1. Merger / Amalgamation of Greek Capital Companies
The merger of Limited Liability Companies (EPE) or Sociétés Anonymes (Aktiengesellschaften – AG/S.A.) in Greece is possible either according to Article 68 et seq. of the Greek S.A. Law and Article 54 of the Greek LLC Law:
- by way of formation of a new company (amalgamation) through the transfer of the assets of two or more companies (transferring companies) each as a whole to a new company (LLC or S.A.) founded by them; or
- by way of acquisition (merger by absorption) through the transfer of the assets of one legal entity or several legal entities (transferring legal entities) as a whole to another existing legal entity (acquiring legal entity).
In a merger, a company thus transfers its entire assets to one or more companies, which are either already existing or newly founded.
For an LLC (GmbH), the merger requires the resolutions of the partners of the participating companies with a three-quarters majority, according to Article 54 of the LLC Law. The merger may only be completed two months after the fulfillment of the publication requirements, provided that no creditor of the companies has raised objections. Furthermore, according to Article 55 of the LLC Law, a notarized merger agreement must be concluded between the parties, which must contain the information required by the essential provisions of the LLC Law.
For an S.A. (AG), the merger is governed by Articles 68-80 of the Greek S.A. Law (Law N.2190/1920 Articles 68 – 80 in their respective current version following the amendment by Presidential Decree 497/87). According to Article 72 of the S.A. Law, the merger requires the General Meeting resolutions of all companies participating in the merger. According to Article 69 of the S.A. Law, a draft merger agreement is required first.
The draft or the merger agreement itself must contain the following information:
- the specific legal form, the name or firm, the registered office of the companies participating in the merger, as well as their registration numbers;
- the share exchange ratio and, if applicable, the amount of the cash equalization payment pursuant to Art. 68 S.A. Law;
- the details for the transfer of the new shares issued by the acquiring company;
- the date from which the shares granted to the transferring company(ies) confer entitlement to a share in the balance sheet profit, as well as all specific details relating to this entitlement;
- the date from which the actions of the transferring company(ies) are deemed to have been carried out for the account of the acquiring company (the merger effective date), as well as the treatment of the results arising from this date until the completion of the merger, in accordance with Articles 74 and 75 of the S.A. Law;
- the rights granted by the acquiring company to individual shareholders and to the holders of special rights (such as non-voting shares, preference shares, multiple-voting shares, bonds, and profit-sharing rights), or the measures provided for these persons;
- any special benefit granted to a member of a management body of the companies participating in the merger, or to an auditor;
- the agreement on the transfer of the assets of each transferring company as a whole against the granting of shares in the acquiring company;
- if applicable, various other arrangements, depending on the specifics.
According to Article 69 § 4 of the S.A. Law, the Board of Directors of each of the companies participating in the merger must prepare a detailed examination report explaining the merger agreement from an economic and legal perspective. This report must particularly contain information on the share exchange ratio and must conclude with a statement, pursuant to Article 71 of the S.A. Law, as to whether the proposed share exchange ratio (and, if applicable, the amount of the cash equalization payment or the participation in the acquiring legal entity) is considered appropriate as consideration. It must specify the methods used to determine the proposed exchange ratio, the reasons why the application of these methods is appropriate, and what exchange ratio or consideration would result from the application of possibly different methods. It must also explain the weight given to the different methods in determining the proposed exchange ratio or consideration and the underlying values, and what particular difficulties were encountered in the valuation of the legal entities.
The merger agreement requires approval by the Ministry of Commerce (> local Prefecture) according to Article 74 of the S.A. Law. For this purpose, the General Meeting resolutions on the merger, together with the notarized merger agreement and a declaration under Law 1599/1986, are submitted. The relevant publication obligations must be observed at all stages.
Merger by way of formation of a new company (amalgamation) takes place according to Article 80 of the S.A. Law with the corresponding application of the merger provisions of Articles 69 to 77 of the S.A. Law. In this process, a new company emerges from the merger of the former companies.
2. Division of Greek Sociétés Anonymes (S.A.)
The division of Greek Sociétés Anonymes is regulated in Articles 81 – 89 of the Greek S.A. Law (in its current version following the amendment by Presidential Decree 498/1987) and is possible either by merger, formation of a new company, or by way of formation of a new company through merger.
- Division by Merger / Amalgamation is understood as the transfer of the entire assets of an S.A. (with dissolution, but without liquidation) for absorption by the simultaneous transfer of the parts of the assets to other existing S.A.s (acquiring legal entities).
- Division by Formation of a New Company is understood as the transfer of the entire assets of an S.A. (with dissolution, but without liquidation) to other S.A.s simultaneously newly founded against the granting of shares or memberships in these S.A.s to the shareholders of the transferring S.A. (spin-off).
- Division by Merger / Amalgamation and Formation of a New Company is understood as the transfer of the entire assets of an S.A. (with dissolution, but without liquidation) partly to other already existing S.A.s, and partly to other S.A.s simultaneously newly founded against the granting of shares or memberships in these S.A.s to the shareholders of the transferring S.A. (split-up).
For the division, General Meeting resolutions of all companies participating in the division are required according to Article 84 of the S.A. Law. According to Article 82 of the S.A. Law, the Boards of Directors of the companies participating in the corporate division must draft a written division agreement. This agreement contains, mutatis mutandis, the information mentioned above under the merger / amalgamation section. The provisions on the examination report, publication obligations, etc., outlined for the merger, and Articles 71 – 74 of the S.A. Law apply accordingly.
According to Article 88 of the S.A. Law, the division provisions of Articles 82-86 of the S.A. Law apply accordingly to the division by formation of a new company. The division by merger and formation of a new company takes place according to Article 89 of the S.A. Law with the corresponding application of Articles 81 § 4, 82 – 87, and, if applicable, Article 88 of the S.A. Law.
3. Corporate Reorganization through Change of Legal Form
The existing legal form of an existing company can be changed into another legal form by way of reorganization through change of form. This is referred to as corporate reorganization. However, a uniform reorganization law does not exist in Greece. The relevant regulations are found partly in the Greek S.A. Law N.2190/1920 (Article 66 S.A. Law in its current version following the amendment by Law N.2339/1995 and Article 67 S.A. Law in its current version following the amendment by Law N.409/1986). Furthermore, relevant regulations are found in the Greek LLC Law N. 3190/1955 (Article 51 LLC Law in its current version following the amendment by Law N.2339/1995 and Article 53 LLC Law).
Accordingly, legal entities registered in Greece can be reorganized through merger/amalgamation, division (spin-off, split-up, segregation), transfer of assets, or change of legal form.
The conversion of a Greek Société Anonyme (Anonymi Eteria = AE/S.A.) into a Limited Liability Company (Eteria Periorismenis Efthinis = EPE/LLC) by change of legal form takes place according to Article 51 LLC Law and Article 66 S.A. Law through a notarized conversion resolution of the General Meeting of the changing legal entity after prior valuation of the assets and liabilities. The conversion resolution and the required declarations of consent from individual shareholders must be notarized. The formation rules applicable to the new legal form must be applied to the change of form.
The conversion of a Greek LLC (GmbH) into an S.A. (AG) requires a three-quarters majority resolution of the General Meeting, according to Article 67 S.A. Law, after prior valuation of the assets and liabilities. The notarized conversion resolution must contain the S.A.’s articles of association, information on the composition of the first Board of Directors, as well as the information listed below, and must be submitted to the Ministry of Commerce or its branch at the local Prefecture for approval.
The notarized conversion resolution contains:
- the legal form the legal entity is to obtain through the change of form;
- the name or firm of the legal entity in its new legal form;
- a participation of the previous shareholders in the legal entity according to the rules applicable to the new legal form, insofar as their participation is not lost according to this book;
- number, type, and extent of the shares or memberships that the shareholders are to obtain through the change of form or that are to be granted to an incoming partner with personal liability;
- the rights of individual shareholders and of the holders of special rights;
- if applicable, further regulations;
- the codified partnership agreement of the LLC (minimum information according to Article 6: name, registered office, purpose and duration of the company, personal details of the partners, capital and shares).
Prior to this, an valuation of the assets and liabilities of the company must take place. The conversion is subject to the publication obligations of the LLC Law.
The conversion of a General Partnership (Offene Handelsgesellschaft = Omorhythmi Eteria / O.E.) or Limited Partnership (Kommanditgesellschaft = Eterorhythmi Eteria / E.E.) into an LLC by change of legal form takes place according to Article 53 LLC Law through a written notarized conversion agreement. The notarized agreement contains the information mentioned above for the S.A.
The conversion of a General Partnership or Limited Partnership into an S.A. takes place – unless otherwise provided in their partnership agreement – according to Article 67 § 2 S.A. Law through a unanimous resolution of all partners and after prior valuation of the assets and liabilities.
The name of the changing legal entity can be retained as part of the LLC’s name. The partners with personal liability of the General Partnership and the Limited Partnership remain liable for the old liabilities of the changing company until the fulfillment of the publication obligation.
(Status: April 2010. All information is subject to change and without guarantee.)