The Corporate Governance Review: Greece

Overview of governance regime

With the recently introduced Law 4706/2020, under the title 'Corporate governance of public limited companies, modern capital market, incorporation into Greek legislation of Directive 2017/828/EU of the European Parliament and of the Council, measures for the implementation of Regulation (EU) No. 2017/1131 and others' (Government Gazette A136/17.07.2020) (the Law) and the abolition of the relevant Articles of Law 3016/2002,2 Greek legislation has sought to modernise its legal framework for corporate governance for listed public limited companies, as well as to clarify certain issues that have been the subject of extensive debate in the legal practice and theory of corporate law.

Pursuant to the Law, the Hellenic Capital Market Commission (HCMC) has issued:

  1. Circular Decision No. 60/18.09.2020 with the Guidelines for the Suitability Policy;
  2. Decision No. 1A/890/18.09.2020 of the board of directors of the HCMC, which regulates the sanctions in the case of violation of the provisions of the Law; and
  3. Decision No. 1/891/30.09.2020 of the board of directors of the HCMC regarding the evaluation of the system of internal audit.

The immediate issuance of the above regulations combined with the very pressing deadlines set by the new Law, demonstrates the willingness of the regulatory authority to guide and support directly and constructively the listed companies in their adaptation process to the new legislation and to supervise their observance.

The provisions of the Law entered into force 12 months after its publication, on 17 July 2021.3

Corporate leadership

The provisions of the Law concerning corporate governance (Articles 1–24) complement the provisions of Law 4548/2018 regarding public limited companies with shares or other securities listed on a regulated market in Greece.

i Board structure and practices

Suitability/fit and proper policy (Article 3)

For the first time, a suitability/fit and proper policy has been introduced by the Law for members of the board of directors, which has to be approved by the general meeting of the company and is applied at each election of directors of the listed company. According to HCMC Decision No. 60/18.09.2020 for the Guidelines for the Suitability Policy, pursuant to Article 3 of the Law, the suitability policy must be clear, sufficiently documented, governed by the principles of transparency and proportionality and in accordance with the company regulations and the corporate governance code applied by the company.

Suitability is divided into individual and collective suitability. Individual suitability is related to the adequate knowledge, skills, experience, independence of decision-making, moral guarantees, good reputation and adequate time available for performance of the duties of a person as a member of the board of directors of the company in accordance with the eligibility criteria set in the suitability policy of the company.

The suitability of the board of directors constitutes the collective suitability of the board as set by the Law. When selecting or renewing the term of office or replacing a member, the evaluation of both individual and collective suitability shall be taken into consideration. The suitability policy must include the minimum content provided by law, such as the principles for the selection or replacement of the members of the board, criteria for assessing their suitability and formulation of diversity criteria for their selection, thus achieving a variety of views and experiences in order to ensure pluralism and better decision-making for the benefit of the company. An important reform in the Law is the provision that the selection criteria for the members of the board include the sufficient gender representation at a percentage that is not less than 25 per cent of all its members. In fact, the participation of more women board members on the boards of the listed companies is a requirement. The nomination committee must take this criterion into account when submitting its final recommendations for the appointment of a board member.

The suitability policy takes into account the specific responsibilities of each member, his or her participation on other boards, the nature of his or her duties and his or her listing as an independent or non-independent member, as well as specific incompatible or characteristic or contractual commitments related to the nature of the activity of the company or its corporate governance code.

The company must constantly monitor the suitability of its board members to identify occasions where it is deemed necessary to re-evaluate their suitability. The suitability policy and any substantial modification is submitted to the general assembly for approval and is valid upon its approval. Amendments that introduce derogations or significantly change the content of the suitability policy as regards the general principles and the applied criteria are considered essential.

The internal audit, regulatory compliance unit, the nominations committee and the secretary of the board of directors assist in monitoring the implementation of the suitability policy.

The duties of the board of directors (Article 4)

The duties of the board of directors are provided in detail in Article 4 of the Law, in addition to those introduced and established by the main corporate Law 4548/2018. These include, inter alia, monitoring and periodic evaluation every three financial years of the corporate governance system, ensuring the effective operation of the system of internal audit (the objectives of which are listed indicatively), posting on the company's website of the current codified articles of association and the preparation of a corporate governance statement, which must contain, inter alia, reference to the suitability policy and to the work of the committees of the board of directors.

Composition – quorum of the board of directors (Article 5)

The listing of board members as executive, non-executive and independent non-executive, as set out in the previous legislative framework of Law 3016/2002, has been maintained. The status of members as executive or non-executive is defined by the board. The independent non-executive members, who are either elected by the general meeting or appointed by the board of directors, should not be less than one-third4 of all its members and in any case they should not be fewer than two.5 On some occasions described by the Law (preparation of financial statements, meetings of the board of directors on issues based on Law 4548/2018 approved by the general meeting with increased quorum and majority) the board of directors is quorate when at least two independent non-executive members are present.

ii Directors

Executive members (Article 6)

The role of executive members has been clarified by the Law. The executive members shall ensure the implementation of the strategies set by the board of directors and shall discuss with the non-executive members on a periodic basis the appropriateness of such strategies. In addition, they submit reports to the board when the conditions require measures to be taken that are reasonably expected to affect the company, such as decisions for risk-taking or business development, which are expected to affect the financial situation of the company.

Independent non-executive members (Article 9)

Reinforced criteria for the independence of independent non-executive members have been established. In order to be considered independent, a board member (by definition and during his or her term of office) must not directly or indirectly hold a percentage of voting rights greater than 0.5 per cent of the company's share capital and there must be no financial, business, family or other dependence. The board of directors reviews the fulfilment of the conditions of independence at least annually, and if it finds that they are not valid, it initiates procedures to replace the member as defined by the Law. The independent non-executive bodies submit, jointly or individually, reports to the general meeting independently of the reports submitted by the board of directors.6 The strengthening of the role of the independent members results from other provisions of the Law, such as Article 10 paragraph 3, which stipulates that the chair of the nomination and remuneration committees should be an independent non-executive member, and Article 5 paragraph 3, which stipulates that the unjustified absence of an independent member for at least two consecutive meetings of the board is equivalent to resignation.

iii Committees of the board of directors

Remuneration committee (Articles 10 and 11)

For the first time, a remuneration committee has been established with its own regulation; it is composed of at least three members and consists exclusively of non-executive members of whom at least two are independent non-executive members. The latter shall be the majority of the committee, with the president also being an independent non-executive member. The mandate of the remuneration committee includes the formulation of proposals to the board of directors regarding the remuneration policy submitted to the general meeting for approval, as well as the remuneration of persons covered by this policy, including but not limited to the executives.

Nominations committee (Articles 10 and 12)

A nominations committee has been established for the first time, with its own regulation; it is composed of at least three members and consists exclusively of non-executive members of whom at least two are independent non-executive members. The latter shall be the majority of the committee, with the president also being an independent non-executive member. This committee is responsible for finding persons who are suitable to take a position on the board of directors, based on the criteria set out in the suitability policy.

The board can assign the functions of the above-mentioned committees to one committee, with the criteria for its composition and its duties defined by Articles 10–12 of the Law.

Audit committee (Article 10)

An audit committee was introduced into the corporate structure by Law 4449/2017 (Article 74 paragraph 4). The relevant provisions are supplemented by the Law and cover various areas such as its composition, replacement of members and its duties.

iv Corporate governance system (Article 13)

The Law provides for the implementation of a corporate governance system that should include at least one system of internal audit (including risk management and regulatory compliance systems), procedures for the prevention, detection and suppression of conflicts of interests, shareholder communication mechanisms and remuneration policy.

v Company regulations

The company must have an updated set of company regulations for itself and for its most important subsidiaries, which must be approved by the board of directors. The regulations must contains settings at least for the topics that are defined in the provisions of the Law, such as reference to the main features of the system of internal audit, the recruitment process for senior executives and evaluation of their performance, the process for disclosing dependency relationships for the independent non-executive members, prevention and treatment procedures in the case of situations of conflicts of interest, etc.

According to HCMC Decision No. 1/891/30.09.2020, specifically for the system internal audit and its evaluation, the company regulations must at least contain its evaluation policy, the internal audit system (e.g., object and periodicity of control, range evaluation, etc) as well as the procedures of its function (e.g., stages of selection of candidates who will carry out the evaluation, the competent institution, its selection and approval process, assignment of the evaluation by the competent body, etc).

The people conducting the audit must be objective and independent and be qualified with the relevant professional experience and training. Assessing the adequacy of the system of internal audit must be carried out based on international best practice. In a group of companies, for holding companies, it should be determined based on the company regulations of its important subsidiaries, so that they are included in the scope of the auditing. The objectives of the auditing are the audit environment, risk management, control mechanisms and safety valves, the information and communication system and the internal auditing system. The first evaluation must have been completed by 31 March 2022, with the reference date 31 December 2021, and a reference period from the Law's entry into force pursuant to Article 14 of Law 4706/2020. In addition, it is required that a certified auditor confirms in the audit report that the company has updated regulations.7

vi Unit of internal audit

Organisation and operation (Article 15)

The unit of internal audit oversees the monitoring, the improving functions and the company's policies regarding its internal audit system. The Law delineates the relevant areas such as mode and obstacles of appointment of the head of the unit, its duties and responsibilities as well as its obligations (submission to audit committee of the annual audit programme and resource requirements for its implementation). In the case of a change of the head of the unit, the Capital Market Commission must be informed within 20 days of the change.

Duties and responsibilities (Article 16)

The duties of the internal audit unit are provided indicatively by the Law and include among other things the monitoring, audit and evaluation of the implementation of the company's regulations and the internal audit system, reporting to audited units, periodic submission of reports to the audit committee, etc. Moreover, it is provided that the head of the unit shall be present at the general meetings and submit relevant information to the HCMC.


8As in any other member state of the EU, shareholders of listed companies who are crossing the threshold that awards them standing to exercise 'activist rights' have to make themselves known to the firm. In compliance with the transparency requirements (arising from the Transparency Directive),9 where a shareholder acquires or disposes of the shares of an issuer whose shares are admitted to trading on a regulated market and to which voting rights are attached, he or she must notify the issuer and the HCMC of the proportion of voting rights held as a result of the acquisition or disposal where that proportion reaches, exceeds or falls below the thresholds of 5, 10, 15, 20, 25, 33.3, 50 or 66.6 per cent. The management of Greek companies already feels the pressure when the news comes in that a major institutional investor is building a minority stake in the share capital. It has been noticed that the management of Greek firms may on its own volition make progress on the corporate governance front merely as a response to the news that a shareholder is building an equity position that allows the potential exercise of 'activist rights'.

Corporate social responsibility / ESG

Investors, customers, governments and the general public are increasingly pressuring companies to put sustainability at the heart of their business models. But how does the market respond and what actions can companies take to adopt a more sustainable approach?

Over the past decade, the importance of sustainability and sustainable development has had a profound effect on the entire planet – not only in the way its people live, but also in the way governments shape their policies and the way in which companies develop operational models and plan their strategic action plan. The covid-19 pandemic, meanwhile, has put business resilience into question, placing sustainability action at the centre of their needs.

Adopting the principles of sustainability is now a key element of the strategy of large and pioneering companies (known as blue-chips). In line with the EU Climate Neutrality target by 205010 and in line with the UN Global Sustainable Development Goals (SDGs),11 these leading companies have recently announced their targets for zero carbon emissions in the next decades.

One of the key motivators for businesses to embrace the principles of sustainability as a guiding strategy is the growth opportunities that this type of approach can create. One of the strongest incentives to integrate sustainability into the strategy is to attract investment, as, every year, more and more capital is invested in companies and projects that meet an integrated sustainability framework (the ESG framework).

The EU has set ambitious targets for climate, environment and sustainability through its Climate Neutrality Strategy 2050, its Energy Transformation Framework by 2030, the EU Classification for Responsible Financing, Energy Union and the action plan for the circular economy.12 The implementation of the EU strategy for sustainable financing is a key step towards the implementation of the historic Paris Agreement and the wider EU Agenda for Sustainable Development.13

The financial sector and the investment market are playing a key role in achieving these goals, as large private equity and lending funds will be directed to sustainable financing. Green financing, social and sustainable bonds have emerged as the most popular financing tools. The ESG Integrated Sustainability Framework incorporates environmental, social and governance criteria, and social impact investment is expected to be at the heart of the post-pandemic economic recovery, as this crisis has forced many organisations to reconsider the relationship between profit and growth. ESG, facing the unprecedented conditions that prevailed, is an opportunity to rebuild more green and resilient economies.

Many investors and banks also use sustainability as the equivalent of a company approach to risk management. New criteria and indicators (KPIs) based on the EU Sustainable Financing and Classification Regulations will be an important factor in the process of obtaining credit and evaluating the investments of a bank, an investment fund or other institutions.

An additional incentive for businesses is the need to meet the new requirements and expectations of the supply chain. There is a global trend that demonstrates the need for large companies in the most developed countries to adopt the principles of sustainable development not only within their own businesses, but also between their partners and customers. This trend is also pushing developing countries to comply with these issues in order to be able to serve their customers and maintain or expand their revenues.

Corporate responsibility and sustainable development change the way businesses set and achieve goals. Regardless of the size of the business, a sustainability strategy can benefit a company in several ways. It allows the setting of appropriate and ambitious goals for the implementation of an integrated ESG framework in the company, while at the same time it ensures a coordinated and studied approach of maximising the benefit at minimum cost. For many companies, the financial cost of implementing a sustainability programme is a major hurdle that needs to be overcome – an issue that has been exacerbated by the financial pressures of the covid-19 pandemic.

Social impact assessment is increasingly coming to the fore, presenting not only the economic but also the social benefits of investment. Through the available methods and tools available to businesses, they aim to demonstrate how effectively they can use their resources to create value for society.

The initial step in such a process is to identify a clear and achievable vision that should be supported, respectively, by the corporate mission and the values of the organisation. A key factor in achieving any strategy, according to management, is the existence of a comprehensive action plan, with individuals taking on specific responsibilities and a timetable. The monitoring of the company's performance in relation to the strategic plan of the organisation should be done through a strong system of KPIs based on the essential issues (the most important ESG issues) and in accordance with top international standards. This process requires continuous dialogue with senior management, effective management of individual actions for the implementation of the strategic plan, as well as accurate and appropriate analysis of data and information, access to innovative ideas and solutions and a good understanding of the market and the expectations of the stakeholders. This is a process that has been mobilised among Greek listed companies since June 2020 following the implementation of the Law.


i Shareholder rights and powers 14

Every shareholder in a Greek listed company has three default powers. These are the power to:

  1. vote in shareholders' meetings;
  2. sell shares and to receive dividends, if the corporation is marking a profit; and
  3. challenge certain corporate resolutions in court.

Apart from these default powers, Greek law introduces a number of 'activist rights' that are dependent on the shareholder holding a minimum percentage of the share capital; shareholders may typically exercise these rights either alone or collectively (thus adding up their percentages, so they reach the minimum percentage set by law).

ii Shareholders' duties and responsibilities

Shareholders holding at least 5 per cent of a company's share capital are entitled to apply for the convocation of an extraordinary shareholders' meeting. The board must set the date of the meeting within 45 days, and any protracted tactics of the board in relation to the convened meeting should be avoided. Minority shareholders in Greece make use of this right in order to bypass the board and raise current issues for discussion and resolution directly by the shareholders.

Following the convocation of a shareholders' meeting (either by the board or by shareholders), minority shareholders holding 5 per cent may request the board to add items to the meeting's agenda. This enables shareholders to, for example, nominate directors, seek the removal of incumbent directors and thus contest the choices of the supermajority shareholder in a typical Greek corporation. The request must either be justified by the shareholders or accompanied by a draft resolution, so that the rest of the shareholders are facilitated in exercising their voting rights. Where the shareholder-added items are not properly posted prior to the meeting, the requesting shareholders are entitled to request the deferral of the meeting either in full or for certain issues; if a resolution is nonetheless entered into by the meeting, the requesting shareholders may seek the nullification thereof in court in the aftermath.

iii Shareholder activism

Recent corporate scandals, such as the one related to the Folli Follie Group, have led to a rising concern about the standards of corporate governance in Greek companies, which have been addressed by the Law. Shareholder owners who are quite often the founders of the company or family members thereof continue to dominate the management of most listed Greek non-bank corporations. This naturally opens possibilities of abuse and corporate waste; non-Greek minority shareholders have now started to be put on alert. During the long Greek debt and economic crisis, Greece's creditors, mainly the EFSF and the IMF, imposed a series of corporate governance reforms in the four systemic Greek banks where non-executive directors had been elected. It seems that reforms have been incorporated more efficiently in the financial industry during the past decade under the direct influence of Greece's creditors, whereas non-bank corporates seem to still be lagging behind in this respect.

The need to encourage minority shareholders to exercise their rights is a constant challenge in Greek corporate governance. The typical minority shareholder of a Greek company is plagued with 'rational apathy'.

It is noted that shareholders tend to be primarily interested in the return on their investment either in the short or long term and less for the company itself. This may be caused by many factors, such as the lack of necessary know-how and resources that would help them participate actively and exercise their rights. Shareholder advisory services are not commonly used in Greece, and retail investors in particular are not aware of them at all. Thus shareholders lack the necessary information to be able to evaluate complex strategic issues and options, complex transactions of the company or other matters that are submitted for approval by the shareholders' meeting. On the other hand, the benefit that shareholders with a low percentage of rights may have from their involvement in these issues may be very small in relation to the time and effort they have to invest in order to actively participate, thus this is a disincentive for their engagement. Therefore the cost, time and the benefit that the minority shareholders may acquire is insignificant.

The new Greek core law on corporations, which transposed, inter alia, the EU Shareholder Rights Directive, provides concrete measures that enhance the engagement of shareholders in corporate governance as well as the transparency of their participation. Various provisions therein regulate the extent and quality of the active participation of institutional investors and asset managers in the companies in which they invest, ensuring the reliability and quality of advice provided by proxies and the facilitation of the transmission of cross-border information through the verification of shareholders' details.

Despite the structural weaknesses, Greece has recently become an attractive investment destination not only for foreign state-owned enterprises but also for institutional and activist investors. Activist investor funds, private equity firms, global asset management firms and proxy advisers have already pursued and keep pursuing their campaigns by targeting Greek companies with questionable standards of corporate governance and weak shareholder engagement. The aforementioned activists often develop a position consisting of shares in well-known and market-leading companies in different industries, such as mobile and broadband network operators, construction groups and health-care companies.

iv Contact with shareholders

Information for shareholders by the board of directors for its candidate members (Article 18)

The board of directors is obliged to publish online the information (no later than 20 days before the general meeting) on the justification of it final recommendation for the candidate members, their detailed CVs and the determination of the eligibility criteria of the candidates in accordance with the suitability policy of the company.

Shareholder service unit (Article 19)

The establishment of this specific unit is intended for the equal and immediate information of shareholders and the facilitation of the relevant processes in order to exercise their rights effectively, as well as in informing them about other issues provided for in the Law, namely the distribution of dividends and free shares, the provisional information ahead of general meetings and decisions taken by them.

Corporate announcements unit (Article 20)

The corporate announcements unit makes announcements regarding regulated information (Law 3556/2007) and its corporate events pursuant to Law 4548/2018. It is also in charge of the company's compliance with the obligations deriving from Article 17 of Regulation 596/201415 for privileged information and other applicable relevant legal framework.

Share capital increases with payment cash or bond issue changes in the use of funds raised (Article 22)

If the subject matter of the general meeting is the share capital increase by payment in cash, the board of directors is obliged to submit a report to the general meeting stating the general directions of the investment plan to be financed by the funds of the increase. Moreover, this plan shall include an indicative implementation schedule and a report of the use of the funds raised by the previous increases in case that three years have not been completed after the closure of the said increases. Such information must be included in the minutes of the board of directors when it raises capital under Law 4548/2018. Deviation that exceeds the 20 per cent in the use of the funds raised, in relation to that provided for in the related decisions of the general meeting or the board of directors, is permissible if preceded by a decision of the board of directors with 75 per cent majority and approval by the general meeting, which has been taken with increased quorum and majority. Such a deviation is not permissible within a period of six months from the completion of pumping of the funds, unless an exceptional occasion occurs. The above is also applicable to the issuance of a bond loan through a public offering.

Disposal of company assets (Article 23)

The Law further stipulates that the decision of the general meeting for disposal of its assets, which takes place within two years and the value of which represents more than 51 per cent of the total value of the assets of the company, must be decided with increased quorum and majority as defined in Article 130 paragraph 3.4 of Law 4548/2018.


Law 4548/2018 and the Law provide an array of rights under which shareholder activism in Greece may play a greater role in the future. The existence and the possibility of exercising the rights of the minority is beneficial for the company and leads to the achievement of corporate goals as well as the attraction of investment funds. Moreover, the Law seeks to adapt the strengthening of corporate governance processes and structures in order to meet the increased demands set by the modern capital market. The Law is significantly harmonised with the EU legal framework and considers international trends in this area. This fact can contribute to the creation of a safe and reliable investment environment and ultimately make the Law a tool to attract investment and significantly change the introvert nature of the vast majority of the Greek listed companies to more extrovert and open organisations willing to associate with new investors and allocate investments. Finally, the implementation of the ESG criteria on corporate financing alongside the new corporate governance framework will assist Greek listed companies to expand their business based on sustainable development and sustainable funding.


1 Pavlos Masouros is managing partner at Masouros & Partners Attorneys at Law.

2 Pursuant to Article 91 of Law 4706/2020, Articles 1–11 of Law 3016/2002, which had regulated corporate governance, have been abolished.

3 Article 93 of Law 4706/2020.

4 This provision is similar to the one in Law 3016/2002.

5 The president of the board of directors is elected by the non-executive members of the board. Should the president belong to the executive members of the board, the vice-president will be elected by the non-executive members pursuant to Article 8 of Law 4706/2020.

6 The same provision existed in Article 4 paragraph 2 of Law 3016/2002.

7 Article 21 of Law 4706/2020.

8 This section was previously published in The Law Reviews on 23 August 2021 in The Shareholder Rights and Activism Review: Greece; by Pavlos Masouros and Antonios Nikolaidis, Masouros & Partners Attorneys at Law, available at

9 EU Shareholder Rights Directive, Directive 2017/828/EU of the European Parliament and of the Council of 17 May 2017 amending Directive 2007/36/EC as regards the encouragement of long-term shareholder engagement (text with EEA relevance).

10 More information about the neutrality goals of the EU can be found at

14 For Section V.i/ii/iii see footnote 8.

15 The text of the regulation can be found at

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