Koumentakis

Tag: new law on corporate governance

  • The Remuneration Report of the members of the Board of Directors of SAs

    The Remuneration Report of the members of the Board of Directors of SAs

    The issue of remuneration of Board members has been repeatedly addressed in the context of our articles. And so has the conflict of interests of the latter with the SA for this reason; the related risks for the SA; the relevant interest of the company, the shareholders and, of course, the beneficiaries- and clearly the third parties: investors and banks. We have already noted that transparency issues and the need for shareholders to participate in the approval of remuneration are pursued through the “say on pay” principle (including: Articles 9a and 9b of Directive 2007/36 / EC, as amended by Directive 2017/828 / EU). Based on this principle, the remuneration of the members of the Board of Directors should be defined in such a way that the shareholders are able to express an opinion. Given the above, our national legislator re-approached the specific issue with the law on SAs (: Law 4548/2018). It brought, on the one hand, some changes in the procedure and the conditions for granting remuneration to the members of the Board of Directors on the basis of their organic relationship (: Societe Anonyme: Remuneration of the Members of the BoD). It incorporated, on the other hand, two important tools for the transformation of the above principle into national law: (a) the Remuneration Policy and (b) the Remuneration Report. We will then deal with the latter.

     

    Legislative Framework – The distinction of Remuneration Policy from the Remuneration Report

    The issues related to the Remuneration Policy and the Remuneration Report are regulated in the provisions of articles 110-112 of Law 4548/2018. In this way, the provisions of Articles 9a and 9b of the aforementioned Directive 2007/36 / EC-as in force are incorporated into Greek law.

    The two, in particular, tools aim at the transparency and the participation of the shareholders in the issue of the formation of the remuneration of the members of the Board of Directors. Mandatory for listed SAs. Optional for the others. The Remuneration Report retains its independence from the Remuneration Policy, however, it is inextricably linked to the latter. In any case, these are distinct texts, which present two main differences:

    (a) The Remuneration Policy is the means of structuring the strategy of the SA regarding the granting of remuneration to the members of the Board of Directors. It promotes, in this context, its sustainability and long-term interests. In this way, it addresses the future. On the other hand, the Remuneration Report is a comprehensive overview of the total remuneration granted per board member for the previous financial year. It concerns, that is, the previous year and is of  an accounting character.

    (b) Regarding the Remuneration Policy, the shareholders’ vote is binding. On the other hand, their vote on the Remuneration Report has an advisory character.

     

    Subjective and objective scope

    The Remuneration Report is drafted collectively by the Board of Directors of the SA (: article 96 §2 law 4548/2018). The responsibility they bear in case of any violation of the provisions regarding the Remuneration Report is also collective (: article 112 §6 b). Therefore, the members of the Board are responsible in cases of violation based on the provision of article 102 of law 4548/2018. They also bear criminal responsibility, based on the provision of article 179 §3 law 4548/2018.

    The Remuneration Report must include the complete overview of the remuneration of the members of the Board of Directors, which were foreseen to be paid by the Remuneration Policy of the previous financial year (: article 112 §1 law 4548/2018). This is a fact, regardless of whether the latter (: members of the Board of Directors) are newer, older, executive, non-executive or independent. The recording must be made, in each case, in a clear and comprehensible manner. However, its subjective field may occupy other persons as well. When, for example, by statutory regulation, the application of the provisions for the Remuneration Policy and Report is extended to the executives, as they are regulated by the International Accounting Standards (article 24 §9). The latter, in this case, will refer to the payments of the specific persons as well.

    The concept of remuneration, in the context of the Remuneration Report, is conceptually identical to that of the Remuneration Policy. In other words: the Remuneration Report includes the total remuneration granted (or still owed) to the members of the Board of Directors in their organic capacity and position. The Remuneration Report is not interested in other fees. Such as, for example, those that are due, in a special relationship deriving from an employment, mandate, independent services or works contract [int .: Societe Anonyme: Contracts with Members of the BoD for the Provision of (Additional) Services].

     

    Content

    The minimum content of the Remuneration Report is provided in the provision of article 112 §2, law 4548/2018. At the same time, the European Commission has adopted a targeted consultation with guidelines for the standard presentation of the information contained in the earnings report. The final guidelines are still pending.

    The content of the Remuneration Report concerns the remuneration of each member of the Board separately. It basically includes: (a) the total remuneration paid as well as the way the manner it was paid was in accordance with the approved Remuneration Policy; (b) the annual change in remuneration, the performance of the company and the average remuneration of employees, excluding executives, during the last five years. The Remuneration Report also mentions: (c) any remuneration of any kind coming from any company belonging to the same group; (d) participation in equity schemes; (e) the options exercised; (f) information on the possibility of reclaiming remuneration; (g) the circumstances under which derogations from the remuneration report may have taken place, in accordance with the provisions of Article 110 §6 (inadvertently in Article 112 §2 f.g. reference is made to the repealed §7).

     

    The advisory vote of the shareholders

    The shareholders vote (in the context of the ordinary General Assembly with the relevant item on the agenda) on the remuneration report of the last financial year. Their vote, however, is advisory. This means that the shareholders’ decision does not bind the SA, although the voting is mandatory. The Board, however, has an additional obligation regarding the outcome of this vote. Specifically, it “… must explain in the next Remuneration Report the way in which the above result of the vote was taken into account…” (art. 112 §3 Law 4548/2018). It is concluded, therefore, that the SA may not take into account the above result at all, as long as it explains the way it worked in the next Remuneration Report that it will submit to the General Assembly.

     

    Publicity Formalities and Personal Data

    The Remuneration Report is subject to specific publicity formalities. The SA, however, must also post the Remuneration Report on its website, immediately after the relevant vote of the General Assembly. This posting must be for a period of ten years (article 112 §4 of Law 4548/2018). The period of posting can exceed the ten years, in case it no longer includes personal data of the members of the Board.

    We therefore confirm that the provisions of Law 4548/2018 are intertwined (and) in this case, with the requirements of Regulation 679/2016 / EC for the Protection of Personal Data. As already mentioned, the Remuneration Report refers individually to each member of the Board. This means that their personal data are being processed. The legal basis of this processing is the provision of article 112 §5 of law 4548/2018. The purpose of the processing in this provision is defined as the increase of transparency “… regarding the remuneration of the members of the Board of Directors, with the aim of strengthening the accountability of the members and the supervision of the shareholders on these remunerations”. However, the special categories of personal data according to article 9 §1 of the Regulation are explicitly excluded from the above processing and the Remuneration Report. These are the personal data that reveal “… racial or ethnic origin, political views, religious or philosophical beliefs or participation in a trade union, as well as the processing of genetic data, biometric data for the purpose of unambiguous identification of health or data relating to the sexual life of a natural person or sexual orientation “. In case, for example, that the granting of an allowance depends on any illness of the member of the Board of Directors, the Remuneration Report should include only the amount of this allowance. The cause must not be mentioned.

     

    Judicial review and the possibility of reducing salaries

    In the case of the Remuneration Report, the provision of article 109 §7 of Law 4548/2018 applies to the possibility of reducing remuneration after the issuance of a court decision. Such a reduction may take place in cases where there was a substantial change in the conditions under which the Remuneration Policy was approved and it was not revised (article 110 §2 law 4548/2018). This is, essentially, a judicial review of the Remuneration Policy. The application to the competent court, in this case, is exercised within an exclusive period of two (2) months from the voting on the Remuneration Report.

    The compliance review with the approved Remuneration Policy of the SA is carried out by the Remuneration Report. It would not be possible, after all, to approve remuneration for the members of the Board of Directors (and / or specific executives) without providing a compliance review.

     

    The obligation to prepare a Remuneration Report (for the review of the approved Remuneration Policy) is borne, as we mentioned in the introduction, by companies with shares listed on a regulated market. They both contribute to increasing corporate transparency and strengthening the (necessary) corporate governance. The accountability of the members of the Board of Directors and the supervision of the shareholders on their salaries is strengthened. They therefore promote the interests of the company and its shareholders. They make the companies that adopt them more transparent (and, therefore, attractive for investors).

    Therefore, their adoption by all companies is desirable.

    Even by the non-listed ones.-

     

     

    Stavros Koumentakis
    Managing Partner

     

    P.S. A brief version of this article has been published in MAKEDONIA Newspaper (April 11, 2021).

     

    Disclaimer: the information provided in this article is not (and is not intended to) constitute legal advice. Legal advice can only be offered by a competent attorney and after the latter takes into consideration all the relevant to your case data that you will provide them with. See here for more details.

  • The Remuneration Policy of the members of the Board of Directors of the SA

    The Remuneration Policy of the members of the Board of Directors of the SA

    The remuneration of the members of the Board of Directors of an SA is a “hot” issue for everyone interested: the company, the shareholders and, of course, the beneficiary. But it also interests third parties: investors and banks. Our national legislator re-approached this issue with the law on SAs (Law 4548/2018). The procedure and conditions for granting remuneration to the members of the Board of Directors on the basis of their organic relationship were covered in our previous article (: Societe Anonyme: Remuneration of the Members of the BoD). At the present article, we will be concerned with the Remuneration Policy. A Mandatory Policy for companies with shares listed on regulated markets (Article 110 §1). A policy welcome, without a doubt, by the rest.

    Remuneration of board members and conflict of interest ˙ the (global) debate

    The remuneration received by the members of the Board of Directors may, under certain conditions, be detrimental to the SA. This is, moreover, a typical case of conflict of interests. It can be proven harmful when, for example, in some cases they are associated with the achievement of high goals (indicatively: the company’s turnover). It is then possible for the members of the Board of Directors to sacrifice the management of the SA by excessive risk-taking, on the altar of achievement of their, short-term, own benefit.

    The recent long-term financial crisis “brought” to our country the global debate over the exorbitant fees of the members of the Board. The basis of the relevant concerns is often the lack of sufficient transparency but also the substantial participation of the shareholders in their approval. Their goal is to defend, ultimately, the corporate interest.

    The achievement of this objective is pursued through the “say on pay” principle (inter: Articles 9a and 9b of Directive 2007/36/EC, as amended by Directive 2017/828/EU). Based on this principle, the remuneration of the members of the Board of Directors should be defined in such a way that the shareholders are able to express an opinion. The tool of its implementation is the Remuneration Policy (as is the Remuneration Report) which have already been transposed into national law.

     

    Legislative framework

    The national legislator regulated the matters related to the Remuneration Policy (and the Remuneration Report) in the provisions of articles 110-112 of law 4548/2018. In this way, it incorporated into Greek law the provisions of articles 9a and 9b of the aforementioned Directive-as in force.

    With the Remuneration Policy (article 110 and 111 of law 4548/2018), which will concern us in this article, the strategy of the SA regarding the granting of remuneration to the members of the Board of Directors is structured. The SA’s sustainability and long-term interests are also promoted. The content of the Remuneration Report (article 112 of law 4548/2018) regards the remuneration granted to the members of the Board of Directors (or that are still due) for the previous year. It is not permissible, of course, for the paid salaries to deviate from what the Remuneration Policy stipulates.

     

    Remuneration policy

    The obligation to establish it

    As we “hurried” to note in the introduction, not all SAs are obliged to adopt a Remuneration Policy. This obligation is typically borne only by companies with shares listed on a regulated market. Both for the members of the Board of Directors and for the general manager, if any, and their deputy (article 110 §1). However, with a relevant statutory regulation, it is possible to apply the provisions for the Policy and Remuneration Report in two more cases: (a) to the executives, as they are regulated by the International Accounting Standards (article 24 par. 9) and (b) to unlisted SAs. We aim, in these cases, for greater transparency towards the shareholders. For the benefit, in the end, of SA.

    The obligation to establish a Remuneration Policy covers the remuneration granted to the members of the Board of Directors in their organic capacity and position. It does not cover, in other words, other fees. Such as, for example, those that are due for a special relationship of employment, mandate, independent services or works [int .: Societe Anonyme: Contracts with Members of the BoD for the Provision of (Additional) Services].

     

    The responsibility of the General Assembly

    Competent body for the approval of the Remuneration Policy is defined by law (article 110 §2) to be the General Assembly. This is a transformation of the principle we have already mentioned: “say on pay” [principle, which, however, already existed in the pre-existing national law (art. 24 par. 2 law 2190/1920)]. The shareholders’ vote is binding. In other words: the SA has no right to deviate from the decision of its shareholders.

    A simple quorum and majority is sufficient for the decision of the General Assembly (for the approval, ie, or not of the Remuneration Policy). In the initial wording of Law 4548/2018, it was provided that in the relevant voting the shareholders who happened to be, themselves, members of the Board of Directors did not have the right to vote. This prohibition is no longer in place (: abolished by law 4587/2018).

    In case of approval of the Remuneration Policy by the General Assembly, its duration extends, at a maximum, to four years from the relevant decision. It will, however, require further submission and approval by the General Assembly, when the conditions under which it was approved change substantially (even within four years) (Article 110 §2).

    When the General Assembly is called upon to approve a new Remuneration Policy after the expiration of the previous one, it is, of course, entitled to reject it. In this case the company is bound by the Policy previously approved. The duration of the latter is extended until the next General Assembly, when a new, revised Remuneration Policy is submitted (article 110 §4).

     

    The possibility of deviating from the Remuneration Policy

    The obligation to re-submit for approval the Remuneration Policy should be distinguished from the possibility of derogation from it (Article 110 §6). The specific / provided for derogation is, in exceptional circumstances, permissible. As long as three, basic, conditions are met. Specifically:

    (a) There is a relevant provision in the Remuneration Policy of the procedural conditions for the derogation.

    (b) There is a relevant provision in the Remuneration Policy of the items in respect of which the derogation may occur.

    (c) The need for the derogation serves the long-term interests of the company as a whole or ensures its viability.

     

    The body responsible for submission of the Policy to the General Assembly

    The Board of Directors is the competent body of the company for the submission of the Remuneration Policy to the General Assembly for approval. It is true that the specific competence of the Board of Directors does not explicitly arise from the wording of the law. On the contrary, it is derived, as a collective duty of the members of the Board of Directors, to ensure the preparation and publication, inter alia, of the Remuneration Report (article 96 §2 of law 4548/2018). However, we do not find a corresponding provision for the Remuneration Policy. This, however, does not mean that the members of the Board do not have the obligation to draft the Remuneration Policy and submit it to the General Assembly.

    An different interpretation would not be compatible with the recent law on corporate governance (Law 4706/2020). As we mentioned in a previous article [The (new) law on Corporate Governance (and a comparative overview with the preexisting one)], the relevant law introduces, in addition to the Audit Committee, two additional committees of the Board (Article 10): The Nominations Committee and the Remuneration Committee. The latter is responsible for: “formulating proposals to the Board of Directors regarding the remuneration policy submitted for approval to the General Assembly, in accordance with paragraph 2 of article 110 of law 4548/2018” (: article 11 a’). In addition, it examines the information included in the Remuneration Report, providing an opinion to the Board of Directors (art. 11 par. C).

     

    The content of the Remuneration Policy

    The provisions of the Remuneration Policy must be recorded in a clear and comprehensible manner. Its (minimum) content is determined, in sufficient detail, in the provision of article 111 §1 law 4548/2018 (which constitutes an exact transposition of the relevant provisions of article 9a of Directive 2007/36/EC).

    The minimum content, for example, should be the way in which this Remuneration Policy contributes to the business strategy, the long-term interests and the viability of the company. In addition, the different components for the granting of fixed and variable remuneration of all kinds as well as the criteria for their granting. The methods used to assess the degree of fulfillment of the specific criteria. The conditions for the postponement of the payment of the variable remuneration and its duration. The duration and content of the employment contracts of the members of the company’s Board of Directors – any existing retirement plans. Any share disposal rights and options. The decision-making process for the approval and determination of the content of the remuneration policy and so on.

     

    The disclosure formalities

    The central goal of the Remuneration Policy of the members of the Board of Directors is to enhance transparency. The justification is the possibility of constant information of all interested persons (especially shareholders and investors). It is therefore not paradoxical that the Remuneration Policy is made public (articles 110 §5 as well as 12 & 13). At the same time, however, it must remain available on the company’s website for as long as it is valid (art. 110 par. 5).

     

    The existence and, in particular, the proper implementation of the Remuneration Policy of the members of the Board of Directors, constitutes an important obligation of the companies that have shares listed on a regulated market. This obligation arises from the (recent) law on Société’ Anonymes. However, it also has strong foundations in the (absolutely recent) law on corporate governance.

    The value of the Remuneration Policy lies in the strengthening of corporate governance. And where the latter is strengthened, the companies that invest in it end up benefiting. After all, what investor will not see positively a company that has invested in corporate governance? Which bank will not, at least, increase the creditworthiness of a company with a strong relevant performance? Any relative costs for adopting a Remuneration Policy and complying with its content seem small compared to the reasonably expected benefits.

    Obviously for unlisted companies as well.

    Especially, perhaps, for them.-

     

    Stavros Koumentakis
    Managing Partner

     

    P.S. A brief version of this article has been published in MAKEDONIA Newspaper (April 4, 2021).

     

    Disclaimer: the information provided in this article is not (and is not intended to) constitute legal advice. Legal advice can only be offered by a competent attorney and after the latter takes into consideration all the relevant to your case data that you will provide them with. See here for more details.

  • Societe Anonyme: Remuneration of the Members of the BoD

    Societe Anonyme: Remuneration of the Members of the BoD

    The Board of Directors of the Société Anonyme acts, in principle, collectively. However, it is possible (: a rule without exceptions) to delegate the powers to bind and represent to a specific member. It is also common for board members to associate with the SA through special relationships. Indicatively, with contracts of employment, works, independent services or mandate. These contracts (also) provide for the fees that the SA (must) pay them for their specific, additional, services. These issues have already occupied us in our previous article [: Contracts of Board Members for the Provision of (Additional) Services]. In this article we will deal with the issues of remuneration of the members of the Board of Directors that the SA (sometimes) pays them in the context of their internal relationship. In the latter case, the legal basis for the payment of remuneration must be sought in the articles of association, in a decision of the General Assembly or in the remuneration policy that may be adopted by the SA (: obligatory if it is listed).

     

    Establishment of a control mechanism in the remuneration of the members of the Board of Directors

    As already announced by the explanatory memorandum of law 4548/2018, the remuneration regime of the members of the Board of Directors is reformed (with articles 109 et seq.). A specific framework is chosen for the protection of the SA and the minority shareholders. The justifying reason? The risk of impairment of the corporate assets of the SA due to exorbitant fees and other, disproportionate benefits.

    It is noteworthy, however, that the specific provisions (Articles 109 et seq.) “… do not apply in the case of compensations and expenses paid under an approved by law, where required, legal relationship (eg expenses in the context of work or mandate) and / or provided by law (eg CC 723), as after all, it is still valid today, in accordance with the position of the case law”. In other words, what is regulated in independent contracts between the Company and the members of its Board of Directors: (a) is valid independently (we also addressed the specific issues in our aforementioned article) and (b) is not occupied by the regulatory scope of the provisions that we attempt to approach here.

    Therefore, based on the type of remuneration that the members of the Board of Directors may receive in the context of their organic relationship, the terms, the procedure of their granting (but also the relevant restrictions in place) are analyzed as follows:

    Fees and benefits that do not consist of participation in the profits of the year

    Types of fees and other benefits

    The remuneration of salaried consultants consists of a fixed, as a rule, “remuneration”. This, however, is not a rule without exception. The type of pay varies depending on the case. It may take, as an indication, the form of compensation per session or the award of a bonus. Other benefits may include housing, security and / or a car.

    The determination of fees in the articles of association or in the remuneration policy of the company

    Remuneration or other benefits are legally paid to the members of the Board of Directors – provided that there is a relevant provision in the articles of association or in the remuneration policy of the company (article 109 §1 law 4548/18). In more detail:

    (a) Regarding the (possible) provision in the articles of association

    The articles of association may provide for the granting of remuneration to specific (or all) members of the Board. This possibility seems more theoretical as we will rarely and in very special cases encounter it. These are fees, the granting of which concerns (obviously) the future. Retrospective forecasting is excluded. In addition: a mere reference to the articles of association regarding the right to receive remuneration is not enough. The fee must be specified (in the amount and the conditions of its payment) in the articles of association.

    In case it is required to mediate a decision of the General Assembly for its determination, it is considered (and it is) a fee which is granted after the approval of the General Assembly (see below) and not on the basis of the statutory provision.

    We should consider that the regulation of the remuneration determined by the statute also includes the provision for the maximum, the final amount of which is determined by a decision of the General Assembly. However, the same does not apply in those cases where the statute stipulates its minimum amount and it is left to the General Assembly to determine the amount to be finally paid. We must consider, in the latter case, that this is a fee determined by the General Assembly.

    The statutory provision for the payment of remuneration to the members of the Board of Directors may exist in the initial statute of the SA- the one drafted for its establishment. It is, however, possible that the relevant provision will be introduced later – after an amendment, ie, of the statute by a decision of the General Assembly. Unless otherwise provided by the Articles of Association, the relevant decision shall be taken by the usual quorum and majority.

    (b) Remuneration policy

    The determination of fees in the company policy is regulated, specifically, by articles 110-111 of law 4548 / 2018. Remuneration policy arrangements are mandatory for companies with shares listed on a regulated market. Of course, this does not rule out the possibility that other companies will adopt a similar remuneration policy. For these latter companies, the relevant statutory provision is necessary in any case. The further analysis, however, of the remuneration policy will be the subject of a different article of ours.

     

    The granting of fees after a special decision of the General Assembly

    In the event that there is no provision in the law or the articles of association of the SA (and without prejudice to the provisions of the remuneration policy): “… remuneration or benefit granted to a member of the board of directors… shall be borne by the company only if approved by a special decision of the General Assembly…” (article 109 §1 law 4548/18).

    In contrast to the pre-existing law (article 24 §2 b’ of law 2190/1920), article 109 refers to a decision of the General Assembly and not of an ordinary General Assembly. This does not mean, however, that the relevant responsibility is now assigned to the extraordinary General Assembly. The argument in favor of the exclusive competence of the ordinary General Assembly is not without value.

    The above, approving, decision of the General Assembly should be specific. Therefore, the approval of remuneration or other benefits to the members of the Board of Directors should be an independent item on its agenda. The decision for the approval is taken with the usual quorum and majority. However, it is possible for the articles of association to introduce increased, respectively, percentages. It follows from the wording of the provision that the approval of the General Assembly for the granting of remuneration or other benefits can only concern the previous corporate year. A corresponding approval for future payments cannot take place – but it is possible to pay sums in advance for future fees (as we will see later on).

     

    Fees from the participation in the profits of the year

    For the granting of remuneration consisting of corporate profits, a prerequisite is the relevant provision in the articles of association of the SA. However, the general, relevant, provision is sufficient. The determination of the amount of these fees may take place following a decision of the General Assembly. The decision shall be taken, as defined in paragraph 2 of Article 109, by a simple quorum. A GA, in this case, is considered the ordinary one.

    The fees in this case are taken from the balance of net profits that may remain after deducting the amounts corresponding to the formation of the regular reserve and the distribution of the minimum dividend (: articles 160 §2 and 161 Law 4548/2018). It is possible, however, in any case, for the articles os association to impose further restrictions.

    The specific fees, therefore, are directly dependent on the existence of profits: It is not possible to approve (and, much more, pay) such fees when there are no profits. This works in favor of the company in two ways: (a) It is not possible for the company to be burdened when it has no profits and (b) It provides (indirect) incentive to the members of the Board of Directors to maximize the profitability of the SA.

     

    The advance payment of fees

    As already mentioned above, it is possible to pay an advance to members of the Board of Directors: “The General Assembly may allow an advance payment for the period up to the next ordinary General Assembly. The advance payment of the fee is subject to its approval by the next regular General Assembly” (article 109 §4 law 4548/18). The law does not specify the fees that may be paid in advance. However, it is not considered possible to pay a fee in the case of:

    (a) Profit sharing

    It is not considered possible to deposit fees that will eventually consist of a participation in the company’s profits. This is because, at the time of the down payment, it is not possible to make a secure prediction of the existence of net profits; much less to determine the net profits available to board members for remuneration.

    (b) Fees provided by the articles of association

    Advance payment of fees, the granting of which is provided for in the articles of association of the SA, is also not considered possible. The reason is that these fees are paid under the terms, conditions, time and procedure provided therein.

     

    Judicial review of the amount of fees

    The grid of regulations set by article 109 of law 4548/2018 does not let the decisions concerning the payment of remuneration to the members of the BoD go virtually unchecked even when the set conditions are met. In fact, the relevant choice of the legislator seems reasonable as it is not uncommon for the majority of the shareholders to decide to grant unjustifiably high salaries to members of the Board. Such decisions are usually taken in those cases where the majority of the shareholders (or persons related to them) happen to be members of the Board, without the latter really being entitled to the fees decided to be paid to them.

    In these cases, the right of minority shareholders to oppose to the decision for the payment of remuneration or benefit, of any kind, to a specific member of the Board is recognized. A necessary (formal) condition is that the minority shareholders represent 1/10 of the paid up (according to the most correct point of view) capital of the SA. If the specific formal condition is met, the court may (at the request of shareholders, by those who objected, representing 1/20 of the paid up capital -article 109 §5 law 4548/2018) evaluate, based on the data which will be taken into account, that the remuneration decided to be paid to a member of the Board is excessive and should be reduced.

    The application to the court must be submitted within an exclusive period of two months from the relevant approval of the General Assembly. It is noted, however, that the fees paid to the members of the Board on the basis of a special relationship / contract are outside the framework of this judicial review.

     

    We should consider it reasonable and, at the same time, imperative to have a clear separation (first of all in our minds) of the qualities of the shareholder, the member of the Board of Directors but also of the employee / provider of services to the SA. In this context, we must accept that the specific persons (must) have a different benefit from their participation in the SA. The shareholder from the dividends due to them; the employee / service provider from the fees provided by the relevant contracts; the member of the Board of Directors from the fees provided (or not) by the statutory regulations and possible decisions of the General Assembly.

    It is true that (especially) in the context of family SAs the aforementioned qualities are “blurred”. It is in these cases that, above all, there should be a separation of the company’s finances from the pocket of the entrepreneur, the establishment of (not mandatory but necessary-essentially) rules of corporate governance.

    In fact, this is not only for the benefit of minority shareholders. It is mainly for the benefit of the company but also of its development.

    Stavros Koumentakis
    Managing Partner

     

    P.S. A brief version of this article has been published in MAKEDONIA Newspaper (March 21, 2021).

     

    Disclaimer: the information provided in this article is not (and is not intended to) constitute legal advice. Legal advice can only be offered by a competent attorney and after the latter takes into consideration all the relevant to your case data that you will provide them with. See here for more details.

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