Revocation of a General Partnership Manager

Legal Insight

January 2025

Christina Kapourani, LL.M. (mult.), Ph.D. Candidate

I. Summary - Introduction

Partnerships, such as general partnerships, are legal entities through which small and medium-sized businesses operate. These businesses typically have a family-oriented or otherwise closed structure regarding the individuals involved in the corporate scheme. Due to the close and trusting relationships established among the members of a general partnership, the management and representation of the partnership, unless stipulated otherwise in its articles of association, generally rest with all partners, who can act individually without requiring the cooperation of others.

However, the members of the partnership may stipulate in its articles of association that specific individuals shall serve as managers and representatives. This provision is not immutable, as the members of the partnership can revoke the management and representation powers granted to specific individuals, particularly if they commit managerial errors.

Below, we will briefly outline the conditions under which the revocation of a manager of a general partnership is lawful, as well as the legal consequences of such a revocation.

II. Legislative Provisions - Management Authority in General Partnerships

Articles 254(1) and (2) of Law 4072/2012, which governs general partnerships, state:

"All partners have the right and obligation to manage the partnership, unless otherwise stipulated in the partnership agreement {...}. If management is exercised collectively or by several partners, each managing partner may act individually, provided the agreement does not stipulate otherwise."

Furthermore, Article 257(1) of the same law provides:

"Each partner has the authority to represent the partnership, unless otherwise stated in the partnership agreement."

These provisions reflect the legislator’s default rule for general partnerships and apply in the absence of alternative arrangements in the articles of association (commonly referred to as the rule of “legal individual management”).

In practice, however, partners often wish for the partnership to be managed and represented before third parties by specific individuals, either due to their particular skills, which earn them greater trust, or because of their greater contribution to the partnership’s activities.

Collective management, where decisions require the unanimous consent of all partners for actions (e.g., paying employees and suppliers, withdrawing from bank accounts, signing contracts, purchasing supplies), is less common. This is because it slows down transactions and can potentially increase disputes among partners.

When the articles of association adopt an alternative provision to the above rule of individual action by all partners, this is referred to as "statutory management," as is commonly stated.

The cessation of management authority (whether related to internal partnership matters or its representation in the market) occurs in cases such as:

Dissolution and bankruptcy of the partnership.

Death of the manager.

Placement of the manager under legal guardianship.

Voluntary withdrawal or exclusion.

Revocation of management and representation authority under Articles 752, 757 of the Civil Code and Article 249(2) of Law 4072/2012.

The last case applies only where the articles of association provide for the assignment of management to specific individuals or to all partners collectively, not when the rule of legal individual management applies (i.e., where each partner can act individually without the consent of others).

III. Manager Revocation - Conditions for Revocation

Under the specific provisions of Article 752 of the Civil Code (which also apply to the revocation of representative authority):

"Management assigned by the partnership agreement to one or more partners may be revoked only for significant cause {...}. A significant cause includes gross breaches of duty or incapacity for regular management. Revocation requires a unanimous decision of all other partners, unless otherwise agreed."

(a) Decision by the Other Partners

A fundamental condition for the revocation of a manager is the unanimous decision by all other partners that the designated individual(s) should no longer manage the partnership.

It is important to note that:

The articles of association may stipulate that unanimity is not required, and a majority may suffice (Article 752(3) of the Civil Code in conjunction with Article 253(2) of Law 4072/2012).

The manager facing revocation is not entitled to vote on the matter due to an obvious conflict of interest (see also Thessaloniki Court of First Instance Decision 7631/2013, NOMOS legal database). A clause in the articles of association requiring the consent of the revoking manager for their own revocation is invalid, as is any conflicting agreement (Article 98 of the Civil Code).

Revocation is also possible in two-member partnerships, as the unilateral declaration of the sole entitled partner is equivalent to a multilateral decision by several partners (combined interpretation of Articles 253 and 267 of Law 4072/2012).

For the decision to take effect and terminate the manager's authority:

- The decision does not necessarily need to be in writing unless required by the articles of association.

- The decision must be communicated to the individual being revoked.

It must be registered in the General Commercial Registry (GEMI) to have legal effect against third parties unaware of the revocation through other means.

(b) Significant Cause

The second and essential condition for revocation is the existence of significant cause. Such cause exists when retaining the individual as manager becomes particularly burdensome for the partnership's interests and, indirectly, for the other partners.

The concept of significant cause is evaluated case by case, considering factors such as specific agreements between partners, the partnership's business, its size and duration, the partners’ characteristics, the partnership’s structure, and its financial performance.

Examples of significant cause include:

- Long-term illness or prolonged absence.

- Persistent failure to comply with diligent management standards (e.g., improper bookkeeping or failure to issue invoices).

- Refusal or unwillingness to perform necessary management actions.

- Unjustified opposition to or refusal to consent to necessary management acts (e.g., refusal to settle the partnership’s debts).

- Misappropriation of partnership assets (e.g., embezzlement of partnership funds).

- Engaging in competitive acts against the partnership to serve personal interests.

Agreements among partners that prohibit revocation for significant cause are invalid (Article 752(1) of the Civil Code). However, agreements limiting or enumerating significant causes are permissible.

IV. Consequences of Revocation

To produce legal effects, the revocation decision must be communicated to the individual being revoked and registered with GEMI for third-party acknowledgment. A valid significant cause is a prerequisite for the validity of the revocation.

If no significant cause exists or the grounds cited are false or insufficient, the decision is void (Article 180 of the Civil Code). The revoked manager or any other party with a legitimate interest may:

- Seek a declaratory judgment (Article 70 of the Code of Civil Procedure) to establish whether a significant cause exists.

- Request interim measures to temporarily regulate management authority.

If the revocation is lawful, statutory management authority generally reverts to all partners, unless otherwise specified.