Law Developments "Silent Partnership" recently regulated by L. 4072/2012

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
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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
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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
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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
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• 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
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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
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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.
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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
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“Silent Partnership” recently regulated by L. 4072/2012 - December 2012