Personal liability of managers and directors of limited liability companies
Liability of directors of commercial companies (E.P.E./I.K.E./S.A.)
The management bodies of limited liability companies (limited liability companies, companies limited by shares, private limited companies) are responsible for the management of internal matters and the representation of the company vis-à-vis third parties, taking key decisions for the management of the company’s assets and the achievement of the company’s purpose. As representatives of the will of the legal entity, they take binding decisions on the company’s course and, in this context, an attempt is made to approach the basic provisions of Greek legislation governing the issue of the liability of the directors of limited liability companies.
Liability of Directors for Tax Liabilities
According to Article 50 of the Tax Code, the management bodies of legal persons are personally and jointly and severally liable for the payment of all tax obligations of the legal person (indicatively, income tax, VAT, i) the existence of the status of manager during the operation, dissolution, liquidation or merger of the legal person; ii) the debts became due during their term of office; and iii) the debts were not paid to the State through their own fault.
Directors’ liability for insurance contributions
According to article 31 of Law 4321/2015, the management bodies of legal persons (corporations) are personally and jointly and severally liable for the payment of the legal person’s social security contributions to the social security institutions, regardless of the time they were established, provided that the following conditions are met: i) the existence of the status of director during the operation, dissolution, liquidation or merger of the legal person ii) the debts became due during their term of office and iii) the debts were not paid.
Liability towards the Company
The members of the board of directors of a company limited by shares are liable to the company for the damage suffered by the company due to an act or omission consisting of a breach of their duties (Art.102 of Law No. 4548/2018), It follows from the law that the liability of the director is “quasi objective”, as the manager is in principle liable unless he proves that in the exercise of his duties he exercised the diligence of a prudent businessman operating in similar circumstances (Article 102 par. 2) or that he acted in accordance with a lawful decision of the General Meeting (Article 102 par. 4 s. a’) or that he relied on a reasonable business decision, in which case he is exempt.
In the case of I.K.E. article 67 of Law no. 4072/2012 stipulates that the director is liable to the company for violations of the law, the Articles of Association and the decisions of the partners, as well as for any mismanagement. In this case, too, the liability of the manager is unlawfully objective, as he is exempted for acts or omissions based on a lawful decision of the partners or based on a reasonable business decision taken in good faith and with sufficient information, in the best interests of the company. The partners may, by a resolution adopted after the approval of the financial statements, discharge the director for mismanagement, unless they unanimously decide on a general discharge.
Finally, in the case of a limited liability company, the directors are liable to pay compensation to the company if they have acted in breach of the law or the Articles of Association or if they have committed misconduct in the management of the company’s affairs. In any case, even if the director has intentionally damaged the company, the meeting may discharge him from any liability for damages, waive the claims against him or decide not to pursue the corporate action.
Liability towards third parties
According to Article 71 CC, if the management of a legal person commits a negligent act or omission, which gives rise to an obligation to pay compensation either due to a breach of contractual obligations or due to tort, the legal person is jointly and severally liable with its director.
In the case of an LLC, as regards the claim against the individual partners and third parties, it is subsidiary, as it can be brought only in the event that the partners’ meeting decides not to bring a corporate action against the directors or does not take a decision within a reasonable period of time to bring it.
The information is accurate to the best of our knowledge as at the time of writing. We have no obligation to update it. We accept no responsibility against any third party who is not a client of the firm and has not signed the terms of our engagement.