REINCORPORATIONS: A COMPARISON BETWEEN GREEK AND CYPRUS LAW

Thomas PAPADOPOULOS

Abstract


This paper will analyse the legal framework of reincorporations in Greek andCypruslaw. A reincorporation entails change of the law applicable to a company through a seat transfer. Reincorporations and subsequent change of applicable law inGreeceandCypruswill be scrutinized. A comparison between Greek Law and Cyprus Law will be drawn.Cyprushas a quite detailed legal framework of voluntary inbound and outbound reincorporations. WhileGreecehas certain provisions on outbound reincorporations, it does not have any provisions on inbound reincorporations. The compatibility of these national provisions with internal market rules, as interpreted by the case law of the Court of Justice of the EU (CJEU), will be discussed.

REÎNCORPORĂRILE: ANALIZĂ COMPARATIVĂ A LEGII DIN GRECIA ŞI CIPRU

Scopul acestui studiu constă în analiza bazei normative a reîncorporării în legea Greciei şi în cea a Ciprului. Reîncorporarea pre­supune schimbarea legii aplicabile în cazul în care compania îşi schimbă administrarea. În cadrul acestui mesaj ştiinţific vor fi examinate, în plan comparat, legea Greciei şi legea Ciprului. Ciprul are o bază normativă foarte clară şi detaliată cu privire la reîncorporările de ieşire şi de intrare. În timp ce Grecia are anumite dispoziţii privind reîncorporarea de ieşire, neavând însă nicio dispoziţie de intrare. Anume problemele privind compatibilitatea acestor prevederi naţionale, pe de o parte, cu cele internaţionale interpretate prin practica judiciară a Uniunii Europene, pe de altă parte, vor fi discutate.


Keywords


reincorporation, case law, outbound incorporation, inbound incorporation, applicable law, legal frame­work, Greek law, Cyprus Law.

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References


Directive 2005/56/EC of the European Parliament and of the Council of 26 October 2005 on cross-border mergers of limited liability companies [2005] OJ L 310/1.

Council Regulation (EC) No 2157/2001 of 8 October 2001 on the Statute for a European company (SE) [2001] OJ L 294/1.

Legal persons are equated with natural persons. P. Agallopoulou, Basic Concepts of Greek Civil Law (Ant. N. Sakkoulas/ Staempfli/Bruylant 2005) 59.

AGALLOPOULOU, P. (n 3) 60. Some authors adopt dissenting opinions supporting other theories: Λ. Γεωργακόπουλος Εγχειρίδιο Εμπορικού Δικαίου, Τόμος 1 και Τόμος 2 (Εκδόσεις Σάκκουλα 2η έκδοση 1996) 621/[L. Georgakopoulos Handbook of commercial law, vol.1 and vol. 2 (Sakkoulas 2nd ed. 1996) 621], Κ. Παμπούκης “Η αμοιβαία αναγνώριση των Κοινοτικών εταιριών στη νομολογία του ΔΕΚ: συμπεράσματα για το ελληνικό διεθνές εταιρικό δίκαιο” [2003] ΕπισκΕμπΔ 283-300/[K. Pamboukis “Mutual recognition of Community companies in ECJ’s case law-Conclusions for the Greek international company law” [2003] Episkopisi Emporikou Dikeou (EpiskED) (in Greek) 283-300] and Φ. Κοζύρης “Δικαιοδοσία και εφαρμοστέο δίκαιο στις εσωτερικές εταιρικές σχέσεις-προτάσεις για την Ελλάδα μετά τις αποφάσεις Centros και Uberseering” [2003] ΕπισκΕμπΔ 618-638/[F. Kozyris “Jurisdiction and applicable law in internal corporate affairs-proposals for Greece after the decisions of Centros and Uberseering” “ [2003] Episkopisi Emporikou Dikeou (EpiskED) (in Greek) 618-638].

L. Kotsiris Greek Law on Partnerships and Corporations (4th edition, Sakkoulas Publications 2013) 214.

L. Kotsiris (n. 5) 89.

HATZIMIHAIL, N. Cyprus as a Mixed Legal System. 2013. JCivLS 37-96; Symeon S. Symeonides. The Mixed Legal System of the Republic of Cyprus”, 78 Tul.L.Rev. 441 (2003).

A. Emilianides and others, Private International Law in Cyprus, International Encyclopaedia for Private International Law (Kluwer 2015) 55.

Ceska Konsolidanci Agentura ν. Sampratrans Shipping Ltd , (2009) 1 Supreme Court of Cyprus 615, Fredericou Schools Co Ltd Κ.Α. Ν. Acuac Inc, (2000) Civil Appeal No. 8266, A. Emilianides and others, Private International Law in Cyprus, International Encyclopaedia for Private International Law (Kluwer 2015) 55.

Letco Co Ltd ν. Eliades and others (1991) 1 Supreme Court of Cyprus 435. A. Neocleous (ed) Introduction to Cyprus Law (Yorkhill Law Publishing 2000) 895. Cyprus case law also cites Dicey & Morris for the definition of domicile as the place of incorporation of the legal person: “"...a corporation incorporated in a single country may only have one domicile, which will be in that country" and “"a corporation duly created in a foreign country is to be recognised as a corporation in England, and accordingly foreign corporations can both sue and be sued in their corporate capacity in the courts."”. China Wandao Engin. Corporation ν. The Republic of Cyprus, (1997) 4 Supreme Court of Cyprus 2084. Dicey & Morris The Conflict of Laws (12th ed., Sweet & Maxwell, 1993) 1103.

NEOCLEOUS, A. (n 10) 895.

Μεταλληνός A.Α. “Τα νομικά πρόσωπα (ιδιωτικά πρόσωπα)-εφαρμοστέο δίκαιο” σε Χ. Παμπούκης (Ε-πιμ.) Δίκαιο Διεθνών Συναλλαγών (Νομική Βιβλιοθήκη 2010) 94/[A. Metallinos “Legal persons (legal persons of private law)-Applicable law” in Ch. Pampoukis (ed) Law of International Transactions (Nomiki Vivliothiki 2010) (in Greek) 94]. See also Χ. Παμπούκης Νομικά πρόσωπα και ιδίως εταιρίες στις συγκρούσεις νόμων (2η έκδοση, Εκδόσεις Αντ. Ν. Σάκκουλα 2004) 147-150/[Ch. Pamboukis Legal Persons and Especially Companies in Conflict of Laws (2nd edition, Ant. N. Sakkoulas publications 2004)(in Greek) 147-150].

Metallinos A. (n. 12) 94-95. For a discussion of the conditions of seat transfer of companies limited by shares and of companies with limited liability (Art. 29 para. 3 and Art. 31 para. 2 of Law 2190/1920 and Art. 38 para. 3 of Law 3190/1955), see: Β. Κιάντος Ιδιωτικό δίκαιο του διεθνούς εμπορίου (4η Έκδοση, Εκδόσεις Σάκκουλα 2005) 161-168/ [V. Kiantos Private Law of International Commerce (4th edition, Sakkoulas 2005)(in Greek) 161-168]. For an analysis of seat transfers of Greek Sea Trading Companies of Law 959/1979, see: Α. Καραγκουνίδης “Αναγνώριση και εγκατάσταση κεφαλαιουχικών εταιριών στον κοινοτικό χώρο υπό το πρίσμα της κοινοτικής και της ελληνικής έννομης τάξης-Ο έλεγχος της εφαρμογής εθνικών κανόνων συγκρούσεως από το ΔΕΚ” [2005] ΕλλΔικ 1315, 1337-1347/ [A. Karagounidis “Recognition and establishment of capital companies in Community area in the light of Community and Greek legal order-control of application of national conflict of laws rules by the ECJ” [2005] Elliniki Dikeosini (EllDik) (in Greek) 1315, 1337-1347]. An interesting article on the relationship between EU Company Law and Greek Sea Trading Companies of Law 959/1979: N. Tellis “Expansion of the Applicability of EU Company Law Directives via Analogy?– A Study Based on the Example of Greek Sea Trading Companies” [2008] ECFR 353.

Art. 45 para. 2 of Law 4072/12 states: “Transfer of the registered office of the company to another country of the European Economic Area (EEA) does not result in the dissolution of the company, under the term that this receiving country recognises the transfer and the continuation of the legal personality. The manager drafts a report which explains the consequences of the seat transfer to members, creditors and employees. This report together with a financial report on this seat transfer are registered to General Commercial Registry (G.E.MI.) and remain at the disposal of members, creditors and employees. The decision for this transfer is not taken, unless two months have passed since this publication. Seat transfer is decided unanimously by members. The competent authority of General Commercial Registry (G.E.MI.) could reject the application for seat transfer on grounds of public interest.”

Metallinos A. (n. 12) 95.

This refers to the English translation of Law 3777/2009 of I. Madarou: I. Madarou “Law 3777/2009 on cross-border mergers of limited liability companies and other provisions” [2010] Revue hellénique de droit international-RHDI 887-898. See, also: E. Perakis “Cross-border Mergers and the new Greek Law 3777/2009” [2010] Revue hellénique de droit international-RHDI 839-844.

For a discussion of the implementation of the Cross-border Mergers Directive in Greece, see: “Transposition of the Cross-Border Mergers Directive into Greek Law” in Bech-Bruun and Lexidale Study on the application of the Cross-border Mergers Directive 471-489 and T. Kyriakopoulos “Greece” in D. Van Gerven (ed) Cross-Border Mergers in Europe-Volume 2 (Law Practitioner Series, CUP 2011).

While Law 3777/2009 on cross-border mergers of limited liability companies applies to mergers between Greek companies and EU companies (see, Art 1 para.2 mentioned in the previous paragraph), there is no special provision regulating the cross-border merger between a Greek company and a non-EU company. Although there is no special provision on such cross-border mergers, it was argued that they are also permitted under Greek law. The argument in favour of a cross-border merger between a Greek company and a non-EU company is that Greek law allows transfer of the seat of a Greek company to a non-EU country without dissolution and liquidation. It is possible to achieve a cross-border merger in two separate stages; a Greek company could first transfer its seat to a non-EU country and then could proceed to a domestic merger with the non-EU company under the law of the non-EU country. Hence, it would be a meaningless and unnecessary complication not to allow this cross-border merger in a single stage. Never¬¬theless, in a cross-border merger between a Greek company limited by shares and a non-EU company, Art.49a of Law 2190/1920 on minority shareholders protection (minority shareholders have the right to request the repurchase of their shares by the company, if the general meeting decides the transfer of the registered seat of the company to another country (Art. 49a para. 2 of Law 2190/1920)) should also be applied, by analogy. A. Metallinos (n. 12) 97.

Ε. Μαστρομανώλης “Το δίκαιο της καταστατικής έδρας: σύγχρονες εξελίξεις” στο Σύνδεσμος Ελλήνων Εμπορικολόγων (Επιμ.) Το ιδιωτικό διεθνές δίκαιο του εμπορίου (Νομική Βιβλιοθήκη 2008) 72-73/[E. Mastromanolis “The Law of the Real Seat: Recent Developments” in Association of Greek Commer-cialists(ed) Private International Law of Commerce (Nomiki Vivliothiki 2008) (in Greek) 72-73]. This solution seeks to avoid the problematic situation of non-recognition. Non-recognition is avoided by recognizing and characterizing this company as a de facto general partnership. There is a significant amount of case law: Supreme Court (Arios Pagos)-Full Court 975/1997, PPPir.-ΠΠΠειρ. 1903/1979, Athens Court of Appeal 10146/1979, PPPir.-ΠΠΠειρ 2075/1974, etc.

The provisions of the Cyprus Companies Law (Chapter 113), which are cited in this paper, are based on an

English translation of this Law available in the website of the Office of the Law Commissioner of Cyprus:

Although UK law adopts also the incorporation theory, a company with its registered office in UK cannot transfer its registered office to any other foreign country. There is no legal framework which allows the change of the registered office from the jurisdiction of incorporation to another foreign jurisdiction. P. Davies and S. Worthington Gower and Davies Principles of Modern Company Law (9th ed. Sweet & Maxwell) 148.

For an overview of the Cyprus mechanism for reincorporations, see: P. Tramountanelli “Cyprus Company Redomi-ciliation” in Cyprus Law Digest (Nomiki Vivliothiki 2012) 119-121.

Tsadiras A. “Cyprus” in D. Van Gerven (ed) Cross-Border Mergers in Europe-Volume 1 (Law Practitioner Series, CUP 2010) 133-146.

Cyprus Companies Law (Chapter 113) refers to foreign companies as “overseas companies”. “Overseas companies” means a company incorporated outside the Republic of Cyprus (Art. 354R)

Art.354R defines the document of incorporation: “document of incorporation” includes the memorandum and the articles as well as any other document serving the same purpose.

Art.354R defines the approved country or jurisdiction: ““approved country or jurisdiction” means a country or jurisdiction having equivalent legislative provisions as this Law”.

There is a requirement for submission of documents concerning reincorporation in Greek. Art. 354Q states: “Where, pursuant to the provisions of this Part, it is required to deliver documents to the Registrar, these documents have to be submitted in the Greek language or in certified translation in the Greek language”.

According to 354E (2), the name of the company is also checked by the Cyprus Registrar of Companies: “If, according to the opinion of the Registrar, the name declared under section 354C as the name under which the overseas company will continue creates the danger of confusion or it is misleading with the name of a registered company or a trade mark, the registrar shall give directions to the overseas company in order to amend its name and shall not temporarily register the said company according to subsection (1), until he is satisfied that the name under which the overseas company will continue its activities has been amended in such a way that it does not create the danger of confusion or of becoming misleading.”

Art.354R defines the continuing company: ““continuing company” means the company that continues to exist as a body corporate under the legal regime of another approved country or jurisdiction: Provided that the rights and obligations of the continuing company shall not be affected by the registration of the company as one continuing within and outside the Republic according to this Law.”

Regulation 848/2015/EU of 20 May 2015 on insolvency proceedings (replacing as of June 2017 Regulation 1346/2000 on insolvency) [2015] L 141/19.

Art. 354N states that “provided that the requirements of section 354L are fulfilled and the three month period referred to in section 354M has expired without an objection to the continuation of the company, or in the case that an objection has been submitted provided that the Court approved the continuation of the company under the legal regime of another country or jurisdiction or approves the said continuation of the company according to sufficient guarantees and such guarantees are provided, the Registrar shall consent to the continuation of the company under the legal regime of another country or jurisdiction.”

Article 354R defines the document of continuation: ““document of continuation” includes every document or certificate confirming that the company has been registered as a company continuing in an approved country or jurisdiction outside the Republic”.

Art.354O states that: “with the issue of the document of continuation according to which the company continues in another approved country or jurisdiction, the company shall immediately deliver to the Registrar a copy of the document of continuation and, with this act, the company shall cease to be a registered company in the Republic from the date that its continuation in the other approved country or jurisdiction is placed in force, the Registrar shall strike off the name of the company from the register and it shall issue a certificate of striking off:…”. Art 354R defines the continuing company: ““continuing company” means the company that continues to exist as a body corporate under the legal regime of another approved country or jurisdiction: Provided that the rights and obligations of the continuing company shall not be affected by the registration of the company as one continuing within and outside the Republic according to this Law.”

Moreover, Art. 354P introduces a special register for companies which continue outside Cyprus: “the Registrar shall keep a register of all companies that received his consent to be registered as continuing in another approved country or jurisdiction. The register shall include the name of the company as continuing as well as all relevant details.”

WYATT, D. A. and DASHWOOD, A. and others. European Union Law (6th edn, Hart Publishing,, 2011) 679.

See, the website of the Cyprus Investment Promotion Agency (CIPA): < http://www.investcyprus.org.cy/ > accessed 5-11-2016

See, the website of Enterprise Greece, the official agency of the Greek State, under the supervision of the Ministry of Economy, Development and Tourism, to promote investment in Greece, exports from Greece, and make Greece more attractive as an international business partner. < http://www.enterprisegreece.gov.gr/en/about-us-/profile > accessed 5-11-2016.

For an analysis freedom of establishment of companies in EU law, see: P.Paschalidis, Freedom of Establishment and Private International Law for Corporations (OUP 2012), S.Rammeloo Corporations in Private International Law (OUP 2001), Justin Borg-Barthet The Governing Law of Companies in EU Law (Hart 2012).

Case C-210/06 Cartesio Oktató és Szolgáltató bt [2008] ECR I-09641.

Case C-378/10 VALE ECLI:EU:C:2012:440.


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