For company liquidation in Greece, it is necessary to follow 2 main steps: dissolution and liquidation (ekkatharisi), which are done following the local regulations. Our lawyers in Greece can help you close a company.
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What are the steps for company liquidation in Greece?
The dissolution can be initiated if the members of the company take this decision, if the term stated in the Articles of Association has expired or if the company has accomplished its purposes. It can also start if a general partner is legally incapable to carry on with the business, is declared bankrupt, dies, or simply leaves the partnership.
The dissolution is followed by liquidation, with the final purpose of canceling the company from the commercial register. The person in charge with the liquidation is called liquidator and it’s appointed either by the general meeting of the entity or by the Court.
His powers are the same as the ones of the former management but they can be used only in the interest of the liquidation. Usually the former manager or director is also appointed liquidator.
The main aspect for starting the liquidation process is opening new books and closing the ones used by the company up until that point. During the liquidation process, the company’s members have to receive the balance sheet, that will be presented and analyzed during the general meeting.
If the document is approved, it must be published and the creditors are notified regarding the process and the modality of submitting their claims. You can rely on our law firm in Greece, where you can receive the necessary support throughout the entire liquidation procedure of the company.
The claims from the creditors have priority in front of the shareholders and if they cannot be covered in full, the entity’s assets can be sold in public auctions. Public auctions cannot be organized sooner than four months since the liquidation was initiated.
When all the creditors’ claims are satisfied in full, a new balance sheet must be elaborated and a report regarding the whole process must be presented in front of the company’s members.
The remaining assets are then distributed to the shareholders in the order of their contribution to the capital. After this step the last balance sheet is elaborated and the general meeting is convened for the last time. The balance sheet is published if approved and the liquidator is then dismissed. The company is deleted from the registers and no other commercial activities can be performed by it.
What are the latest regulations for company liquidation in Greece?
If you are considering liquidating a company in Greece, regardless of the reason, you can easily address to our Greek law firm for legal counselling. Please mind that if you were familiarized with the law regulating insolvency and liquidation in Greece, the law has recently been modified, so it would be advisable to address to a team of specialists.
Starting with 1st of January 2021, Greece has adopted the Debt Settlement and Facilitation of Second Change Law (the Law 4738/2020). The new law provides new provisions and measures when dealing with both personal and corporate insolvencies. The legislation also transposes into the national law and practices the Directive 1023/2019.
Under this new law, the local authorities have as a main purpose the reduction of the time and procedures involved when dealing with insolvency, restructuring and company liquidation. Through the new regulations, Greek authorities have introduced a modern, electronic system, which is set to facilitate the procedure, by providing up-to-date information to the Court authorities on the situation of an entity.
The same system also includes the publication of the court decision regarding the insolvency of a company. With regards to auctions, a procedure through which the assets of a company or an individual are sold in order to obtain capital for the respective debts, the new law introduced new rules as well.
Thus, starting with 2021, the auctions are to be held online on a platform designed especially for this purpose, so that it can increase the transparency of the procedure, given that auctions related to company liquidation and insolvency have to be held publicly.
It is expected that the new system will have as a main benefit the speeding up of the liquidation procedure, as the assets will be sold much faster. If you want to know more details on the new law, please refer to our team of Greek lawyers, who can advise on the latest modifications of the law.
If you need company liquidation services in other countries, such as Netherlands, we can put you in touch with our local partners who offer business consulting and immigration services.
What is ‘inability to pay” in Greece?
A company or another type of entity must declare insolvency and start the procedure of company liquidation in Greece only in certain scenarios. One of them refers to not being solvent, which means that the respective entity does not have a cash flow in order to secure the current financial obligations it has.
The legislation defines what “inability to pay” is and if a party is in this particular situation, this means that the insolvency procedure can start.
According to the Greek law, the “inability to pay” refers to the lack of cash flow that a debtor has, which makes the respective entity unable to pay the tax obligations to the Greek state or the Greek social security, as well as to financial institutions, in the case in which the entity has a debt (through a credit) with such institutions.
The term is to be applied in the case in which the person is liable to pay at least EUR 30,000 for a period of minimum six months. You can receive more details on this regulation from our Greek law firm. If you are in this situation, please do not hesitate to address a team of competent lawyers who have the necessary legal expertise in this legal field.
What are the conditions for winding up a Greek limited liability company?
The conditions for company liquidation in Greece for a limited liability company are similar as the ones presented in the beginning of the article, as all companies have the same framework for the initiating this procedure.
However, for each company type can appear certain particularities. For instance, for this company type, the procedure can start after 2 thirds of all the company’s partners decide in a general meeting to close the company.
The 2 thirds of the partners must also hold 2 thirds of the company’s shares (however, the rules may slightly vary based on the stipulations of the articles of association). Our lawyers in Greece can offer more details.
In comparison, for the joint stock company, the dissolution can be initiated by the company’s shareholders who own at least 1 third of the company’s shares; our law firm in Greece can offer in-depth information on the dissolution of this company type. You can address our attorneys in Greece if you want to find out more on the conditions necessary for other company types.
Who can be appointed as a liquidator in Greece?
Investors who want to close a company in Greece, or a partnership, have to appoint specialized persons who can complete the liquidation procedure. According to the Greek Government, the procedure can be done by individuals who have an in-depth background in certain fields, such as:
- accounting;
- law;
- auditing.
These individuals must have also obtained a prior certification for the role of liquidator, following a specific examination. In Greece, there are 2 categories of persons who can carry out liquidation/insolvency proceedings, Category A practitioners and Category B practitioners.
While Category A can participate in all types of company liquidations, Category B has the right to close a company in Greece only as long as the respective entity is a small business (it has the status of Very Small Entity – VSE, more exactly).
Who can appoint the liquidator?
The person who will carry out the insolvency proceedings must be appointed by the Greek courts. However, the company involved in the procedure or other parties involved in it can propose a certain person.
It must be noted that winding up a company in Greece must be done by a person who is specialized in the Greek liquidation legislation and procedures, and certified by Greek institutions. This means that the procedure in Greece can’t be done by liquidators or insolvency specialists who practice this profession in other member states of the European Union.
How long does it take to liquidate a company in Greece?
The process of company liquidation can take several years if many claims are involved in it but after five years, measures of accelerated liquidation are taken. If you need help for closing a company, please address our team of lawyers in Greece.
Still, given that the law has recently been modified, the procedure can take a shorter amount of time, but this can vary based on numerous factors. If you have to start the liquidation procedure, do not hesitate to refer to a team of Greek lawyers with an in-depth experience in similar cases. Our team can help you find the most suitable solution for your situation.
What is the data on company liquidation in Greece?
The information concerning the companies that are liquidated in Greece, or those that have entered the bankruptcy procedure is gathered by the Hellenic Statistical Authority. In the list below, you can find information on how the number of bankruptcies has evolved over the years for Greek commercial companies:
- in 2010, there were 380 registered bankruptcies, the largest number, of 178, registered in the case of business partnerships;
- in 2011, it was registered the largest number of bankruptcies, of 474, for the entire measured period (2010 – 2019);
- since 2015, the number of bankruptcies gradually decreased – 206 in 2015, 111 in 2016 and 114 in 2017;
- in 2018, there were less than 100 bankruptcies, of only 82, with almost an equal distribution between sole traders (30) and business partnership (32);
- 2019 registered the lowest number of bankruptcies, of only 63.
You can address our team of lawyers for other legal issues that can be of your interest. For example, if you want to buy a property in Greece for commercial purposes you can rely on our attorneys, who are specialized in this area. We can also help you buy land in Greece.
In this case you can’t travel to Greece, as a foreign investor, you can give us a power of attorney and we will act on your behalf and take care of the company formation process and any other corporate matter, such as in other countries, like Portugal, where you can open a company through a local lawyer.
Our team can represent foreign clients in the procedure of purchasing a property for residential purposes as well (we offer specialized assistance to EU and non-EU citizens). Our Greek lawyers can provide the necessary assistance in this procedure, as well as in winding up a company in Greece.