Criteria for Selecting Business Types in Greece

Jul 30, 2023

Criteria for Selecting Business Types in Greece


GP (General Partnership) | LP (Limited Partnership) | LLC (Limited Liability Company) | IKE (Private Company) | SA (Public Company):

General Partnership (GP):

Personal and unlimited liability of partners. Coincidence of partners. Keeping simplified accounting books.

Risk: According to the combination of articles 249 para. 1 and 258 para. 3 of law 4072/2012, the general partner is liable without limit, meaning with all of their personal assets and for the entire partnership debt, to any third party, individual or the State, not only for debts created after their entry to the GP but also for pre-existing debts before their entry. Moreover, according to article 269 of law 4072/2012, this liability lasts for five years after their exit from the GP or from any loss of their status in any way (e.g. due to the transformation of a GP into an IKE).

Therefore, it is highly unsuitable for individuals with substantial personal assets.

A disadvantage is also that the bankruptcy of the partnership leads to the coincidence of partners [article 7 para. 4 of the Bankruptcy Code (law 3588/2007)].

An advantage is the keeping of simplified accounting books.

Limited Partnership (LP):

Asymmetry among partners. Keeping simplified accounting books.

Risk for the general partners: the same as mentioned above for general partnerships.

On the other hand, participating in this business type as a limited partner creates risk only to the extent of their contribution to the capital (whether they lose it due to the company's poor performance or they have not contributed it in the first place, they are only liable personally towards third parties up to the amount they should have contributed).

An advantage is the keeping of simplified accounting books.

Limited Liability Company (LLC):

Double majority for decision-making. Establishment and amendments through a notarial deed. Risk of percentage reduction for partners with a participation of < 26%. Gradual elimination of this business type due to the establishment of IKE. Possibility of single-member company.

Choosing this business type is more suitable for a business with a projected small or medium size and definitely not a very large turnover.

Notarial deed: A notarial deed is required for the establishment of the company and any amendments to its articles of association, resulting in increased expenses.

Decision-making with Double Majority: A double majority is required for decision-making, and therefore the establishment of a company with only two partners should be avoided (i.e., a company with two partners). In particular, in a two-member company, due to the above rule, even if one partner holds 99% of the corporate shares, they cannot make decisions at the General Meeting of the Partners if the other partner, holding 1% of the corporate shares, does not agree (since they would not have voted in favor more than half of the total number of corporate shares).

Risk of further percentage reduction for partners with a participation of < 26% in any increases of the corporate capital: If the aforementioned partners do not have the funds to participate in the approved increase or do not wish to invest further funds in the company for any reason, their percentage of participation in the company (and consequently the amount of distributed dividends) will be further reduced (provided, of course, that the total number of partners allows the formation of a statutory majority without them).

After the establishment of IKE as a business type with law 4072/2012, LLCs are no longer advantageous, and there will be a gradual elimination of the need for this business type.

Private Company (IKE):

Establishment with a private document. No minimum capital requirement. Possibility of single-member company. Various types of corporate contributions. Limitation of partners' liability (except for those whose contribution is guarantee-related).

Choosing this business type is more suitable for a business with a projected small or medium size and definitely not a very large turnover.

The establishment of the IKE as a business type with law 4072/2012 essentially occurred to gradually replace the LLC, which presents particular difficulties in its operation (mainly due to the rule of double majority for decision-making by the General Meeting of the Partners, which was not provided for in IKE's case and can be introduced by specific statutory regulation).

Société Anonyme (SA):

Minimum capital of at least €24,000. Only capital contributions. Administrative Board with at least 3 members. Limited term of the AB's office. Procedures for convening General Meetings. Representation of corporate participation in shares. Limited rights of minority shareholders. Possibility of single-member company.
The business type of SA is suitable for establishing companies with many shareholders, substantial capital, and a large turnover. For small, medium, and family businesses, the selection of another business type (mainly IKE) is more preferable.

Here, the risk of the percentage reduction of small shareholders also applies (according to the circumstances).


Our law office will fully guide you in making the right choice of business type and provide comprehensive solutions with the collaboration of our team of lawyers, accountants and advisors.