Disputes in the Greek IKE – Complete FAQ Guide

The Greek Private Capital Company (IKE) is undoubtedly the corporate vehicle of choice for small and medium-sized enterprises. Its key advantages include: (a) it is a capital company and therefore the partners bear no personal liability for the company’s debts, and (b) it may be incorporated with zero share capital. However, both its small size and the often close personal relationships that develop during its operation frequently give rise to conflicts that disrupt the normal functioning of the company.
Read more: Exclusion of a Partner from the Greek IKE

In such cases, the question arises as to what actions the partners of the IKE may take, firstly, to remove the manager, and secondly, to have his potential civil or criminal liability determined. The most fundamental of these is the ability to request the exclusion of the manager from the management, or even his exclusion from the company itself (if he is simultaneously a partner). Importantly, significant rights are available even to a minority holding one-tenth (1/10) of the company shares: that minority may trigger a company audit and petition for the judicial removal of the manager — always, however, with the involvement of the court. Furthermore, beyond the removal of the manager from the company, partners may concurrently seek before the competent courts to establish his potential civil or criminal liability for any violations he has committed.
Read more: Partners’ Defence Against Mismanagement in the Greek IKE

Under Article 59 of Law 4072/2012, a manager appointed pursuant to the articles of association may be removed by a decision of the partners taken by an absolute majority of the total number of company shares — and this without any requirement for a serious cause for removal. Only where management has been entrusted for a fixed term may the articles of association provide for specific grounds of removal. It should be noted that, where the manager subject to removal is also a partner, his shares are not taken into account in forming the majority; the relevant decision will therefore be taken by the remaining partners, excluding the shares of the manager being removed. The articles of association may provide for a higher majority threshold for the removal decision, which may not, however, exceed the qualified majority of two-thirds of the total number of company shares.
Read more: Partners’ Defence Against Mismanagement in the Greek IKE

A serious cause for exclusion exists when the continuation of the company with the partner in question is, to such a degree — whether for objective or subjective reasons and within the framework of good faith and commercial ethics — so burdensome as to place the normal operation of the company at risk. However, according to Supreme Court Decision 473/2019 (Areios Pagos): “The serious cause is assessed according to the circumstances and in relation to the overall organisation of the specific company. Its existence must carry particular weight and have significant impact on the smooth functioning of the company. These impacts must have a quality of permanence and must not be of a temporary nature.” Indicative examples of serious cause include: the inability of the partners to reach agreement and the resulting inability to adopt decisions and achieve the company’s purpose (Court of First Instance of Agrinio 129/2020), breach of the duty of loyalty and the carrying out of competitive activities, and the exploitation and abuse of power on the part of the partner under exclusion.
Read more: Exclusion of a Partner from the Greek IKE

Within the framework of Law 4072/2012 as it applies to the IKE, the right of exit is provided for in Article 92(1), which reads: “Any partner may exit the company for serious cause by court order, issued upon the partner’s application.” It is accepted that a serious cause for exit exists when the continued participation of the partner in the company becomes, for objective or subjective reasons and within the framework of good faith and commercial ethics, unbearable. As indicative examples of such circumstances, reference is made to: mismanagement, the inability to achieve the company’s purpose, the inability of the company to function due to the formation of two opposing blocs of partners, persistent disputes and disagreements regarding the organisation and operation of the company, and even serious personal differences (see EirSiteias 50/2014, EirVolou 245/2021, EirPatron 200/2024). Furthermore, the partners are afforded the possibility to depart from the statutory provision by regulating the right of exit in the articles of association.
Read more: Voluntary Exit of a Partner from the Greek IKE

The exiting partner has the right to claim payment of the full value of his company shares, which is determined by the court if the parties do not agree or if the articles of association do not provide for a method of determination. The critical date for the determination of the value of the exiting partner’s interest is the date of the hearing of the application (see EirPatron 200/2024). Furthermore, the exit of the partner takes effect — in the case of the statutory right, upon the issuance of the final judgment, and in the case of the contractual right, upon the declaration of intent reaching the company — and is completed, pursuant to Article 92(4) of Law 4072/2012, by the cancellation of the company shares and the reduction of the share capital, where this is required.
Read more: Voluntary Exit of a Partner from the Greek IKE

A partner who participates in an IKE by way of a guarantee contribution assumes liability towards third parties for any debts of the company. This liability is “direct” and “primary”, in that each creditor may proceed directly against the partner without it being required that the creditor first seek to obtain satisfaction from the company and that such attempt prove fruitless and ineffective. However, this liability is limited: the partner will be liable to third parties only up to the amount set in the articles of association. Furthermore, the law imposes — and reinforces with a criminal provision — the obligation to register with the GEMI (General Commercial Registry) an “updated statement” of the guarantee contributions each time a change occurs in those contributions.
Read more: Liability of the Guarantee-Contribution Partner in the IKE

Where a partner who participates with a guarantee contribution exits the company or is excluded therefrom, he will continue to be liable towards the company’s creditors for obligations of the company that arose prior to the registration of these events with the GEMI, for a period of three (3) years from that registration, provided that he has not fully discharged the amount for which he is liable based on the guarantee contribution he assumed.
Read more: Liability of the Guarantee-Contribution Partner in the IKE
Read more: Intra-company Dispute — Sale of Company Shares — Sham Participation

In a reported case, the Athens Court of First Instance issued an order for interim measures directing a conservatory seizure of all movable and immovable assets of a private capital company (IKE) that had been incorporated by a natural-person debtor for the purpose of frustrating the satisfaction of a creditor’s claim against him. Thus, the court may — following a specific application — issue an interim order directing whatever interim measure is appropriate to provide temporary judicial protection. For example, the court may issue an interim order directing the necessary interim measures, which may include the temporary suspension of the voting rights of the partner subject to exclusion.
Read more: Conservatory Seizure Against an IKE Incorporated to Defraud Creditors

Under Article 94 of Law 4072/2012, every partner is entitled to be informed of the progress of the company’s affairs and to examine the company’s books and documents, as well as to request information necessary for the understanding and assessment of the items on the agenda of a partners’ meeting. In addition, partners representing one-tenth (1/10) of the total company shares may petition the court for the appointment of an independent certified auditor to investigate serious allegations of violations of the law or the articles of association. The auditor communicates his findings by means of a report addressed to the company and its partners. By exercising the above rights, the minority may obtain the necessary information and secure the evidentiary material needed to effectively exercise its right to petition for the removal of the manager.
Read more: Conservatory Seizure Against an IKE Incorporated to Defraud Creditors