Differences between Limited Liability Company and Societe Anonyme in Greece.

 Shawntel Daniel - Latsoudis & Arvaniti Law Office

Greek companies can be categorized as:-

1.                 Limited Liability company(LLC)

In a LLC company the partners are not liable with their personal property for the company assets i.e. the owners have limited liability for the actions and debts of the company.  Here individual partnership shares represent the corporate participation.  It is incorporated by the Articles of Incorporation legalized by notary. It has to be submitted to the court on the first instance and subsequently published in the government gazette. For a LLC Company the minimum capital must be at least 18,00,000 Euros with half of the capital being cash.

A Limited Liability company has many advantages.

·       The first and the foremost is that it protects the owners of the firm.

·       It can select varying forms of distribution of profits.

·       It is easier to operate and does not need many meetings etc. to manage the company.

·       All the business expenses, losses and profits flow through the company to the individual members. The double taxation of paying corporate and individual tax is avoided.

It has many disadvantages too:

·       It has limited life so it is dissolved when a member dies or undergoes bankruptcy.

·       Not for the business owners who want to take their company public or issue employee shares.

·       It is more complex at has less paperwork, can be classified as sole-proprietorship, partnership or corporation for paying taxes.

2.         Company Limited by shares & capital - Societe Anonyme

This type of company is a commercial entity and the participation in the capital of an SA gives the shareholder the right to participate in distributed profits. However the share holders are not liable with their personal property for an S.A.’s debts. Minimum share capital required for the establishment of an SA is euro 60,000 and must be fully paid according to the law. Its shares are classified as registered shares (nominal shares), bearer - shares (anonymous shares), preference shares (privileged shares) with voting rights and preference shares with no voting rights.

Advantages of Societe Anonyme: -

·       New capital is accessed to develop the business.

·       A float makes it easier for the owners and investors to realize the investment.

·       Employees can be offered extra incentives by granting share options.

·       It can provide customers and suppliers with added reassurance.

·       It usually gains higher public profile which can be good for business.

·       It provides greater potential for acquiring other businesses.

·       Personal guarantees of the directors are not usually required for borrowings.

Disadvantages of Societe Anonyme: -

·       Public companies have to comply with a wide range of additional regulatory requirements and meet accepted standards of corporate governance.

·       While running the company owners have to consider shareholders interest.

·       Business may become vulnerable to market fluctuations, which is outside the control of the owners.

·       If market conditions change during the floatation process owners have to abandon the float.

·       The costs of floatation can be substantial and there are also ongoing costs such as higher professional fees.

·       Managers can be distracted from running the business by the demands of the floatation process and by dealing with the investors afterwards.

All these companies are governed by  Greek Commercial & Corporate Law .