434,149, which represents the 8.9% of the total fiscal active people. The female unemployment rates are higher than males, with a rate of level 12.2% towards 6.5%. Also, due to the impact of the economic crisis in , young people face a shortage of employment opportunities as they look to enter the labour market. Specifically, unemployment level of young people under 24 years old is 26.3%, followed by young people between 25 and 34, with 11.6%.

7 Doing business in Greece 5 The unemployment level is higher in East Macedonia, Epirus, South Aegean, Crete and Ionian Islands. Living standards Living standards in Greece have been accelerated rapidly until 2008, where a global financial crisis appeared. The people of Greece enjoy a high standard of living, which is confirmed by the Human Development Index, where Greece is positioned in the 18th place in the world ranking, after Norway, Canada and Australia. Cost of living The cost of living in Greece, especially in the major cities of Athens and Thessaloniki is high compared to other developed countries, considering that the lower average wage is only 681 euro, according to union contract. Specifically, the average price of consumer goods and services purchased by households are more expensive in relation to other European countries. The consumer price index in Greece, in January 2007 was in relation to Norway s and Canada s

8 Doing business in Greece 6 Regulatory environment Summary Greek Government wishes to promote investment from overseas and so few restrictions exist upon foreign investment and ownership, and tax incentives and grants are available for foreign investors. Restrictions on foreign ownership There are no restrictions in foreign ownership under the current legislative system. Government approvals and registration All businesses must announce, with the proper forms and documents, commencement of operations at the local tax authorities. Businesses must report activities, headquarters, and must seek approval from the local district authorities, which is given to all businesses that have not illegal activities. Competition rules/consumer protection Competition in Greece is regulated by the independent authority for competition H.C.C while consumer protection is made possible through the independent authority Consumer s advocate. These two relatively new authorities are operating to ensure fair competition and fair consumer s treatment. Main goals of H.C.C : To maintain or restore fair trading in the market To protect consumers' interests To ensure economic growth Means Fight against practices which impede or distort competition and cause damage to consumers Fight against entry barriers in the market which must be free and open to all undertakings Conditions

9 Doing business in Greece 7 Conditions Co-operation and application of common standards together with the other European Competition Authorities and the European Commission Rational intervention Import and export controls Customs duties have been abolished at internal EU borders and a uniform system for taxing imports has been put in place. Internal EU border controls subsequently disappeared. Customs officers are now found only at the EU's external borders. Customs officers are also responsible for detecting fraud in value-added tax (VAT) declarations and payments, or the evasion of excise duties on items such as cigarettes. Without this work by customs officers, it would be all too easy for goods to disappear into the black economy rather than entering the tax system, or for unscrupulous businesspeople to report fictitious trade. Price Controls In general there are no controls over prices but the government retains the right to impose a ceiling on retail prices. Use of land Land is regulated so industrial activities will be furthered from urban or concentrated rural areas. Exchange control Some information for government statistics must be provided regularly when a company is under foreign ownership or does business with foreign companies. Notification of transactions in EURO that exceed certain limits must also be made by natural persons. Government incentives The structural framework for investment support in Greece revolves around three institutional pillars: the Investment Incentives Law, the National Strategic Reference Framework , and Public Private Partnerships (PPP). Investment Incentives Law Greece s Investment Incentives Law governs the terms and conditions of direct investment in Greece and provides for the incentives available to domestic and foreign investors. The incentives on offer are among the most competitive in the European Union. Investment incentives are applicable to primary sectors (agriculture, mining), secondary sectors (manufacturing), and tertiary sectors (services) and cover a wide variety of business endeavours. For the purpose of promoting investment in outlying and less developed regions of Greece, the country is divided into three zones, A, B, and C, with zone A being the most industrialized areas of Greece,

10 Doing business in Greece 8 including the prefectures of Attica and Thessaloniki, and zone C being the most remote and less developed. Investors may take advantage of: cash grants and/or leasing subsidies, wage subsidies for new employment created by an investment, or tax allowances through the creation of a tax reserve. The benefit in each instance may go up to 60 percent of the overall investment cost. Investment Incentives For investment projects that fall under the provisions of the law, the following incentives are available: Cash Grant, up to 60%, that covers part of the expenses for the investment project by the State; and /or Leasing Subsidy, up to 60%, that covers part of the payable installments by the State relating to a lease that has been entered into for the use of new mechanical or other equipment; or Wage Subsidy, up to 60%, provided for employment created by the investment; or Tax Benefit up to 60%, that allows income tax exemption on non-distributed gains. The benefit is effective upon completion of the investment for the first ten years of operation and is created through a taxexempt reserve. Terms and Conditions: Equity participation by the investor must be at minimum 25% Eligibility of investor for incentives is confirmed by local, regional, or national authorities within five working days and full approval in two month 50% of cash grant is released upon completion of 50% of the project or advance payment with a bank guarantee and the remaining 50% is released upon full completion of the project Cash grants for wages are released every six months, following an application submitted by the investor Investment projects are divided into two categories, with category 1 receiving higher benefits.

11 Doing business in Greece 9 Finance Summary Nowadays, Greece is considered as the leading investor in all of her Balkan neighbours. This is mainly due to the fact that the Greek financial system has been significantly improved in the recent years and nowadays it is one of the most profitable industries in its economy. The main factors that contributed to this strong economic growth are the financial liberalization and the integration into the EU and euro area, as well as the adoption of International Financial Reporting Standards, which strengthened the transparency and quality of financial statements. Banking system During the past decades, the Greek banking and financial system has undergone momentous transformations. Greece's entry to the Eurozone, led to deregulation in banking and finance industry, with a change in consumer attitude and behaviour. The central Bank and the monetary authority in Greece is the Bank of Greece, which was established in From January 2001, it is a member of Euro system, which is constituted by the Central European Bank and the Central Banks of the other states- members of European Union. It is responsible for the authorisation and supervision of credit institutions, including subsidiaries of EU and non-eu banks and financial institutions, in Greece in accordance with the criteria set down by relevant EU directives. Bank of Greece issues regulations and guidelines relating to the establishment of credit institutions in Greece, capital requirement, risk exposure and investment activities. The most important task of the Bank of Greece is the reassurance of price stability. By December 2008 there were 19 Credit Institutions incorporated in Greece, 30 branches of Foreign Banks, 1 Specialised Credit Institution (Consignment Deposits & Loans Fund) and 16 Cooperatives Banks. Specifically, the Credit Institutions provide individual and business services, as well as private banking. The individual services mostly refer to the following products: Deposits (e.g. Current Accounts, Savings Accounts) Loans (Mortgages, Consumer Loans) Cards ( Debit, Credit and Prepaid Cards) Investment

12 Doing business in Greece 10 Bancassurance (Insurance Products) On the other hand, the business services mostly refer to: Deposits Accounts (e.g. Sight Deposits/ Monthly Interest Accrual Accounts/ Overdraft Accounts, Commercial Accounts) Loans Credit Cards Insurance Products Leasing Factoring- Forfaiting Investment Banking Shipping Services Corporate Banking The most of the above products can also be provided via electronic banking, which gives the opportunity to enterprises and organisations to receive remote payments from their customers, saving time and cost. Capital markets The Athens Stock Exchange The Athens Exchange or ATHEX was first opened in Athens Exchange is a subsidiary of Hellenic Exchanges S.A., whose shares are listed in ATHEX. In August 1999 the derivatives market started operating, and in 2002 the Athens Stock Exchange and the Athens Derivatives Exchange merged to form Athens Exchange. A secondary securities market in the ASE, the Parallel Stock Exchange was founded in 1989, where several medium-sized companies are listed. The ASE is regulated under Stock Exchange Law No 1806 of 1988, which brought the ASE up to the standards of other European stock exchanges, in terms of duties and responsibilities of the various participants. In recent years the Stock Exchange in Greece, is considered as an avenue for investment and a source of funds for companies. As a result, the volume of shares and bonds traded has significantly increased. Since 1999, a New Stock Market (NE.CH.A.) was established that incorporates small share of dynamic or innovative companies who are not admitted to Main or Parallel Market of the Athens Stock Exchange. Moreover, the Greek Market Emerging Markets (EAGAK) was established in 1997, where are negotiated three types of securities: The Greek Certificates (ELPIS), representing the shares of companies based in countries with emerging markets.

13 Doing business in Greece 11 The shares of Investment Funds Emerging Markets (EKAA), which are the mutual funds invested in certain financial markets. Shares of Emerging Markets Portfolio Management (ECHAA) that is specific investment funds companies which invest in the relevant markets. Companies with registered offices and business activity outside of Greece may list their shares on the ATHEX. More specifically, Presidential Decree 350/1985 sets the listing requirements for shares to be listed on the ASE, as well as the obligations of the listed companies towards the ASE. Accordingly, companies may list their shares on one of the ASE s Markets (Main, Parallel and New Stock Exchange Market). Therefore, if the interested issuing companies have their registered offices in an EU member state, the shares of such companies may be listed on the ASE even if those shares have not been previously listed on another stock exchange. If, however, the interested issuing companies have their registered offices in a third (non EU) country, the listing of their shares on the ASE is not permitted unless such shares have been previously listed on the stock exchange of the country of their corporate seat or the country of the main circulation of their shares. Concluding, the Presidential Decree 350/1985 (Main Market), Decision no. 2063/B.69/1999 of the Ministry of National Economy (Parallel Market) and Law 2733/1999 are applicable for the listing of Greek shares, as well as for the listing of shares that have been issued by companies that do not have their registered offices in Greece. The Athens Derivatives Exchange Many investors nowadays tend to associate their derivatives speculation. The reason the derivatives made their appearance was purely to offset the unexpected risks in investment portfolios. The option which means the right-choice entitles the investor to buy or sell the product at a predetermined price and schedule. The buyer of the derivative that chooses to purchase the product in the future at the price set in advance, has the right to exercise or not. In Greece, the derivatives become popular after the establishment of the Athens Derivatives Exchange. ADEX was set up as a subsidiary of the Athens Stock Exchange with the intention to start functioning within less than a year as the derivatives exchange of the Greek market. Law 2533/97, provided the necessary legal framework for the establishment of the formal and organized derivatives market. The main purpose of ADEX was the organization and support of trading in the derivatives market, the organization of the trading system as well as any similar activity. At the same time, ADECH is to organize the clearing and settlement of transactions concluded on derivative products, and supports such procedures in general. The Capital Market Commission, exercises control and supervision on ADEX s and ADECH s operation, in respect to the adherence to the rules and regulations of the capital market.

14 Doing business in Greece 12 ADEX, with an initial series of products such as Futures on the FTSE/ASE-20 and FTSE/ASE Mid 40 indices, Futures on the 10-year Hellenic Republic Bond, Options based on the FTSE/ASE- 20 and FTSE/ASE Mid 40 indices, Stock Options, Stock Lending, covered an investment need that existed, and became imperative during latest years. The General Assemblies of the Athens Stock Exchange S.A. and the Athens Derivatives Exchange S.A. that were held on July 17th 2002 approved the Draft Merger Agreement of the two companies and the modifications in the Articles of Association of S.A. The corporate name of the new company is Athens Exchange S.A. The merger of the two companies was approved by the respective General Assemblies within the framework of further rationalization of the parent company Hellenic Exchanges S.A. (HELEX) that owns directly and indirectly 100% of the stocks in both companies. In addition, the merger of ASE and ADEX is in line with the global trend for mergers between stock and derivatives exchanges and is aiming to achieve synergies in the activities of the two, to lower the operating costs and to improve the overall coordination of the two markets. The purpose of the new company will be the organization, support and monitoring of transactions related to stocks, derivatives and other financial products, the smooth operation of the market, the protection of investors and other related activities. The qualified personnel of the new company will continue to offer the same high level of services regarding market support as in the past. Other sources of finance Apart from the financial institutions, there are also and other sources of finance that an entrepreneur could utilise in order to develop its business. Such sources are mentioned below: Venture Capital: Venture capital is medium to long-term finance provided in return for an equity stake, which can be up to 30% of the company s equity, in potentially high growth unquoted companies. The duration of this finance extends between 3 and 7 years, depending on the amount of the investment. Venture capital firms help businesses achieve their ambitions by also providing strategic advice and information at critical stages of a business s development. Finance houses: Finance houses provide various forms of instalment credit, ranging from hire purchase to leasing. The finance is often asset based and usually for a fixed term and at fixed interest rates. Factoring companies: Factoring companies provide finance by buying trade debts at a discount, either on a recourse basis (the company retains the credit risk on the debts) or on a non-recourse basis (the factoring company takes over the credit risk).

15 Doing business in Greece 13 Mezzanine firms: Mezzanine firms provide loan finance that is halfway between equity and secured debt. These facilities require either a second charge on the company s assets or are unsecured. Because the risk is consequently higher than senior debt, the interest charged by the mezzanine debt provider will be higher than that from the principal lenders and sometimes a modest equity up-side will be required through options or warrants. It is generally most appropriate for larger transactions. Business Angels: This versatile institution refers to private investors who invest capital, time and experience in promising small and medium-sized enterprises. The invested capital may be up to 150,000 and the risk evaluation is performed by the "business angel".

16 Doing business in Greece 14 Imports Summary Greece is a member of a number of international economic organizations including the:european Union. The European Union allows for the free movement of goods between Greece and the other member states: Austria, Belgium, Bulgaria, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Hungary, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, and United Kingdom. The European Union has numerous bilateral and multilateral agreements, such as the Agreement on Textiles and Clothing (formerly the Multi-Fiber Agreement), PECO countries Agreement, Israel Agreement, Turkey Agreement, Baltic Sea countries Agreement, European Free Trade Association (Iceland, Liechtenstein, Norway, and Switzerland). All these agreements are grouped under the umbrella of the World Trade Organization (WTO). All agreements ratified by European Union Executive Commission automatically apply to all EU member states. Exemption or reduced tariff is applicable only to qualified members under the agreement as originating goods. Import restrictions Customs duties Greece, like most member states of the European Community, bases its Harmonized Tariff Schedule on the TARIC (Integrated Tariff of the European Community) which is issued by the Commission and the Member States for the purpose of applying Community measures relating to import and exports, and-when necessary- to trade between member states. The TARIC also serves as a basis for the working tariffs and tariff file of Greece and other Member States. Greek customs values shipments at C.I.F. prices. Import duty rates are divided into two classifications: Most Favored Nation (MFN) and General. Import duties are calculated on ad valorem basis, i.e. expressed as a percentage of the value of the imported goods. There are three primary entry types for importing into Greece: Standard clearance procedure Simplified clearance procedure Simplified declaration procedure

17 Doing business in Greece 15 The first two procedures apply to all shipments regardless of value; the third one applies to shipments of commercial samples valued below 45 EUR or gifts valued below 23 EURO and/or to negligible value shipments below 22 EURO and provides Duty and Tax relief. Below is a summary of the new rules for EU deminimis value that enter into effect December 1, 2008: A commercial shipment below 22 Euros: no duty and no VAT collected. A commercial shipment between 22 Euros and 150 Euros: no duty but VAT is collected. A commercial shipment over 150 Euros:duty and VAT are collected. Antidumping Under strict enforcement of unfair trade laws, Customs will assess antidumping duties or countervailing duties. Antidumping duties are assessed on imported merchandise sold in Greece (EU) at less than the normal price of goods in the manufacturer's home market (also called fair market value). Excise Duties Excise duty rates may also be applicable on certain items such as alcohol and tobacco. For further information, please contact the Greek Customs Office. Excise taxes are assessed against certain commodities, which are normally identified as "luxury" goods. The excise tax is normally assessed against tobacco products, perfumes and alcohol products but can also be assessed against other goods as deemed by Greek regulations. A 12% admissions tax is applied on all motion pictures.

18 Doing business in Greece 16 Business entities Summary Greece provides a lot of challenges and investment incentives in all sectors of economy. The regulation enhances the economic and regional development, with an emphasis on small and medium enterprises, attracting more and more investors. The most common entities used by foreign investors are subsidiaries or branches. In Greece, the types of business entities that can be formed are: Limited Liability Companies ( Eteria Periorismenis Eftinis in Greek language) Corporations ( Anonimi Eteria in Greek language) Sole Proprietorship General Partnership ( Omorithmi Eteria in Greek language) Limited Partnership ( Eterorithmi Eteria in Greek language) Partnerships limited by shares Joint Ventures Silent Partnership Limited Liability Companies Limited Liability Company is considered as commercial by the Greek regulation. It has units in comparison to S.A. Company which has shares. There are significantly more restrictions in the transfer of parts of an Ltd than in the transfer of shares of an S.A. 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 units 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 4,500 euro are required for the formation of a limited liability company and each part has a minimum nominal value of 30. The share capital of the Ltd Company may be formed by contributions in kind instead of cash (or by combination of both). To

19 Doing business in Greece 17 be acceptable, the contributions in kind must be of items capable of appearing in the company s accounts. The value of such contributions is determined by a committee of the prefecture, in the same way as for the S.A. companies. 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 obtainment 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. The Ltd is governed by the General Meeting of the partners. The G.M. is convened at least once a year within three months from the end of the financial year. Every member (i.e. holder of at least 1 unit ) is entitled to take part in the G.M. and has one vote for each unit. Resolutions are made by majority of the number of members who must also altogether hold more than 50% of the share capital (double requirement). The management of the Ltd is assigned to one or more administrators, who may or may not be members (unit-holders) of the company. The appointment of the administrator is made either by the Articles of Association or by a resolution of the General meeting, subject to publication requirements. The administrators are forbidden to be partners of another limited liability company or a general partnership pursuing the same objective without the permission of the general meeting. 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. Corporations (S.A.) Businesses organized as SA are more significant economically than those organized otherwise. The internal organization of a limited company 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 Assembly of Shareholders is responsible for taking the most important decisions, including business decisions that are implemented by the Board of Directors. The meetings are ordinary and extraordinary. Annual General Meeting is at least once a year. Each share represents a vote and everyone has the right to vote or be voted. The Board of Directors is elected by the General Assembly and consists of at least three members charged with the management of the company s business. So the Board of Directors meets on every important

20 Doing business in Greece 18 issue and monitors the progress of the company s shares. The Board elects the President, who is responsible for coordinating the work and the CEO, which holds the administration and representation of the company. Establishment of an SA: Persons seeking to do business as an SA 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 Limited Companies (which is conclusive evidence that a limited company 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. Capital Stock: For the formation of SA, two shareholders and a minimum share capital of 60,000 euro are required. The nominal value of each share must be at least 0.30 euro and cannot exceed 100 euro. Shares can be divided into common, preferred and redeemed, nominal and anonymous, voting or not voting and trading or not negotiable. The common share is the most common type of share and includes all the basic rights of a shareholder, whereas the preference share offers precedence over holders of common shares. Share Trading: An SA can be inserted into a stock exchange for trading its shares. However, this requires strict criteria and increased disclosure. Everyone can get shares and transfers them whenever they want. Nowadays, it is a common practice corporations to buy their own shares, in order to offer them to their employees (stock option plan), as a form of non- cash compensation. Dissolution of an SA: The SA may be dissolved, when the period for which it was set up to operate is expired, or when the company is under bankruptcy, or the majority of general assembly of shareholders decide it. Apart from the case of bankruptcy, the shareholders of the company assign liquidators so as to proceed to company s dissolution.

21 Doing business in Greece 19 Sole Proprietorships The sole proprietorship is the simplest business entity under which one can operate a business and where there is no legal distinction between the owner and the business. It simply refers to a person who owns the business and is personally responsible for its debts. The sole proprietorship is a popular business form due to its simplicity, ease of setup, and nominal cost. A sole proprietor need only register his or her name and secure local licenses, and the sole proprietor is ready for business. A distinct disadvantage, however, is that the owner of a sole proprietorship remains personally liable for all the business's debts. The main advantage of this type of business is that the owners can establish a sole proprietorship instantly, easily and inexpensively, whereas owners have the disadvantage that they are subject to unlimited personal liability for the debts, losses and liabilities of the business. Foreign company branches Establishing a foreign company branch: The establishment of a branch office in Greece offers the foreign company the possibility to act in its own name and to enjoy a full recognition of the legal entity form adopted when established in its country of origin. The regulation that is followed during the establishment of branches of foreign companies in Greece is the Law 2190/20 (article 50), Law 3190/55 (article 57-58) and Presidential Decree 360/93. According to the above laws, the types of foreign companies that can establish a branch in Greece are: The S.A. companies, e.g. companies limited by shares with share capital of or more. Limited companies with share capital of at least The requirements are identical for both: - Resolution of the relevant corporate body for the establishment of a branch in Greece. - Articles of Association of the foreign company, including the Memorandum of Association and any amendments thereof. - Certificate of the competent authority (e.g. Companies House) of the country where the company has its seat for the amount of the share capital paid (minimum or respectively according to the type of company). - Certificate of the competent authority of the country where the company has its seat stating that the company is in operation, its licence is valid and it is not subject to liquidation. - Notarial act (or act certified by consulate) for the appointment of an Attorney (legal representative).

22 Doing business in Greece 20 - Certificate proving the identity of the legal signatories of the company wishing to establish a branch. - Fee for publication in the Government Gazette. - Registered address of the branch in Greece. - Branch name (if other than the company s). - Jurisdiction to which the company is subject to. All documents must be apostilled (i.e. certified by the Embassy with the Hague Convention Stamp) and officially translated into Greek by the Ministry of Foreign affairs or by a lawyer. Local subsidiaries (wholly owned 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. 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. Partnerships Establishing a partnership: For the establishment of a partnership, the following procedures are essential: Confirmation of name: The right to use the name must be certified by the Hellenic Chamber of Commerce and Industry. Execution of the Constitutional Document: the constitutional document is not required to be in the form of a public document. Tax payment: two copies of the constitutional document are submitted to the competent tax authority and a special tax charge, amounting to 1% of company s capital is payable. Fund legal & Law firm receives payments of 0.5% and 1% of the capital respectively. Court of first instanceδύο αντίγραφα του θεωρημένου καταστατικού από το Επιμελητήριο, τη ΔΟΥ κατά την καταβολή του ΦΣΚ, το Ταμείο Νομικών και το Ταμείο Προνοίας Δικηγόρων, κατατίθενται στο : για δημοσίευση. two copies of the constitutional document are submitted to

23 Doing business in Greece 21 the competent Court of First Instance for publication purposes an entry in the Company Register. General Partnerships (O.E.) General partnerships consist of at least two partners whose liability is unlimited. The name of a General Partnership may either be composed by the names of two or more partners or by the name of one partner followed by the words and partners. 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. 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. The general partnership can be dissolved due to several reasons, such as decease or personal bankruptcy of a partner, restriction of a partner by court decision or expiration of the company s duration. 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 included 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. Partnerships limited by shares A variation of the simple limited partnership is the limited partnership by shares which is also recognized by Greek law. The difference is that the contributions of limited partners are represented by shares, as in the case of Societes Anonyme, which are freely transferable without causing the dissolution of the company.

24 Doing business in Greece 22 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. Silent Partnerships 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.

25 Doing business in Greece 23 Labour Summary The regulation of labour and the rights and obligations arising there from is provided in Greece by a considerable body of legislation ranging from constitutional guarantees to provisions embodied in the civil code and particular labour laws. Collective bargaining agreements have also legal power that binds not only the contracting parties, i.e. representative trade unions, employers associations etc., but also non participating third parties. Wages Minimum wage is established in collective agreements. Some occupations have set up their own agreements, which prevail over the general one and usually include terms that are more favourable to the employee. Legal relation between the employer and the employee starts upon enforcement of employment contract (which is temporary or permanent) and is mandatory. The national collective labour agreement is negotiated between the General Confederation of Workers of Greece (GSEE), on behalf of the employees and the employers organizations, headed by the Association of Greek Industries (SEB). It is stipulated that men and women are paid the same pay for the same work. Social security Social security funds that are currently in existence amount to a few dozens and fall into the following categories: 1. According to services rendered, there is a distinction between insurance funds for main or auxiliary insurance. 2. With reference to groups of employees insured, there is a distinction between insurance funds for persons with a dependent working relation - such as IKA - and funds for other groups of professionals-such as O.A.E.E. (the insurance fund for owners of trading and manufacturing business).

26 Doing business in Greece 24 The social security system in Greece is complicated. Several groups of employees dispose of their own fund for main and auxiliary insurance. Such a fund in which are insured the engineers called TSMEDE. People in a dependent working relation who do not contribute to a particular insurance fund for main insurance are insured in IKA. The auxiliary insurance fund for employees is called ETEAM. The government intends to consolidate several insurance funds. In general it is forbidden for the same person to be insured in two different funds of main insurance for the same occupation. However this is allowed for different occupations of the same person. Pensions Pensions are classified as follows: 1. Pensions granted by the main social security funds and pensions granted by auxiliary funds. Consequently there is a main pension and an auxiliary pension. 2. Full and reduced pensions (depending on age and length of service). To be entitled to a pension there are certain factors to consider such as age, for which the limit is usually 60 for women and 65 for men, and 4,500 days of service. A pension from IKA is paid to any person who has completed 37 years of insurance with no age limit and upon completion of 11,100 days at work. A pension from IKA is also paid to all the insured before 01/01/93 who have turned 58 years of age and have completed 35 years of insurance namely 10,500 days at work. The newly insured in IKA (those insured after 01/01/93) can receive full pension upon completion of 37 years in service with no age limit. A full pension can be paid to all insured who have turned 65 years of age and 4,500 days of service. Special provisions apply to mothers with minor children, to disabled people etc. Fringe benefits According to the range of benefits provided by a social security fund, there are respective allowances such as unemployment and sickness benefits, retirement pension, maternity allowance etc. Holiday pay Holidays can be granted from the first day of work in the same business. An employee should take his holidays until 31/12 of every calendar year. It is forbidden the holiday days to be transferred into the next calendar year.

27 Doing business in Greece 25 According to the law N.3302/2004 the employee is entitled to 20 days of vacation for the first calendar year or analogy of 20 days if he joins the company during the year. For the second calendar year the employee is entitled to 21 days from the time that 12 months of his employment have been completed. For the third calendar year he is entitled to 22 days and after 10 years of work at the same employer or 12 years of work experience then he is entitled to 25 days of vacation per year. After the completion of 25 years of employment one more day is added (National public collective employment agreement EGSSE 2/4/2008). To calculate days off only working days count. Days off work an employee is entitled are calculated as follows: Length of service in the same business (full years) Years Employees working 5 days a week Employees working 6 days a week 1st year 20 days 24 days 2nd year 21 days 25 days 3rd year till 10th year 22 days 26 days 10 years at the same employer 25 days 30 days 12 years at different employers 25 days 30 days Employees who have completed 25 years of service are entitled to 26 days of vacations. Employees paid a salary are entitled to a holiday pay, which is 24/25 of the salary for one year of service or one salary for two or more years of service in the same business. Employees paid a wage are entitled to the wages corresponding to the days of their vacation. Holiday allowance is calculated the same way as holiday pay provided that it does not exceed 1/2 of the salary for employees or 13 wages for workers. It is paid in full to the beneficiary. Holiday pay and allowance are calculated according to the salary or the wages, which would be paid to the employee during the period corresponding to his vacation. At least half of the employees of a business should take their vacation from 01/05 to 30/09 of each year. Days off work that count separately from holidays are set out below: