Author: | Published: 9 Oct 2003
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The societe anonyme (SA) is the type of company most relevant to issues of good governance in Greece. It is also the only type of company that can trade its shares on the stock exchange.


The SA is principally governed by Codified Law 2190/1920 Regarding Societes Anonymes as amended. There also exist a number of mandatory legislative provisions in the form of Presidential Decrees and decisions of the Capital Market Committee, which govern SA companies trading on the Athens Stock Exchange. Two Voluntary Codes containing recommendations on corporate governance issues also exist.

Law 3016/2002 (regarding special issues around the operation and management of public companies) was recently enacted and this expressly addresses corporate governance issues. However, although this new law does introduce several legal novelties, the basic legal structure regarding corporate governance already existed among the provisions of company legislation governing SAs and in the provisions of finance and securities laws and regulations.

This article will discuss several of the central issues concerning corporate governance in Greece, while at the same time highlighting the relevant aspects of Law 3016/2002.


Law 3016/2002, which specifically addresses those companies trading their shares on the Athens Stock Exchange, introduces provisions aimed at distinguishing between executive and non-executive members of the board of directors. The number of non-executive members must not be less than one-third of the total number of board members. At least two of the non-executive members must be independent, having no dependence relationship with regard to the company or persons/entities connected to it. The meaning of the dependence relationship is widely defined and specific criteria are set.

The independent members of the board are entitled to submit separate reports to the annual or extraordinary general meeting of shareholders.

Furthermore, the same law expressly prohibits members of the board and any third party to whom powers have been delegated, from pursuing personal interests contrary to those of the company and obliges them to disclose any such interests that may emerge from company transactions in the discharge of their duties as well as any conflict of interest between themselves and the company or companies connected to it. It remains to be seen how effective the safeguarding of the company against such eventualities will be.


One of the issues directly influencing shareholder protection is the manner in which company directors are appointed and remunerated. Directors are elected by the GA which alone is competent to decide on remuneration.

However, the rights of shareholders as individuals are limited in Greek law. For instance, there is no provision regarding the inspection of director's service contracts. However, employment/service contracts and director's remuneration is always subject to prior approval by specific resolution of the general meeting of the shareholders.

The disclosure of director's remuneration in the annual accounts is limited to the aggregate amounts to be paid to directors. Furthermore, the aggregate amounts to be paid as remuneration to the non-executive members of the board should be shown in a separate category in the Note of the Annual Financial Statements.


Law 3016/2002 also provides that in order for management to proceed with deviations in the use of funds injected by capital increase in relation to what has already been decided by GA resolutions and submitted to the Athens Stock Exchange, a board resolution is required by increased majority of two-thirds of its members. The board must duly inform the next GA of the reasons imposing such a deviation and what the new use of the funds will be.


Internal audit is another of the central issues of this piece of legislation. It reiterates the responsibility (originally introduced by Decision 5/204/2000 CMC) of the board for the internal regulation of the company and sets out the obligation of the company to compose a special internal audit service which will be hierarchically separate from any other operational unit of the company. The existence and due operation of this service is now required for companies listed with the Athens Stock Exchange.


The Securities Regulation provides that, regarding listed companies, in certain cases, disclosure of certain transactions is mandatory. Furthermore, detailed disclosure requirements are set when offering shares or other securities to the public. Listed companies are also under an obligation to inform the market of any event that, if known, would be likely to have a substantial impact on the company's share price.


Recently (before the enactment of Law 3016/2002), the conclusions of a study conducted by the University of Athens were published, offering an optimistic picture of company observance on issues which form part of what is considered basic corporate governance, especially those which are imposed by mandatory legal provisions. However, where it was left up to a company's discretion and initiative to be innovative in adopting new practices, behaviour varied from one company to another. Some companies are already active in areas beyond what is imposed by law. For instance, several large companies demonstrate social responsibility and are active in the areas of environmental protection, consumer protection, health research and so on. However, there is plenty of room for improvement. This is also true when it comes to the setting up and operation of effective risk management systems by Greek companies in order to build a stronger and more competitive profile by adopting effective mechanisms based on international examples but taking into consideration the particularities of the Greek market.

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