November 8, 2026

Stavros Koumentakis

Κοινή διάσπαση εταιρειών
(αρ. 55 ν. 4601/2019)

In a previous article, we examined the definition, forms and main procedural stages of company demergers. The full demerger, which is the subject of this article, is characterised by the dissolution of the company being demerged without liquidation. All its assets and liabilities are transferred to two or more beneficiary companies, generally with corporate participations being allotted to its shareholders or partners. We examine its main characteristics and legal effects, focusing on the allocation of assets and liabilities and the protection of those affected.

Definition and Main Characteristics

The central characteristic of a full demerger is the dissolution of the company being demerged without subsequent liquidation. The company ceases to exist, while its assets and liabilities are allocated to two or more existing or newly formed companies. In a partial demerger and a spin-off of a business branch, by contrast, the company being demerged continues to exist (Articles 55–57 of Law 4601/2019).

The transfer covers all the assets and liabilities of the company being demerged. Its shareholders or partners generally acquire corporate participations in the beneficiary companies and, potentially, an additional cash payment. In a spin-off of a business branch, the participations are allotted to the company being demerged itself (Article 57 of Law 4601/2019).

Dissolution of the Company Being Demerged and Universal Succession

The absence of liquidation is connected with the very mechanism of the demerger. The assets are not liquidated for distribution to shareholders or partners but are transferred to the beneficiary companies as part of the corporate transformation.

The transfer takes place by universal succession, in accordance with the allocation provided for in the demerger agreement or instrument. A separate transfer deed is not required for each asset. However, special statutory formalities remain applicable, such as the necessary cadastral registrations (Article 70(4) of Law 4601/2019).

Universal succession covers all legal relationships relating to the transferred assets and liabilities, including the relevant administrative licences (Article 70(2)(a) of Law 4601/2019). In principle, it also includes contractual relationships of a personal nature, subject to the necessary examination of special legislative provisions and any rights of termination. The clauses of critical contracts and the conditions for the continuation of licences must be examined before the transaction structure is finalised.

Succession does not override the special protection afforded to employees (Article 64 of Law 4601/2019). Where the rules on transfers of undertakings apply, the preservation of employment rights and the obligations to inform and consult employees must be examined.

Allocation of Assets and Liabilities

From a corporate law perspective, a full demerger does not require each transferred group of assets and liabilities to constitute an independent business branch (Article 55 of Law 4601/2019). Individual assets and liabilities may be allocated according to the structure of the corporate transformation. This flexibility is limited by the rules protecting shareholders or partners and creditors, as well as by the requirements of the corporate form selected. Tax treatment and the conditions for any available tax benefits must be examined separately.

From the perspective of each beneficiary company, succession concerns the portion of the assets and liabilities allocated to it. The draft terms record the assets and liabilities of the company being demerged in detail and specify their allocation (Article 59(2)(h) of Law 4601/2019). Particular attention is required in relation to outstanding claims, guarantees and contingent liabilities, in order to avoid disputes as to which entity is responsible.

If an item is not allocated and interpretation of the draft terms does not remedy the omission, special rules apply. Assets or their value are allocated in proportion to the net assets contributed to each beneficiary company. For unallocated liabilities, all beneficiary companies are jointly and severally liable. Each is liable up to the net value of the assets and liabilities contributed to it (Article 59(3) of Law 4601/2019).

Protection of Creditors

Creditors whose claims have not yet fallen due and arose before publication of the draft terms may request appropriate safeguards. The request must be submitted within thirty days of registration and publication of the draft terms in the General Commercial Registry (G.E.MI.). Creditors must demonstrate that the financial position of the companies as a result of the demerger makes the safeguards necessary and that they do not already have such safeguards. An application to the competent court must also be filed within the same period (Articles 60 and 65(1) and (3) of Law 4601/2019).

If a creditor is not satisfied by the beneficiary company that assumed the debt, the other beneficiary companies are also jointly and severally liable. This occurs particularly following unsuccessful enforcement or the insolvency of the liable company. The liability of each of the other beneficiary companies is limited to the net value of the assets and liabilities it received. Claims arising from this additional liability are subject to a five-year limitation period from completion of the demerger (Article 65(4) of Law 4601/2019). Consequently, a demerger does not ensure complete isolation of debts between the beneficiary companies.

Position of Shareholders or Partners

Upon completion of the demerger, the participations in the company being demerged cease to exist. Its shareholders or partners generally acquire participations in one or more beneficiary companies, in accordance with the exchange ratio and the prescribed allocation. Not every shareholder or partner is required to participate in all beneficiary companies (Article 70(2)(b) of Law 4601/2019).

This allocation need not be proportional to their previous participation in the company being demerged. The draft terms specify the allocation and the criteria on which it is based. In the case of a non-proportional allocation, dissenting minority shareholders or partners may demand that the company being demerged purchase their participations. The consideration corresponds to their value and, in the event of disagreement, is determined by the court (Article 66(3) of Law 4601/2019).

Participations in a particular beneficiary company may not be exchanged for participations in the company being demerged that are held by that beneficiary company or by the company being demerged itself. The prohibition also covers holdings through a person acting on their behalf (Article 70(5) of Law 4601/2019).

Exchange Ratio and Cash Payment

The exchange ratio is determined separately for each beneficiary company and establishes the participations acquired in it by shareholders or partners. The management provides legal and economic justification for the exchange ratio, while examination by experts is also provided for, subject to statutory exemptions (Articles 61–62 of Law 4601/2019).

An exchange ratio that is not fair and reasonable does not constitute grounds for annulment of a demerger that has already taken effect. The affected party is entitled to compensation from the company whose shareholders or partners benefit. The claim is subject to a twelve-month limitation period from completion (Article 73 of Law 4601/2019).

In addition to corporate participations, an additional cash payment of up to 10% of the nominal value of the participations allotted may be made. Where there is no nominal value, their accounting value is taken into account (Article 55 of Law 4601/2019). The percentage is not calculated on the value of all the assets and liabilities transferred.

The allotment of corporate participations is the general rule, with a special exception for a full demerger exclusively involving Sociétés Anonymes (S.A.s). In that case, a demerger with a cash buyout is also permitted, with shareholders receiving cash consideration instead of participations (Articles 83(3) and 37 of Law 4601/2019). The 10% limit does not apply to this special case.

Legal Forms of the Participating Companies

A full demerger may also take place between companies of different legal forms, provided they fall within the permitted categories (Article 2 of Law 4601/2019). The beneficiary companies are not required to have the same legal form as one another or as the company being demerged.

The choice affects corporate governance, capital requirements and the personal liability of partners. A person who was not previously personally liable must expressly consent to becoming a general partner (Article 78(2) of Law 4601/2019).

Methods of Carrying Out a Full Demerger

The choice depends on whether the assets and liabilities are intended to be transferred to existing companies, new companies or a combination of both.

In a full demerger by acquisition, the assets and liabilities are allocated among two or more companies that already exist. In a demerger through the formation of new companies, the beneficiary companies are formed simultaneously with the demerger. In the latter case, the General Meeting or partners of the company being demerged also approve the articles of association of the new companies (Article 74(3) of Law 4601/2019).

A special simplification applies where the participations in each new company are allocated in proportion to the rights in the capital of the company being demerged. In that case, management and expert reports are not required, nor is the provision of an interim accounting statement to shareholders or partners (Article 74(5) of Law 4601/2019). The two methods may also be combined. Part of the assets and liabilities is transferred to one or more existing companies and the remainder to one or more new companies. The corresponding rules on acquisition and formation apply in combination (Article 75 of Law 4601/2019).

Completion and Legal Effects

A full demerger by acquisition takes effect upon registration of the demerger agreement in G.E.MI. and its publication on the Registry’s website. The publication requirements concern the beneficiary companies and do not require the prior removal of the company being demerged from the Registry (Article 70(1) of Law 4601/2019 and Articles 17–18 of Law 4919/2022). Where new companies are formed, the same publication requirements apply to the demerger instrument, which also includes their articles of association (Article 74(1)–(4) of Law 4601/2019).

Upon completion of the above publication formalities, the effects of the demerger arise automatically and simultaneously, both between the companies and in relation to third parties. The beneficiary companies succeed by universal succession to the rights and obligations allocated to them, while the company being demerged ceases to exist. Pending legal proceedings continue automatically with the respective beneficiary companies, in accordance with the allocation of assets and liabilities (Article 70(2)–(3) of Law 4601/2019).

Failure to obtain corporate approval or defects in the relevant decision may lead to judicial annulment, subject to the statutory requirements. An application must be filed within three months of registration, while the possibility of remedying the defect is provided for (Article 72 of Law 4601/2019). If publication took place on a different date, the period is calculated from that date (Article 19(4) of Law 4919/2022).

Registration requires a legality review (Article 69 of Law 4601/2019). Members of the administrative bodies and managers are liable to the shareholders or partners of their company for damage arising from a culpable breach of their duties. This liability concerns the preparation and implementation of the demerger. Experts are similarly liable to the shareholders or partners of the participating companies. Liability towards third parties under the general provisions remains unaffected (Article 71 of Law 4601/2019).

In Summary: Practical Significance and Value

A full demerger enables the reorganisation of corporate assets and liabilities through the permanent cessation of the company being demerged. Its management and its legal and other advisers need to examine the allocation of liabilities, the continuation of critical contracts and the protection of shareholders or partners and creditors. Ambiguities may lead to disputes and additional liability, even after completion. In our next article, we will examine the partial demerger, in which one or more business branches are transferred and the company being demerged continues to exist.