Protecting minority investments in Greek companies
A minority shareholding can represent a substantial investment without giving the investor control over the business. That imbalance becomes particularly significant when access to information is restricted, profits are repeatedly retained, or company assets are used to benefit those in control.
Minority shareholders in a Greek société anonyme (AE) have statutory rights to information, access to court-ordered investigations, and remedies to challenge shareholder resolutions and, where the legal requirements are met, pursue compensation. An AE is a Greek company limited by shares; it may be listed or privately held. The remedies considered here arise under Greek Law 4548/2018 and depend on the facts, the investor’s shareholding, the company’s articles of association and the applicable deadlines.
These issues are particularly acute in family-owned and closely held companies, where the controlling shareholders also control the board. Early legal assessment helps investors identify the available remedies and protect the value of their participation.
When majority control becomes an abuse of power
Majority shareholders can determine the outcome of corporate decisions, but that power is subject to legal limits. Article 137(2)(b) of Law 4548/2018 allows a general meeting resolution to be set aside where it results from an abuse of majority power within the meaning of Article 281 of the Greek Civil Code.
A disagreement over business strategy is not, by itself, enough. The assessment turns on the purpose of the decision, the company’s genuine commercial needs and the decision’s economic effect. Circumstances that may warrant closer scrutiny include:
- Repeated retention of profits combined with disproportionate remuneration or other benefits for shareholders who control management.
- A capital increase intended, in the circumstances, to dilute or weaken the minority’s position without a genuine corporate need.
- Transfers of assets or business activities to related parties on terms detrimental to the company.
A decision of the Greek Supreme Court illustrates the importance of examining the alleged conduct as a whole. The Court considered allegations that the retention of profits and benefits granted to the majority formed part of a coordinated course of conduct. Those allegations could not be assessed solely by examining each resolution in isolation. Although the case arose under the previous legislative framework, its reasoning remains instructive. The ruling concerned whether the claim was adequately pleaded and legally sustainable, rather than a final finding that the alleged misconduct had been proved.
Access to company information
Information is often the starting point for effective shareholder protection. Under Article 141 of Law 4548/2018, any shareholder, regardless of the size of their holding, may ask the board to provide specific information at the general meeting concerning company affairs relevant to the agenda. The request must be submitted at least five clear days before the meeting.
Shareholders representing 10% of the paid-up share capital have broader rights to information about the company’s affairs and financial position. The articles of association may reduce the relevant thresholds within the limits permitted by law.
These rights do not confer unrestricted access to every company document. Requests should identify the information sought precisely, comply with the applicable deadline and ensure that the response, or refusal, is properly recorded.
The board may refuse disclosure only on substantial and sufficient grounds, which must be recorded in the minutes. If the refusal is challenged, the court determines whether it is justified under the procedural rules governing interim relief and may order the company to provide the information.
Court-ordered investigations into company affairs
A court-ordered special audit can help establish what occurred in transactions that shareholders have been unable to clarify. Article 142 of Law 4548/2018 provides two principal routes:
- The 5% threshold: shareholders representing at least 5% of the paid-up share capital may seek an investigation into specific acts where the evidence makes a breach of the law, the articles of association or general meeting resolutions probable.
- The 20% threshold: shareholders representing at least 20% may seek a broader management review where specific indications and the overall conduct of company affairs support the conclusion that management is not acting in accordance with sound and prudent management standards. The articles of association may reduce this threshold to as low as 10%.
In a recent appellate decision, the court ordered a targeted investigation into specified transactions, including a loan and transfers of funds to individuals. It rejected the broader request to review the company’s entire management because the necessary misconduct had not been proved. The court distinguished the proof required for that broader review from the lower evidential threshold applicable to an investigation into specific alleged breaches.
The practical implication is that an application should connect identifiable transactions or conduct with clearly defined matters for investigation. An order for an investigation does not itself establish liability.
Challenging shareholder resolutions: timing matters
An action to set aside a general meeting resolution requires careful assessment of the statutory conditions, including the claimant’s shareholding and whether the shareholder attended the meeting and opposed the resolution.
Article 137 provides a four-month deadline for bringing the action. Time runs from the adoption of the resolution or, where it is subject to mandatory publicity, from its registration with the Greek General Commercial Registry (GEMI).
Filing proceedings does not automatically suspend the resolution’s implementation. The need for interim relief must therefore be assessed separately.
Greek law also distinguishes between resolutions that may be set aside and resolutions that are void. That classification affects the legal basis of the challenge, the applicable deadlines and the litigation strategy.
Company losses and personal shareholder claims
Where company funds have been diverted or transactions have caused loss, a central question is who suffered the legally recoverable damage and who is entitled to bring the claim.
A fall in share value resulting from loss suffered by the company does not automatically give the shareholder a personal damages claim. The analysis must distinguish the company’s claim against its directors from any independent claim arising from an unlawful infringement of the shareholder’s own rights.
Articles 104 and 105 of Law 4548/2018 provide a mechanism through which qualifying minority shareholders may initiate steps for the company to pursue its claims and, subject to statutory conditions, seek the appointment of a special representative to act for it.
Case law has emphasised that a prior request to the board is a necessary procedural step. Failure to follow that process may prevent the appointment of a special representative, even where serious allegations are made. Selecting the correct claimant and following the statutory procedure are therefore central to an effective recovery strategy.
Building a shareholder dispute strategy
The initial assessment should cover the company’s articles of association, current ownership structure, corporate minutes and financial statements. These materials help establish the investor’s rights, identify the conduct requiring investigation and determine which remedies remain available.
The resulting strategy may involve targeted information requests, a court-ordered investigation, a challenge to shareholder resolutions, damages proceedings or negotiations between shareholders. The choice and sequencing of those steps should reflect the commercial objective, whether that is greater transparency, protection of company assets or an agreed resolution of the dispute.
At Papatriantafyllou & Thanasenari, we approach corporate and shareholder disputes with a focus on protecting investment value and advancing each client’s commercial objectives. We combine analysis of corporate relationships and financial evidence with a coordinated litigation and negotiation strategy. Our approach places particular emphasis on preserving evidence early, selecting the appropriate remedies and assessing the implications of each step for the company and the client’s shareholding.