In addition to the company forms already discussed under the article “Company forms in Greece”, Greece also has the mixed form known from Germany, the GmbH & Co. KG (in Greece: “EPE & SIA EE”).
The following article highlights the key features as well as relevant scenarios for forming and structuring a GmbH & Co. KG in Greece. All information without claim to completeness and without guarantee.
Note: This article is also available as a PDF download under the title “The Greek GmbH & Co KG (EPE & Sia EE)”.
1. Legal form of the GmbH & Co. KG
The GmbH & Co. KG / EPE & SIA E.E. is a limited partnership and therefore a partnership. It has its own legal personality in Greece. The KG has two different types of partners, the general partner and the limited partner. In a KG, the general partners are liable for the debts of the KG without limitation with their full assets, while the limited partners are liable only up to the amount of the business contribution they have undertaken. Further liability of the limited partner is excluded (Art. 271 Law 4072/2012).
What is special about the “true” GmbH & Co. KG is that the general partner, i.e. the sole unlimitedly liable partner of the KG, is a GmbH (corporation). The consequence is that the general partner of the KG, who is actually unlimitedly liable, is liable only up to its share capital due to its nature as a GmbH (company with limited liability). The advantages that result include, on the one hand, combining the greater flexibility of a partnership in bookkeeping, financial statements and shareholder resolutions with more favourable taxation etc., and, on the other hand, the limitation of the GmbH’s liability to the paid‑in share capital. A disadvantage is the double administrative burden associated with operating both the GmbH and the KG.
2. Formation scenarios
When founding a GmbH & Co. KG, various scenarios are conceivable.
- GmbH and KG are newly formed for the purpose of a GmbH & Co. KG.
- A GmbH takes a stake in an already existing or newly formed KG and contributes its business.
- A general‑partner GmbH is newly formed and assumes the general partner position previously held by a natural person.
In most cases, the limited partners (as financiers of the future KG) are already determined, so that, to operate the GmbH & Co. KG, the general‑partner GmbH must first be formed so that it can subsequently participate as a legal entity in the KG to be formed.
3. Formation formalities of the GmbH
The formation formalities of the GmbH are governed by the Greek GmbH Act 3190/1955. The corporate purpose of the general‑partner GmbH usually consists in the management of the XY KG as general partner. For further details on formation, operation, liability, publicity etc. of the GmbH, see the article “Formation of a GmbH in Greece”.
4. Formation of the KG
Once the general‑partner GmbH has been formed, the partners proceed with forming the KG. The essential provisions for the KG derive from Law No. 4072/2012: pursuant to Arts. 23 and 271 Law 4072/2012, at least two partners must participate in the KG, one general partner and one limited partner. As a rule, the general‑partner GmbH will hold only a very small share in the KG, while the limited partners will generally hold almost the entire share of the KG. The GmbH assumes the role of the sole unlimitedly liable partner, i.e. the general partner.
The partnership agreement of the KG may be concluded privately or by notarial deed, as there is no special rule in the law. Pursuant to Art. 273 Law 4072/2012, the summary to be filed must contain at least the following:
- Name and first name, legal capacity and residence of the partners.
- The trade name of the company.
- The partners entrusted with management (in the GmbH & Co. KG, the general partners).
- The amount of the limited partners’ contribution and the limitation of the limited partner’s liability.
- The duration of the company.
Pursuant to Art. 272 Law 4072/2012, the name of the KG must necessarily contain at least the name of a general partner, i.e. the GmbH, whereas the name of a limited partner may not be used. For further details on the Greek limited partnership, see the article “Company forms in Greece”.
5. Costs and publicity obligations
The formation is ultimately subject to the obligation of public notice (publicity obligation) pursuant to Art. 273 Law 4072/2012. A summary of the partnership agreement with the above minimum content must therefore be filed with the commercial register of the district court.
In all other respects, the statements made in the chapters on the KG and the GmbH regarding formation, bookkeeping, publicity obligations, etc. apply to the GmbH & Co. KG. The costs for the formation of the GmbH and of the KG accrue cumulatively.
6. Management
Once both companies, i.e. the GmbH and the KG, have been formed, the GmbH, as general partner, assumes the sole management of the KG. By operation of law, the limited partners are excluded from management. The KG is thus represented by its general‑partner GmbH, which in turn is represented by its managing director, who is often at the same time also the managing director of the GmbH and, as the authorized representative body of the GmbH, also acts for the KG.
7. Audit and publicity obligations
- KG: The KG submits only its annual financial statements together with the profit and loss distribution plan to the competent tax office (Art. 64 of the Greek Income Tax Act – EstG / Law 2238/94).
- GmbH: The GmbH is obliged (all managing directors and shareholders) to publish the annual financial statements consisting of balance sheet, profit and loss account, profit distribution plan and notes (Art. 22 para. 4 GmbHG), as well as managing directors’ reports and any audit reports by auditors. Large GmbHs are additionally subject to audit by auditors if they meet two of the three requirements listed in Art. 42a AktG – Greek Stock Corporation Act (net sales over €3 million, assets over €1.5 million, 50 employees).
8. Taxes
Taxation of the GmbH & Co. KG is based on the taxation of partnerships. The then current tax rate for partnerships is 26% for the share of profits up to €50,000, and 33% for the portion above that amount.
(Status: January 2012. All information without guarantee.)