Company Formation – Lawyer

What is a company?

A company is an association of private-law persons established by legal act (contract – “articles of association”) for the pursuit of a common purpose.

What is company law?

ND Company law, or business law, is the body of rules governing the relations of the partners towards their association (“internal relations“) and towards third parties (“external relations“).

What is the basic difference between partnerships and capital companies?

Companies are divided into: partnerships and capital companies.

In partnerships, the personal contribution of each partner is essential to the operation of the company. For this reason, the death or bankruptcy of any of the partners brings about changes in the company, while the partners themselves are liable with their personal assets.

In capital companies, the basic element is the concentration of capital. Therefore, the status of the partners is irrelevant, while the transfer of the corporate capacity is free. Partners may abstain from the management of the company and are not liable for its debts.

A further distinction, depending on whether the purpose is economic or not, divides them into commercial or civil companies.

What are the basic corporate forms?

According to the principle of the closed number of corporate forms, there are specific company forms provided for by law and private will is not permitted to create new ones. The most basic of these, which concern us here, are the following commercial forms:

• Partnerships:
  • General Partnership (OE)
  • Limited Partnership (EE)
  • Silent Partnership
• Capital Companies:
  • Private Capital Company (IKE)
  • Limited Liability Company (EPE)
  • Société Anonyme (AE)

What is a General Partnership (O.E.)?

The General Partnership is a commercial partnership with legal personality, for the obligations of which all participating partners are liable jointly, without limitation and severally, even for a period of five years after its dissolution. It is the oldest form of partnership in our country, while its main characteristic is the obligation of the partners to contribute personally to the achievement of the corporate purpose.

Formation Capital

The initial formation capital starts from EUR 1, while each partner’s contribution may be in cash, in kind or in rights such as the grant of use of a property, goodwill, trademark, etc.

Management and Representation

The law provides that all partners must participate in the management of the company. Representation is exercised by the partners themselves, who may appoint one or more of them as manager.

Profits and Charges

Participation in the profits is based on the partners’ percentage in the corporate capital, unless otherwise specified in the articles of association.

Profits are distributed at the end of the financial year (for single-entry bookkeeping), while the tax rate on profits is 24%. In addition, a business tax of EUR 1,000 is provided for. The above must also be combined with the partner’s personal taxation.

Finally, mandatory social security insurance applies to members of general partnerships.

Dissolution

The grounds for dissolution of the O.E. are referred to in Articles 765-775 of the Civil Code (AK), but they do not apply restrictively, as they may be modified by the corporate contract (articles of association).

The most important of these are:

• Inability to achieve the corporate purpose
• Lapse of the period of duration
• Death of a partner
• Bankruptcy or placement under judicial assistance of a partner
• Agreement of the partners
• Court ruling for dissolution
• Other reasons provided for in the articles of association

Dissolution is followed by the liquidation of the company.

Advantages and Disadvantages

Advantages

• Low formation costs
• Minimum formation capital
• Low operating costs

Disadvantages

• Unlimited liability of all partners
• Mandatory insurance for all partners
• Inability to divide the corporate capital

What is a Limited Partnership (E.E.)?

The Limited Partnership is a commercial partnership with legal personality in which the general partners are liable jointly, without limitation and severally for its obligations (even for a period of five years after its dissolution), while the limited partners are not liable or are liable on a limited basis.

The E.E. is a “special form of general partnership” (Rokas, “Commercial Companies”) and therefore everything stated above for O.E.s applies, with the only difference being the extent of the liability of the limited partners towards third parties (“external relations“).

What is a Silent Partnership?

The Silent Partnership was statutorily enshrined by Law 4072/2012. As a term, the silent partnership pre-existed, but the framework of its formation and operation had never been reflected in a legislative text. By analogy, until then, the articles of the Commercial Law referring to “shareholding commercial companies” were applied. Law 4072/2012 now also applies to silent partnerships that had been formed prior to its enactment, provided that at the time of entry into force of the law they were not in liquidation or bankruptcy (Article 294§1).

Definition

According to the above law, it is provided that:

“By the contract of silent partnership, one of the partners (apparent partner) grants to another or other partners (silent partners) the right to participate in the results of one or more commercial transactions or commercial enterprise, which they conduct in their own name, but for the common interest of the partners” (Article 285§1).

By this definition, the legislator also enshrined statutorily the established perception under prior law that the silent partnership is a genuine company. This is also evident directly from the explanatory memorandum to the law, which states that the silent partnership is a company and is regulated as such, but also from the direct supplementary application of the provisions of the Civil Code (AK) on the company. However, of the provisions of the AK, only those referring to the company as an internal association of persons apply.

Thus, the silent partnership is constituted between two or more natural or legal persons informally, even where it has the purpose of conducting formal acts, and is proved only by written agreement of the parties. Its content is freely determined provided that the principle of the closed number of companies under commercial law is not violated.

Furthermore, according to the above definition, it follows that the silent partnership may have only a commercial purpose. That is, a silent partnership with an economic purpose that is not commercial (e.g. lease of property) is not conceivable.

However, case law maintains that “strictly speaking, the silent partnership is not a commercial company, in the sense that only the apparent partner acquires commercial status, since they are the one who conducts commercial acts as a customary profession. The silent partnership, provided that it has a commercial purpose, constitutes a company of commercial law, in the sense that it is used for the exercise of commercial acts and is governed by the rules of commercial law” (Piraeus Court of Appeals 235/2019).

Accordingly, this is an “internal company” which resembles the sub-partnership.

Formation

Furthermore, according to the same law, “The silent partnership has no legal personality and is not registered in the General Commercial Registry (GEMI). The terms of the corporate agreement are proved only by written agreement of the contracting parties” (Article 285§2).

According to case law that tends to become established, “It must be accepted that the terms of the corporate contract are necessarily proved by document only insofar as they deviate from the provisions of the law. If the silent partnership has been formed informally and there is no document, its terms arise from the provisions of Articles 285 et seq. of Law 4072/2012” (Piraeus Court of Appeals, op. cit.).

From the above, therefore, it follows that:

• The written form provided is evidentiary and not constitutive. Therefore, a silent partnership may be formed even without written form.
• The relevant provisions are of permissive law, as stated in the explanatory memorandum to the law. Therefore, the parties may deviate from these provisions. In this case, written agreement is required.
• Proof by witnesses against a written corporate agreement is not permitted.

Therefore, provided that the parties follow the written form, the formation is self-evident and the only dispute that may arise will be in relation to the interpretation of the terms of the agreement.

However, an issue arises when a silent partnership is formed without a document. In this case, as regards proof of the formation, any suitable means of proof may be used (witnesses, correspondence, commercial books, bank accounts, etc.) in order to prove that the parties have formed a silent partnership.

However, terms different from those provided in Law 4072/2012 and in the provisions of the AK to which the law refers cannot be proved by witnesses.

Operation

Pursuant to Articles 286 – 291 of Law 4072/2012, the following are further provided:

• The silent partner pays their contribution to the apparent partner.
• Third parties acquire rights and assume obligations only towards the apparent partner.
• The management of the silent partnership is exercised by the apparent partner.
• What is acquired from the management of the company belongs to the apparent partner.
• The silent partner participates in the profits of the company at the percentage or amount agreed in the corporate contract or, if not agreed, in equal parts.
• Unless otherwise provided, the silent partner participates in losses arising at the same percentage as in the profits. It may be agreed that participation in losses does not exceed the value of the contribution.
• At the end of each calendar year or at the time agreed by the parties, as well as in case of dissolution of the company, the apparent partner is obliged to render account and pay the corresponding profits to the silent partner. It is not excluded that payment of profits to the silent partner be agreed during the calendar year, particularly upon completion of an act or business activity.
• The silent partner is not obliged to return profits received in earlier periods due to losses in subsequent periods.
• The corporate contract specifies the silent partner’s rights of control in relation to the acts or enterprise that are the object of the silent partnership.

Internal Corporate Relations

The contributions of all partners are initially placed with the apparent partner so that they may achieve the company’s purpose with them. However, it may be agreed that certain contributions will become common to the partners or that they will be granted to the apparent partner only for use. However, in this case, this is a community of right and not corporate property (Piraeus Single-Member Court of First Instance 3870/2015). This is because the silent partnership, as a consequence of its internal character and therefore the absence of legal personality, cannot have corporate property, that is, property of which it is the holder. Furthermore, in the silent partnership, the provisions concerning civil partnership without legal personality do not apply by analogy either, so that the partners themselves cannot be holders of rights and therefore of property.

Furthermore, anything acquired by the apparent partner during the exercise of the corporate activity of the silent partnership does not belong to all the partners but only to them, so that they may, with what is acquired, fulfil the corporate purpose.

Furthermore, the obligations of the silent partnership are also created in the name of the apparent partner, while the latter bears liability for their fulfilment, even with the entirety of their personal assets.

Therefore, the apparent partner is not obliged to render common anything from what they acquire in the exercise of their activity, since they do not represent the silent partners. From the above it follows that, ultimately, the only right of a proprietary nature of the silent partners is the right to the profits.

Nevertheless, in view of the fact that the provisions of Law 4072/2012 on the silent partnership are of permissive law, it may be agreed that whatever the apparent partner acquires, they are obliged to render common to all partners, on the basis of the proportion of their participation in the company. Thus a common property is created which is governed by the provisions on community, while again this is not corporate property within the meaning of the provisions of company law.

Furthermore, the issue arises of the treatment of the case where the apparent partner, who acquired in their capacity as manager of the silent partnership a property item in their own name, subsequently refuses to transfer it to the silent partner in proportion to their corporate share, so that the latter may also become a co-holder of the acquired thing.

It has been held, therefore, that the silent partner may seek under the provisions on unjustified enrichment their contribution, which was spent for the acquisition of the thing, since by this amount the apparent partner becomes richer for a cause that did not follow, while the contribution by the silent partner to them does not constitute their legal obligation, since the purpose for which it was given was not realised (Areios Pagos 360/2012).

Dissolution and Liquidation

The silent partnership is dissolved in the cases provided for by the Civil Code for companies. Therefore, grounds for dissolution of the silent partnership are:

1. The lapse of the agreed period of duration of the company (unless the partners agree otherwise).
2. The realisation of the purpose of the company or where it has become impossible to achieve.
3. The relevant joint decision of the partners.
4. The death of one of the partners.
5. The reduction in the number of partners of the company to one.
6. The bankruptcy or placement under judicial assistance of a partner (unless there is a clause for continuation of the company).
7. The termination of the company.

In particular as regards termination, if the company has been formed for an indefinite period, then it may be exercised at any time, provided that this is done in accordance with good faith and not untimely. This means that the company should not be terminated at such a time that the continuation of the company becomes difficult or impossible and so the interests of the remaining partners are harmed.

If the silent partnership has been formed for a fixed period, it may be terminated before that period elapses only if there is a serious cause.

However, the termination by one partner brings about the dissolution of the silent partnership with all its legal consequences, even if there is no serious cause, even if the termination is abusive or untimely. Untimely or abusive termination simply gives rise to a right of compensation to the remaining partners.

Dissolution of the silent partnership is followed by liquidation. This is carried out by the apparent partner and consists of returning to the silent partner the value of their participation, reduced by the losses attributable to them.

Finally, the statute of limitations for claims between partners is 20 years.

Tax Treatment

According to Article 2 of Law 4172/2013 (Income Tax Code – KFE), it is provided that: “Definitions – … For the purposes of the present, the following are understood as: … d) ‘legal entity’: … silent partnerships“.

In addition, Article 45 of the same law provides: “Subjects of the tax – Subject to income tax of legal persons and legal entities are: … e) communities of civil law, civil for-profit or non-profit companies, participating or silent if they exercise an enterprise or profession“.

On the basis of the above, the tax legislation recognises the existence of silent partnerships by classifying them in the cases of “legal entities“. However, given that the silent partnership transacts with third parties through the apparent partner, the latter is also the only one liable towards the tax administration on behalf of the silent partnership as well.

Furthermore, in support of the above, no tax provision provides for recognition of profits in the name of the silent partner, nor for any tax obligation of the latter. Therefore, the silent partner DOES NOT have an obligation to declare income acquired from their participation in a silent partnership.

Insurance Treatment

An issue arises as to whether the apparent partner has an obligation to insure the silent partner. This becomes particularly significant a) in cases where there is a breakdown of relations between the partners and the silent partner reports the apparent partner and the company to the social security organisation for failure to insure them, and b) in case of inspection, if the silent partner is found by the competent inspection bodies to be providing their services without being insured.

Given that the social security legislation does not provide special provisions for the silent partnership, we need to refer to the relevant case law. According to it, “a precondition for inclusion in IKA insurance is the provision of dependent labour for remuneration. The silent partner who offers personal services is not subject to IKA insurance if, in the specific case, it is established that they offer their personal services either in the form of a corporate contribution in fulfilment of their relevant obligation arising from the corporate contract, or in the spirit of serving their own affair and as a reasonable involvement in the management of corporate affairs for the promotion of the corporate purpose” (Thessaloniki Single-Member Administrative Court of Appeals 1380/2015).

This judgment overturned a previous judgment which provided that “within the meaning of the provisions of Article 2 of Emergency Law 1846/1951, the existence of a silent partnership does not exclude that one partner, and indeed the silent one, may be an employee under the instructions and guidance of the other partner, that is, that they provide dependent work and be subject, for this reason, to IKA insurance. On this reasoning, a silent partner of a silent partnership is subject to IKA insurance, who, as has been proved, provided dependent work to that company, even if they were not obliged from the contract of formation of that company to do so…” (Three-Member Piraeus Administrative Court of First Instance 2440/2011).

However, Areios Pagos has ruled on this matter and absolutely on the absence of an employment relationship: “…regardless of the characterisation of the legal relationship described as a silent partnership or … the existence of a relationship of dependent labour is excluded…” (Areios Pagos B’ 148/99).

From the above it is clear that the constitutive document of the silent partnership must provide for a series of arrangements in order to prevent both friction between the partners and risks vis-à-vis the tax and social security administration. Taking these into account, the silent partnership can constitute a useful and flexible tool of business in many cases.

What is a Private Capital Company (I.K.E.)?

The Private Capital Company (I.K.E.) is a commercial capital company with legal personality, for the obligations of which only the company itself is liable with its assets and not the partners, and its capital is divided into parts called “corporate shares“.

The I.K.E. was established by Law 4072/2012 as a “hybrid” of the advantages of partnerships and capital companies. Due to its great adaptability, it has almost displaced the form of the E.P.E. and has prevailed even over partnerships, and it has become the basic “vehicle” for start-up enterprises.

All of the above, for 3 basic reasons:

1. Minimum initial capital with the possibility of non-capital contributions, and indeed without linking participation to capital.
2. Great flexibility of the articles of association.
3. Avoidance of insurance for participants.

Additionally, there is the possibility for the formation of a single-member I.K.E.

Formation Capital

The initial formation capital starts from EUR 1, while the partners’ contributions may be non-capital or even guarantee contributions, provided they do not exceed 75% of the amount of liability that the partner assumes towards the company’s creditors. Furthermore, there is no link between participation in the initial capital and the shares of participation in the company.

Management and Representation

The management of the company is exercised by the General Meeting and the manager, while representation is by the manager.

Profits and Charges

I.K.E.s keep double-entry books, which increases management costs. In addition, the creation of an annual statutory reserve of 5% is provided for, while the tax on profits is 24%. An additional charge also arises from a 5% tax on dividends. A basic advantage is that only the managers are liable for insurance and not the other partners.

Advantages and Disadvantages

Advantages

• Partners are NOT liable with their personal assets
• Low formation costs
• Minimum formation capital
• Flexibility, speed and adaptability
• Only the manager is required to be insured

Disadvantages

• Increased maintenance cost compared with partnerships
• Dividend tax which does not exist in partnerships (with turnover less than EUR 1,500,000).
• Difficulty in transferring shares compared with other capital companies (e.g. A.E.)

What is a Limited Liability Company (E.P.E.)?

The Limited Liability Company (E.P.E.) is a commercial capital company with legal personality, for the obligations of which only the company itself is liable with its assets and not the partners, and its capital is divided into equal parts called “corporate shares“.

The E.P.E. may also be single-member. In this case, it must be referred to in the corporate name as “Single-Member E.P.E.“, while the General Meeting of the sole partner must take place before a notary public, who also countersigns the minutes.

Formation Capital

The initial formation capital starts from EUR 1. The capital is divided into shares and each share cannot be less than EUR 1.

Management and Representation

The management of the company is exercised by the General Meeting and the manager, while representation is by the manager. Decision-making requires the majority both of the corporate shares and of the partners (natural or legal persons).

Profits and Charges

The distribution of profits is taxed on the basis of income tax at 24% and after deduction of the statutory reserve of 5%, while profits from dividends are distributed on the basis of shares and are subject to dividend tax of 5%. Partners are insured on a mandatory basis.

Advantages and Disadvantages

Advantages

• Partners are NOT liable with their personal assets.
• Minimum formation capital.
• Improved creditworthiness due to mandatory keeping of double-entry books.

Disadvantages

• Increased maintenance cost compared with partnerships.
• Compliance with strict accounting standards.
• Dividend tax which does not exist in partnerships (with turnover less than EUR 1,500,000).
• Mandatory insurance for all partners.

What is a Société Anonyme (A.E.)?

The Société Anonyme (A.E.) is a commercial capital company with legal personality, for the obligations of which only the company itself is liable with its assets and not the partners, and its capital is divided into equal parts called “shares“.

The A.E. may also be single-member. In this case, it must be referred to in the corporate name as “Single-Member A.E.“, while the General Meeting of the sole shareholder must take place before a notary public, who also countersigns the minutes.

Formation Capital

The minimum mandatory formation capital is EUR 25,000 and the minimum value per share is EUR 0.04.

Management and Representation

The management of the company is exercised by the General Meeting and the Board of Directors, while representation is by the chairperson and/or the Chief Executive Officer. After the changes of the new law on A.E.s, instead of a Board of Directors there may be a single-member administrative body, the Director-Manager.

Profits and Charges

The distribution of profits is taxed on the basis of income tax at 24% and after deduction of the statutory reserve of 5%, while profits from dividends are distributed on the basis of shares and are subject to dividend tax of 5%. The members of the Board of Directors or the Director-Manager are remunerated separately.

Advantages and Disadvantages

Advantages

• Shareholders and the Board of Directors are NOT liable with their personal assets.
• High creditworthiness.
• Numerous methods of financing.
• Great flexibility in the entry and exit of participants.
• Only members of the Board of Directors who simultaneously hold a stake of more than 3% in the company are required to be insured.

Disadvantages

• Large initial capital.
• High maintenance cost.
• Compliance with strict accounting standards.

Observations

1. In capital companies, the officers – managers are responsible for debts created to the State and the social security funds.
2. While capital concentration tax (1% on capital) is not owed upon the formation of new companies, it is nevertheless owed upon any subsequent increase thereof.
3. Capital contributions upon formation of any legal person, as well as capital increases and the purchase of shares or corporate shares, are items for which the source of origin of the funds must be justified (“source of wealth declaration“).

Cost Comparison

As is apparent from the table below, the basic differentiation in cost is between partnerships and capital companies, on the assumption that the partnership (O.E. or E.E.) does not exceed in turnover the sum of EUR 1,500,000, in which case it is required to keep double-entry books with everything that this entails (inventory, publications of financial statements, etc.). Finally, the presentation of the sole proprietorship is provided for comparison purposes.

• 

The first conclusion is that, with the existing total tax burden for companies (income tax and dividends) compared with the sole proprietorship, companies present a more favourable tax framework from the level of EUR 50,000 of taxable income and above.

The second conclusion is that partnerships present a clearly lower management cost compared with capital companies, provided that they do not exceed in turnover the sum of EUR 1,500,000.

Third, the obligation of insurance for all participants – partners is a basic disadvantage of partnerships and the EPE.

Finally, to the common question “IKE or EPE?“, the answer is clearly in favour of the IKE.

What are the steps for the Establishment / Formation of a Company?

Electronic One-Stop Service (e-YMS)

The Electronic One-Stop Service (e-YMS) is a digital platform on which the interested party themselves carries out the formation of their company, without the need to visit any public service. Through it, all Partnerships and Capital Companies (OE, EE, AE, EPE & IKE) can be formed.

By Law 4441/2016 significant changes were introduced in the operation of the e-YMS and more specifically the following procedures were abolished:

• Visit to the tax office (DOY)
• Visit to EFKA
• Use of corporate seal
• Tax clearance certificate

For the above procedures the Information System of the One-Stop Service now automatically sends the relevant data to the corresponding bodies.

Formation Procedure

STEP 1

One of the founders or an authorised third person is authenticated through electronic identification (e-id) or alternatively through the password and username they hold for access to TaxisNet or another government internet portal, and enters the digital platform.

The founders must have:

• Capacity to perform legal acts
• An active Greek VAT number (AFM)
• An appropriate residence permit if they come from a third country.

Optionally, the interested party may carry out a corporate name check, an Activity Code (KAD) check and calculate the formation cost before being identified by the system. Also, the platform has a cost calculator application before the start of the formation.

STEP 2

After identification, the interested party selects either the path New Company Formation, or the icon “Start now a new company formation case”.

They then select “Create formation file” and:

• Electronically completes all the data of the standard articles of association. It is noted that:
  • The articles of association, the content of which is expressly defined in Ministerial Decision 11026/2020, per legal form. They are completed by the founders only as regards the data that differentiate the company from others of the same type. Their use is mandatory for formation through e-YMS, regardless of corporate type, and concerns all legal forms (AE, EPE, IKE, OE & EE). If the founders do not wish to use standard articles of association or there are contributions in kind that require notarial form, then the founders should turn for the formation either to the GEMI Service of any Chamber or to the Notary Public-YMS. Alternatively, in our view, they proceed, immediately after formation, to amend them.
  • There is a special provision for Standard Articles of Association with Additional Content provided in Article 9a of Law 4441/16 and concerns only the legal form of the IKE and does not extend to the others.
• carries out an electronic pre-check and reservation of corporate name and distinctive title, and
• fills in all the screens with the required data.

STEP 3

The founders receive an electronic message regarding the submitted application for company formation, are authenticated in the same manner and successively, one after the other, electronically sign the articles of association.

The articles of association are signed electronically either by using the founders’ TaxisNet access codes (electronic signature), or by using special electronic signature equipment (qualified electronic signature). The two types of signatures have the same legal effects and no document or file needs to be uploaded.

The electronic signature constitutes proof of validation and acceptance of all the data registered in the system.

The completion of data in the e-YMS information system has the effect of a solemn declaration under Article 8 of Law 1599/1986. The GEMI Services carry out random sampling checks at a rate of at least 5% on formations made through the YMS.

STEP 4

After the signature-acceptance of the formation application, electronic payment of the formation cost follows.

STEP 5

After the submission of the formation application, the e-YMS system:

1. Grants a GEMI number and a Registration Code Number (KAK) of formation
2. Creates an electronic file in the company’s file at GEMI
3. Assigns a pair of username and password for the company’s access to the GEMI website.
4. Electronically transmits to TaxisNet the required data so that the company is registered in the Registry and obtains a VAT number (AFM)
5. Grants the possibility of access to the TaxisNet website for the submission of an application for a temporary key code, so that the company immediately receives a username and password to TaxisNet.
6. Registers the formed company at the competent Chamber by subject matter and territory
7. Notifies EFKA of the company’s formation
8. Issues digitally signed copies of the corporate contract and the announcement of the company’s formation and sends them electronically to the applicants
9. Provides a certificate of payment of the Single Cost Note for company formation and, where required, of the fee in favour of the Competition Commission.

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FREQUENTLY ASKED QUESTIONS ON COMPANY FORMATION – LAWYER

1. Which corporate form should I choose for my activity?

The choice depends on the type of activity, the number of partners, the available capital and chiefly on the extent of liability that each is willing to assume. The General Partnership (OE) and Limited Partnership (EE) have low formation costs, but the general partners are liable with their personal assets. The Private Capital Company (IKE) and the Société Anonyme (AE) offer limited liability up to the amount of the contribution, in exchange for more complex obligations. As a rule, the IKE is preferred for small family businesses, while the AE is preferred for businesses with significant capital or shareholders.

2. What capital and what documents do I need for the formation?

In partnerships and the IKE the capital may start even from EUR 1, while the AE requires a minimum capital of EUR 25,000. The basic documents include the partners’ identity documents, the articles of association, the lease agreement or title of ownership of the registered office, tax clearance evidence and, as the case may be, solemn declarations regarding impediments. The formation is carried out through the One-Stop Service (YMS) and registered at the General Commercial Registry (GEMI). For the AE and certain cases of the EPE notarial form is required, while for the others a private agreement suffices.

3. How am I protected from personal liability for the company’s debts?

The safest way is to choose a capital form (IKE, EPE, AE), where the partner is liable only up to the amount of their contribution and not with their personal assets. In partnerships, liability is unlimited and several, and indeed remains for five years after dissolution. The proper drafting of the articles of association also plays a significant role (manager’s powers, limits on binding the company, exit clauses), as does the avoidance of personal guarantees to banks and suppliers. For debts to the State and EFKA, managers may be personally liable, so caution is needed in assuming the position.

4. How long does it take to complete the formation?

For OE, EE and IKE formed by private agreement through the Electronic One-Stop Service (e-YMS), the formation may be completed even on the same day, provided that all data are ready and a standard articles of association is used. When the articles of association are drafted on a tailor-made basis, the time usually ranges over a few business days. For AE and for cases requiring notarial form, the procedure is longer and as a rule is completed in two to four weeks, depending on the gathering of supporting documents, the approval of the corporate name and the licences required for the activity.

5. What should I pay attention to in the articles of association so as not to regret it later?

The articles of association are the “internal law” of the company and govern relations between partners when disagreement arises. Important points are: the precise object, the participation percentages, the manner of decision-making (simple or qualified majority), minority rights, the appointment and revocation of the manager, the rules on transfer of shares, pre-emption and option rights, the treatment of death or withdrawal of a partner, and the manner of dispute resolution. Standardised articles of association resolve formation quickly, but create problems when conflicts of interest arise; for this reason tailor-made drafting is recommended.

6. What is the role of the lawyer in the formation and operation of the company?

The lawyer recommends the appropriate corporate form on the basis of the business’s data, drafts the articles of association tailored to the partners’ actual needs, examines issues of corporate name, registered office, licensing and trademark protection, and handles the procedure at GEMI and the other authorities. In parallel, they organise shareholders’ agreements, non-compete and confidentiality clauses, while they also support the company subsequently in amendments, capital increases, transfers of shares, transformations, mergers and dissolutions. Our firm has handled formations and restructurings of companies of every type, with an emphasis on the prevention of future disputes between partners.