ΙΚΕ : Private Company in Greece
Establish a private company in Greece – ΙΚΕ.
WHAT IS A IKE – PRIVATE COMPANY
A private company (IKE) is a capital company introduced with Law 4072/2012. It has legal personality and is of commercial nature even where its purpose does not entail commercial activities.
KRS – Trust the experts for your establishment of a Private Company (IKE) or to transform your company into one!
In KRS, we undertake the entire process of establishing your company and keeping its books of accounts, sending you a financial update on a monthly basis so that you are in a position to make optimal business decisions.
With regard to IKE’s corporate liabilities, the company with its assets is the sole liable party, subject to section 79 of said Law regarding guarantee contributions.
It is composed of one or more natural persons or legal entities (the founders).
The deed of establishment of the company is a document that must comprise the articles of incorporation (Articles). It is not necessarily a Public Notary’s deed unless otherwise provided for by a specific law provision or the founders choose it to be so.
The company is established through the One-Stop service, with the establishment procedure not exceeding a 7-day period.
Share Capital of IKE
“The company of One euro.”
The private company’s share capital is determined by the partners without limitation and may even amount to zero. This type of company is often called “the 1-euro company”!
Partners participate with:
01. CAPITAL CONTRIBUTIONS.
“Capital contributions”, i.e. contributions either in cash or in kind that make up the company’s capital.
Capital contributions in kind are permitted solely if the item contributed is an asset that may be valuated pursuant to section 8 (5), Codified Law 2190/1920.
This is the most common form of participation.
02. EXTERNAL CONTRIBUTIONS
“Non-capital contributions” are the ones that cannot be considered capital contributions, such as receivables arising from commitments to carry out work or provide services.
Such contributions must be specified in the Articles and are provided for definite or indefinite time.
03. GUARANTEE CONTRIBUTIONS.
“Guarantee contributions” entail the assumption of liability towards third parties for the company’s debts up to the amount provided for in the articles of incorporation.
A partner providing a guarantee contribution is deemed as stating solemnly that he/she shall make every effort to be in a position, at all times, to pay the company’s liabilities up to an agreed amount.
The value of each guarantee contribution shall be stipulated in the Articles and may not exceed seventy five per cent (75%) of the aggregate amount of liability.
ADMINISTRATION.
ADMINISTRATION OF THE PRIVATE COMPANY.
The company is administered and represented by one or more administrators.
If not otherwise stipulated in the articles of incorporation, all partners or the sole partner may proceed collectively with the acts of administration and representation of the company (statutory administration).
Each partner, separately, may proceed with urgent acts of administration, which, if omitted, could cause serious damage to the company, provided that the remaining partners are notified in this regard.
Administrator’s Liability.
The administrator shall be liable to the company for violations of the present law, of the Articles and of the decisions made by the partners as well as for wrongful acts within the scope of his/her administration duties.
The administrator shall be released from said liability for acts or omissions that are based on lawful decisions made by the partners or pertain to reasonable business decisions made in good faith, on the basis of sufficient information and exclusively for the purpose of serving the company’s interests.
If more than one administrators acted in joint, they shall be liable in solido.
Partner Responsibilities.
Partners are the only ones responsible for passing resolutions on:
- Modifications to the Articles, including the articles that pertain to share capital increase or reduction, unless the present law or the Articles stipulate that certain modifications or acts for share capital increase or reduction are to be affected by the administrator alone;
- The appointment or revocation of the administrator, subject to section 60;
- The approval of the annual financial statements, the appropriation of profits, the appointment of an auditor and the administrator’s release from liability;
- The exclusion of a partner;
- The dissolution of the company or the extension of duration thereof;
- The conversion and merger of the company.
TAXATION AND INSURANCE OF PRIVATE COMPANY (IKE).
TAXATION AND INSURANCE
Tax Rate
The tax rate is 29% on net profit.
Tax withholding in profit appropriation is at 15%
Insurance with EFKA
Section 1 (2) of Presidential Decree 258/2005 was amended pursuant to section 116 (9), Law 4072/2012, now stating that social insurance with EFKA (the Self-Employed Workers Fund) is mandatory for:
01. IKE (Private Company) Administrators.
Private Company (IKE) administrators appointed by virtue of the Articles or of the partners’ resolution.
Third parties as well may serve as administrators.
02. SINGLE MEMBER
In the event of a Single-Member IKE, it is mandatory for the sole partner to be insured with EFKA.
Said persons are obliged to be insured with EFKA throughout the Greek territory, as applies, mutatis mutandis, to persons associated with capital companies of other forms [Limited Liability Companies (EPE) and Societes Anonymes (AE)].
Remaining Partners
The remaining partners of a private company, i.e. those who do not serve as administrators, may, optionally, be insured with EFKA.
Example:
A private company has been established where A is a partner participating with a 1% equity stake and serving as the administrator and B is a partner participating with a 99% equity stake, serving merely as a shareholder without being the company’s administrator (he happens to be a pensioner as well). Which of the two partners is obliged to be insured with EFKA?
Answer:
Being insured with EFKA is mandatory only for partner A as he is the sole administrator of the company, irrespective of his equity stake therein, and his social insurance contributions are to be calculated proportionately to his equity stake percentage; namely, if the company’s profit amounts to EUR 100,000.00 (100,000.00 * 1% = 1,000), his contributions shall be calculated taking into account the amount of EUR 1,000.00.
Conversion to IKE.
CONVERSION OF AN EXISTING COMPANY TO A PRIVATE COMPANY (IKE)
A company of another form may be converted into a private company by virtue of a resolution by its partners or shareholders, which is passed as stipulated by the law in the event of dissolution of said corporate form.
At all events, where company members will receive shares corresponding to non-capital or guarantee contributions, their consent is required.
The conversion resolution together with the private company’s Articles are registered in the Commercial Register (G.E.MI.). However, the conversion results shall not come to pass if, within one (1) month as of registration, the company’s creditor(s) object in writing to the conversion.
By means of said objections, creditors may request sufficient guarantees insofar as the financial situation of the company under conversion renders such means of protection necessary. Where no objections are raised, this is noted in G.E.MI., upon the company’s request, and conversion enters into effect as of the time of registration of such note.
Where objections are raised, the court may, upon a respective application being filed by the company, allow for the conversion to take place if it deems that the financial situation of the company or the guarantees received by or offered to such creditors do not justify such objections being raised.
The application is notified to the creditors that have raised objections whereas the court decision is subject only to an application to be set aside by default. On this occasion, the conversion shall take place upon registration to G.E.MI. of the court decision dismissing said objections or dismissing the application to set aside the judgment by default.
Contact Us.
KRS – Trust the experts for your establishment of a Private Company (IKE) or to transform your company into one!
In KRS, we undertake the entire process of establishing your company and keeping its books of accounts, sending you a financial update on a monthly basis so that you are in a position to make optimal business decisions.
KRS Financial, Taxation, Audit and Consulting Services
– 72 Syngrou Avenue, Athens, pc 11742
– 1-3 Filellinon Str., Piraeus, pc 18536
– 3 Aggelaki, Thessaloniki, pc 54621
Telephone: 0030 210 93 41 211
Fax: 0030 210 93 41 212
Website: krs.gr
Email: krs@krs.gr