December 2012 Law Developments Athens, Greece "Silent Partnership" recently regulated by L. 4072/2012 Only recently Greek Law has included speciﬁc provisions about the Silent Partnership (afanis etaireia) in articles 285 to 292 of the L. 4072/2012. Additionally, the provisions of the Greek Civil Code regulating the Companies are applicable, with the exemption of those inconsistent with the characteristics of a Silent Partnership, such as those related to the corporate property of a civil company and its operation outwardly. Prior to L. 4072/2012, the applicable legal framework was the general principles of the Greek Civil Code regulating Companies. Silent partners (afaneis etairoi)are usually investors i.e. providing funding to the business activities but are not publicly recognized as partners. The participation of the silent partner may also be restricted to the results of certain activities. It is often argued that the economical meaning of a Silent Partnership Agreement is mainly to the beneﬁt of the silent partner, who although he participates in the business activities of the unlimited partner(emfanis etairos), he is not a trader, bears no liabilities and his participation is not (at least typically) publicly known. A. Characteristics The main characteristics of a “Silent Partnership” newly introduced by L. 4072/2012, in combination with the provisions of the Civil Law regulating the Companies, may be outlined as follows: • A Silent Partnership is an “internal partnership”, in which one or more silent • • • • • partners participate in the business activity of another partner (emfanis etairos) and in return they participate in the proﬁts of the said business activity. A Silent Partnership has no legal personality and is not registered in the General Commercial Registry (ΓΕΜΗ). The corporate bond is restricted only to the internal relationships between the partners (inwardly), while outwardly in the relationships with third persons only the unlimited partner may act, in his own name but to the common interest of all partners. By a Silent Partnership Agreement, all the partners have the obligation to cooperate in effecting the common purpose. Although it is a partnership, it has a capital character meaning that the silent partner participates only economically in the partnership. A Silent Partnership does not have a common property. The silent partners pay their contributions to the unlimited partner, being partially or wholly transferred to him or granted for use. In addition, any acquisitions arising from the administration belong to the unlimited partner. However, the existence of a common property may not be excluded e.g. in case it is agreed that the contributions shall belong jointly to all the partners Platis - Anastassiadis & Associates About Platis - Anastassiadis & Associates B. Establishment Flexibility is one of the advantages of a Silent Partnership since no special formalities are required for its establishment neither does it require registration in the General Commercial Registry (ΓEMH). However, the terms of the Silent Partnership Agreement can only be proven in writing. C. Operation • Given that only the unlimited partner acts in his name, no representation of • • • • • • We are an independent law ofﬁce with a core team of 10 lawyers. Our ofﬁce provides high quality legal services across the full range of commercial and ﬁnancial transactions. the other partners or use of the name of the partnership may take place. Respectively, a third person acquires rights and undertakes liabilities only towards the unlimited partner. The administration of the Silent Partnership is managed only by the unlimited partner. The silent partner may not oppose to the administration of the partnership, but he has the right to audit the books and the documentation of the business of the unlimited partner, unless is differently provided by the agreement. The Silent Partnership Agreement should deﬁne the audit rights of the silent partner in relation to the actions or the business. The silent partner participates in the proﬁts of the company in proportion or by the amount agreed with the Silent Partnership Agreement. In the lapse of a speciﬁc agreement article 763 of the Civil Code applies which provides for participation in equal parts. If not provided otherwise, the silent partner participates in the losses in proportion to its participation to proﬁts. It may be agreed that the participation in the losses may not exceed the value of his contribution. At the end of the ﬁnancial year, or within the time agreed by the parties, as well as in case of dissolution of the partnership, the unlimited partner is obliged to give account and attribute the corresponding proﬁts to the silent partner. An agreement for the payment of the proﬁts to the silent partner during the calendar year, especially upon the completion of any act or business operation, may not be excluded. We focus on providing high quality services giving prominence to the client’s best interest and needs irrespective of geography or culture. In particular, our close cooperation with Platis-Bazilescu in Romania, Ernst Young Danısmanlık Hizmetleri Ltd. Sti in Turkey and Ernst & Young Bulgaria EOOD in Bulgaria allows us to offer seamless and consistent regional services to our clients that have cross country operations. D. Termination © 2012 Αll rights reserved • The Silent Partnership is dissolved as in cases provided by the Civil Code. • Given that a Silent Partnership is an internal company not having a • Platis - Anastassiadis & Associates is part of the Law Specialty Practice which operates in 15 countries within Europe and is comprised of 850 people, of which 66 are partners. corporate property, there is no actual need for liquidation. Thus, the term “liquidation” provided in the said law has a different meaning since it refers to the return by the unlimited partner to the silent partner of his participation value reduced by the respective losses occurred. The death, bankruptcy and judicial guardianship of any of the partners cause the termination of the partnership. In case of unlimited partner’s bankruptcy, the silent partner may be noticed as bankruptcy creditor for the payment of his contribution and the remaining proﬁts deriving from the administration of the Silent Partnership. Our experience allows us to better understand our clients’ needs and offer them integrated multi-disciplinary solutions in the ﬁelds of accounting, tax and ﬁnancial advisory services. Platis - Anastassiadis & Associates Law Ofﬁce is solution focused. We work closely with our clients to seek innovative and practical ways of dealing with their issues. Our priority is to help our clients meet their business objectives. Our expertise, commitment and enthusiasm has resulted in the build up of a client base which includes local and international listed, State and private sector companies and ﬁnancial institutions. Platis - Anastassiadis & Associates Law Partnership is associated with Partners: E. Platis, A. Anastassiadis Platis - Anastassiadis & Associates Law Partnership is registered with the Athens Bar, registration number 80240 List of our associates upon request. Eleni Siabi Eleni.siabi@gr.ey.com Platis-Anastassiadis @ Associates 2 “Silent Partnership” recently regulated by L. 4072/2012 - December 2012