P.C.: A modern and flexible type of company in Greece.
The Private Company (P.C.) – in Greek “Idiotiki Kefalaioyhiki Etaireia” or “IKE” was introduced in Greece by the Law 4072/2012, in order to meet the need for a modern and flexible type of a legal entity.
That new type of company, called Private Company, has become the most popular and from 2012 until today the percentages of establishment of PCs in relation to other corporate forms are steadily upward, in contrast to Ltd. showing a steadily declining trend. According to the official announcements, one out of two new companies is a PC.
General Information and Structure of a PC
The Private Company is a company with legal personality. It is qualified as a commercial company, even if its object is not to carry commercial activities.
A Private Company may be incorporated by several persons (called “members” or “partners”) or by a single person and in such case it shall be called single-membered. The members may be natural persons or legal entities.
Capital of the PC
The capital of the PC is determined by the members without any restriction from the Law, as there is no minimum share capital requirement. The members may participate in the company either by capital contributions, non- capital contributions or guarantee contributions.
Limited Liability of the partners
The PC alone is liable with its property regarding the company’s obligations, with the only exception of the case where a member participates in the company with guarantee contributions and thus undertakes a liability towards third parties for the debts of the company, up to a specific amount which is defined in its articles of association (“Articles”).
A PC may be incorporated by means of a private document, unless a notarial deed is specifically required by the Law (e.g. in cases where real estate is contributed to the company’s capital) or if the partners prefer so. The company acquires the legal personality with its registration at the General Commercial Register (“GEMI”), following the “One Stop Shop” procedure of incorporation.
Anyone who wants to establish a PC must choose the template of the means which is on the General Commercial Register, including the minimum the means must contain. Of course, the ability to choose and upload more detailed means is available. In any case, it is advised, before establishing the PC to take legal consultancy by professional lawyers.
According to the provisions of the Law, the Articles and any amendments thereto, to the extent that they constitute private documents, as well as any resolutions and minutes of the partners’ meetings, may be drafted also in one of the official languages of the EU. In the relations of the company and its partners with third parties however, the Greek text shall prevail.
The PC is established for a specific duration, and may be extended by resolution of the members.
The seat of the company is in the municipality determined in its Articles, and the effective management may be abroad. Furthermore, the PC may transfer its seat to any other member state of the European Economic Area.
Finally, within a month from its incorporation, the PC must create a website, featuring certain information prescribed by law.
The PC is managed and represented by one or more managers, which must necessarily be natural persons.
The Articles may contain provisions for the management and representation of the company, and unless otherwise provided therein, the management and representation of the PC is carried out collectively by the members or by the single member of the company.
The members may appoint one or more managers, and in case more than one are appointed, the managers act collectively, unless otherwise determined by the Articles.
The managers represent the company and perform in its name any actions concerning its management, the administration of its assets and generally the pursuit of its objects.
The managers have an obligation of loyalty towards the company and are liable towards the latter in case of breach of the Law, the Articles and the decisions of the members, as well as for failures in the management of the company.
The members of the PC have the authority to resolve on any corporate matter, and further have the exclusive competence to resolve on certain subjects enumerated in the Law.
Meetings may be held at any place provided in the Articles, whether in Greece or abroad, and the articles may provide that the meetings may be held through teleconference.
Capital, Contributions and shares-parts
There is no minimum requirement in relation to the share capital of the PC.
The contributions of the members in order to participate in the company may be of 3 kinds:
• Capital contributions, in cash or in kind. Capital in cash must be actually paid.
• Non- capital contributions, being assets which are not subject to evaluation (such as the obligation to provide services, for example), and the value of which is defined in the Articles.
• Guarantee contributions, being the undertaking by a partner of a liability against third persons for the obligations of the company, up to an amount determined in the Articles.
It is worth noting that it is not required, for the establishment of a PC, to have all three kinds of contributions mentioned hereinabove.
The nominal value of each share- part is at least 1 euro, and must be the same for all corporate share- parts, regardless of the type of contribution. A share- part cannot be represented by shares (in the sense of securities). The company may issue a document to each member for the share- parts that the said person holds, but such documents are not securities.
Unless otherwise provided in the Articles, there is no restriction to the transfer of the share-parts, with the exception of a member holding share- parts which correspond to non- capital contributions or guarantee, which have not been fully paid, and thus is not allowed to transfer them unless such contribution is converted into capital contribution and then fully paid.
The Articles of the PC may however provide for restrictions in the transfer or encumbrance of share- parts, and may also provide for rights of pre-emption.
The transfer or encumbrance of share- parts during the life of a member must be in writing and must be notified to the company. The managers shall then register the transfer or encumbrance of the share- part in the book of members, and as of that date it shall be opposable to third parties.
Registration at the social security organization (EFKA) is compulsory for the managers of the PC and for the sole member, in case the PC is single-membered.
However, persons who are already insured in a public social security organization of another EU member- state may obtain a relevant exemption from the payment of the insurance fees in Greece.
The taxes for the PC is the same as that applied to Greek Limited Liability Companies, and as such :
– Corporate Income Tax rate: 24 % of the net profit (it is expected to be reduced to 20% as per the Government’s plan).
– Withholding Tax on Dividends: 5%
Before any distribution of profits, 1/20 of the net profits is withheld by the company for the formation of a reserve, which may either be capitalized or set- off against losses.
Advantages of PC in relation to other types of Greek companies
- Zero capital requirements. Οf course we do not recommend this as there will always be costs that must be covered with the initial capital. Contributions in addition to money can also be contributions to work.
- The costs of setting up PC are clearly lower compared to the corresponding fees for setting up other types of companies. Now PC can be set up ONLINE, within 1 hour, with many advantages.
- The articles of association are drawn up without the need for a notary. Nevertheless, it would be good because entrepreneurship is complex and complex, the basic directions and safety valves must be pre-determined and recorded in the articles of association.
- Fixed Tax Rate, without scales for better planning of tax liabilities
- The partners of the PC are not obliged to insure in Social Security organization EFKA, Only the administrator is compulsorily insured.
- PC partners are not responsible with their personal property for the company’s debts. Regarding the corporate obligations, only the company is responsible with its property.
- Decisions are made by a simple majority of 51%. Whoever has the largest corporate share also makes the decisions.
- Speed in decision making.
- It is addressed to small and medium enterprises such as the vast majority of enterprises in Greece.
- It can be single-member company.
- It is established through the services of a Station, even in 1 hour through the electronic platform.
- Simplicity in its establishment and operation as it gives great flexibility to start-ups PC startups.
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