Corporate governance is regulated in Greece mainly by Law 3016/2002 On Corporate Governance, which applies to companies limited by shares (société anonyme or SA, in Greek anonymi etairia) with shares listed on a stock exchange. An SA is formed and run according to the provisions of Codified Law 2190/1920. The regulatory body responsible for enforcement of corporate governance is the Hellenic Capital Market Commission (HCMC), which is an independent decision-making body in the form of a public law legal entity, operating under the supervision of the Ministry of National Economy. It is established in Athens and the Laws 148/67, 1969/91, 166/93, 2324/95, 2396/96 and 2836/2000 regulate its operation. Its main objective is to promote sound conditions for the operation of the capital market and to enhance public confidence both in the quality of supervision and market behaviour. To achieve this objective, HCMC sets the general terms and conditions governing the organization and operation of the capital market and issues instructions on compliance procedures. It also introduces the measures that are useful for ensuring the proper functioning of the market. The legislative framework of the Greek capital market is fully harmonized with the guidelines and directives of the EU. The HCMC's Code of Conduct for Listed Companies, implemented by decision 5/204/2000, is mandatory and binding.

The board of directors

The ultimate responsibility and duty of the members of the board of directors in every listed company is the continuous effort to increase company's long-term market value and the protection of the general corporate interest. This means that board members are not allowed to pursue personal interests that are against the interests of their company. Within this framework, board members are obliged to disclose to the other board members, in advance, any own interests that could arise from corporate transactions within their responsibilities, as well as any other conflict of interest with those of the company or its subsidiaries. (Annually, the board must draw a report referring in detail to the transactions between the company and its subsidiaries.)

Board members and their restrictions

The board consists of executive and non-executive members. Executive members deal with daily administrative issues of the company, whereas non-executive members are mandated with the promotion of all corporate issues. The number of non-executive members cannot be lower than one-third of the total number of board members. The board determines the status of board members as executive and non-executive. Also, at least two independent non-executive board members must exist on the board, appointed by the company's general meeting of shareholders (the GM); this is not required if minority shareholders are represented on the board.

During their tenure, the independent non-executive board members are not allowed to own more than 0.5% of the company's share capital or to have a relation of dependence with the company or persons associated with it. A relation of dependence exists if a board member: i) maintains a corporate or other professional relationship with the company or its subsidiaries, which by nature effects the corporation's activity, particularly if he/she is a big supplier or client of the company; ii) is president of the board or managerial staff of the company, and if he/she has the above mentioned status or is an executive board member of the board in a subsidiary or holds a contractual employment relation with the company or its subsidiaries; iii) has a second-degree kinship with or is the spouse of an executive board member, manager or shareholder controlling the majority of shares of the company or one of its subsidiaries; iv) has been appointed as board member directly by a shareholder who has such a right provided for by company's articles of association, so was not elected by the GM.

Independent non-executive board members may submit reports, jointly or separately, to the GM as they see fit.

Internal regulation

All listed companies must have an internal regulation, which is prepared by the board and should contain at least the following:

• the administrative structure of the company, the responsibilities of different departments, as well as the relationship among the departments and between them and the management. The structure must include an audit department, investor relations department and a department for company announcements;
• the responsibilities of executive and non-executive board members;
• the company policy on management recruiting and performance assessment;
• the monitoring procedure of transactions made by board members, management and persons who by position have internal information about the shares or other securities of the company or its subsidiaries traded on an organized capital market, as well as about other company-related activities;
• the procedure of announcement and notification to the public of important company-related transactions and other economic activities of the board members as well as transactions with main clients or suppliers; and
• the rules governing the transactions among subsidiaries and their monitoring procedure, as well as the appropriate disclosure of these transactions to the company-governing bodies and shareholders.

Audit department

Every listed company must have an audit department, whose members are appointed by the board, are full-time employees and cannot be board members, managers or their second-degree relatives by blood or marriage. Auditors are independent in performing their responsibilities, they do not report to any other company department and are supervised by non-executive board members. Moreover, auditors are allowed to have knowledge of any and all company books, documents, files, bank accounts and financial portfolios and have access to any company department when performing their duties, which include:

• monitoring the implementation and continuous compliance with the company's internal regulation and articles as well as all the regulations relevant to the company, particularly the financial and corporate legislation;
• reporting to the board cases of conflict between interests of board and management members and interests of the company;
• notifying the board in writing at least quarterly of the results of the audit performed;
• attending the company's GMs;
• disclosing, with the prior approval of the board, any information requested in writing by the supervisory authorities, collaborating with the authorities and facilitating the implementation of the authorities' supervising and auditing duties in every possible way.

Reporting obligations

Reporting obligations of listed companies consist of three basic types: a) regular or periodic reporting; b) extraordinary reporting; and c) special reporting.

Regular reporting: Each listed company must provide ASE with the following information or data:

• every three months, the balance sheet, the profit-and-loss account, the statement of changes in shareholders' equity, the cash flow statement, and the explanatory notes and the review report of the certified auditor;
• every six months, the table showing the appropriation of funds raised from share capital increases paid in cash; and
• every twelve months, summary financial data together with the auditor's report, its annual financial statements and annual consolidated financial statements (if there is a case), the annual bulletin (discussed below) and the schedule of intended corporate actions.

Extraordinary reporting: Each listed company must also inform the Athens stock exchange regarding: i) when convening a GM; ii) on the resolutions of any GM; iii) in cases of detachment and payment of main and interim dividends; iv) any corporate actions; v) matters that constitute privileged information; vi) any change of use of funds raised; vii) any changes in voting rights of major shareholders; viii) any transactions relating to the shares of the company by persons discharging managerial responsibilities within the company or its subsidiaries and affiliates as well as persons closely related to them; ix) in cases of a share capital increase through payment in cash, mergers, division takeover or contribution of assets; and x) in cases of share buyback and sale of own shares.

Special reporting: There are certain special obligations for companies with shares listed in the Big Cap segment, companies trading in the Under Surveillance segment, and ocean shipping companies.

Every listed company is obliged to issue and make available to the public and Athens stock exchange an annual bulletin providing regular and sufficient information to investors regarding its activities. The annual bulletin must include: i) annual financial statements drafted according to the International Accounting Standards (IAS); ii) summary of annual financial statements drafted according to a relevant joint decision of the Ministers of Economy & Finance and Development; iii) report of the board on the annual financial statements; iv) the auditing certificates; v) report on company's transactions with its subsidiaries; vi) information provided by Article 10 of Directive 2003/71/EC; and vii) the website where one can find the company's annual financial statements, auditing certificates and annual board reports.

In any case of offering securities to the public, the company must publish a prospectus (within the context of the respective EU legislation) containing any and all information necessary for investors to evaluate the assets, debts, obligations, overall financial status, profits, losses and prospects of the company. Information on the identity of the managerial stuff, the statistics and timetable of the offer, the reasons and procedure of the offer, the history and development of the company, the major shareholders and the share capital must also be included.

Biography

Dimitris Emvalomenos Bahas Gramatidis & Partners Dimitris Emvalomenos' areas of practice include corporate, commercial, securities regulation, competition, M&A, product liability, consumer law, and media law. He has written and spoken extensively on these areas. Recent transactions he has worked on include the Egnatia Bank/Marfin Group merger, the Nissan/Greek Car distribution network, private placement of Ballis Chemicals' shares, the securitization of mortgage loans for Piraeus Bank, cash pooling for Aget Heracles and the financing for the Greek Ministry of Defence's supply of Leo2Hel MBTs. He holds an LLM from the University of London, Queen Mary College (1988) and an LLB from the University of Athens Law School (1987). He is a member of the Piraeus Bar, Greek Commercial Lawyers' Association, Competition Law Partnership, Greek Association for Arbitration, Greek Association of Law and Economics, European Lawyers Union, the International Bar Association (SBL Committees C, L, M, S), British Institute of International and Comparative Law (BIICL – Tort Law Centre – Product Liability Forum, London (correspondent for Greece) and the European Justice Forum (EJF), Brussels (correspondent for Greece). He speaks Greek and English.