We all know the Joint Banking Account. By utilizing its capabilities, more than one depositor can bypass the inheritance procedure and avoid paying inheritance and donation tax. At first -at least. But what if the common asset of more than one person is intangibles, rather than cash deposits? We can look for the solution in the Joint Investment Accounts, which provide us with corresponding facilities, as they are reflected in the Regulation of the Hellenic Capital Market – which was recently approved by a decision of the Hellenic Capital Market Commission [: 6/904 / 26.2.2021 (Government Gazette B1007 /16.03.2021)]. But let’s start with the regulations of the Joint Bank Account that we will encounter in the Joint Investment Accounts.
The Joint Bank Account
The Joint Bank Account is under the provisions of the law (Law 5638/1932 “on deposit in a joint account”). The inflow of capital from abroad and, in particular, the inflow of capital of Greeks living abroad was the purpose of its introduction into the Greek reality. This goal, moreover, is explicitly stated in the Explanatory Memorandum of the relevant legislation.
The Greek legislator aimed, in particular, to make Greek banks competitive with their counterparts abroad. It sought to achieve this by introducing a deposit instrument, which would offer a number of favorable arrangements for depositors. Among them, the exemption from inheritance tax and the possibility of bypassing the inheritance.
As regards, in particular, the case of succession, the possibility of an agreement is provided for, according to which “… upon the death of any of the beneficiaries, the deposit and the account thereof automatically pass to the survivors, until the last one”. This term, in fact, is accompanied by a highly advantageous arrangement for the survivors. It is provided, in particular, that in the event of the death of one of the beneficiaries “… the deposit is owned by them (: the other survivors) free of any inheritance tax or other fee. On the contrary, this exemption does not extend to the heirs of the last remaining beneficiary “(article 2 of law 5638/1932).
The wording of the law provides, as we also mentioned in the introductory remarks, that the object of the joint account can be, exclusively, money (article 1 of law 5638/1932).
It is obvious that, based on the above data, non-monetary assets are not covered by this legislation. Securities and debt instruments-e.g. In some cases, however, the legislature opted for the proportionate application of the favorable provisions of the law on the joint account. Indicative: the securities of the State in accounting form. In the case of the Joint Investment Account as well. The latter concerns the possession of intangible securities-shares, ie, among others, that are listed on the Greek stock exchange.
The co-ownership of intangible securities
The possession of intangible securities and the development of investment activity in the Greek Capital Market through the opening of a Securities Account, presupposes for each investor to be legalized-to have a Share, ie in their name. The latter contains their identification data and receives from ATHEXCSD, when it opens, a Registry Serial Code Number (RSCN) which is unique to DSS and does not change (: Section III, Part 4, 4.1 and 4.3. Regulation of the Hellenic Central Securities Depository SA-ATHEXCSD, the content of which was approved by a recent decision of the Hellenic Capital Market Commission: 6/904 / 26.2 .2021 (Government Gazette B1007 / 16.03.2021), based on the provision of article 4 of law 4569/2018 and Regulation (EU) 909/2014 (CSDR)
It is possible that sometimes two or more investors are co-owners of some shares. In this case, it is presupposed, according to those that apply to the listed shares, the participation of all, without exception, the co-owners for each related transaction.
In case there is co-ownership in intangible securities, the possibility of forming a Co-ownership Share is provided. It is assumed that each of the co-owners has an independent Customer Share. The Share of Conjunctures is determined on the one hand by the co-owners and on the other hand by their percentage of co-ownership in the securities (Section III, Part 5, 5.2.2. Regulation of ATHEXCSD).
For the common securities that are registered in a Co-ownership Share, it is provided that in case of any change of the co-owners or the percentage of co-ownership in the specific values, the creation of a new Co-ownership Share is required. This new Share is also determined by the new data of the current times and the new percentages of ownership.
An exception is that it is not required to create a new Co-ownership Investment Share in the event of the death of one of the co-owners. In this case, ATHEXCSD changes the names of the co-beneficiaries by registering in the position of the co-owner who passed, their heirs. Obviously, it also changes, respectively, the percentages of co-ownership (: Section III, Part 5, 52.7. Regulation of ATHEXCSD).
What is mentioned immediately above does not apply, however, in the event that the possibility of registration in a Joint Investment Account is opted for.
The Joint Investment Accounts- In General
The Joint Investment Accounts (: JIA) can be created at the request of two or more natural persons if they act as co-beneficiaries of a joint securities account according to the provisions of par. 6 of article 13 of law 4569/2018. A legal entity, therefore, cannot participate in the creation of a JIA (: Section III, Part 5, 5.1.1. Regulation of ATHEXCSD).
The JIA is clearly identified by the co-beneficiaries, who -as provided- are joint owners of the values registered in it (: 5.2. Regulation of ATHEXCSD).
As we have already pointed out above, the peculiarity of JIA is the fact that this Share is governed by the provisions governing the Joint Bank Account (: Law 5638/1932).
The characteristics of the JIA
The contract of the JIA contains the individual terms for its operation. The creation of a JIA, however, is distinguished for its specific characteristics.
Each Participant in a Joint Investment Account implements under their own responsibility any transaction related to the operation of the relevant Securities Account at DSS, acting (also) on behalf of the co-beneficiaries. Each co-beneficiary, therefore, can act individually, without the complicity of the others (: 5.1.6. Regulation of ATHEXCSD). Among the co-beneficiaries, however, their hierarchical order is determined, which indicates the one who is legitimized to act as a representative of all (: 5.1.5.b. Regulation of ATHEXCSD).
The case of death of one of the co-beneficiaries
The change of the co-beneficiaries of a JIA she is not possible. Specifically, in case of death of a co-beneficiary (and if the application of the condition of sub-paragraph a of article 2 of law 5638/1932 has not been implemented), the balance of Securities corresponding to the rights of the heirs or bequests is transferred to their own Securities Accounts (5.1.8. Regulation of ATHEXCSD).
However, the case in which the provision of article 2 of law 5638/1932 is applied is different. In the latter case, the securities are automatically transferred to the other co-beneficiaries. Specifically, ATHEXCSD modifies the details of the JIA, as it eliminates the deceased from the co-beneeficiaries. However, the hierarchical order of the co-beneficiaries, recorded from the beginning, is maintained (: 5.1.9. Regulation of ATHEXCSD).
It is possible, of course, as a logical consequence, after the death of the other co-beneficiaries, that only one survivor remains. In this case, the registered in JIA assets are owned by the beneficiary remaining. The latter is obliged, in this case, to proceed with the unification of the JIA with their unique Share (: 5.1.9. Regulation of ATHEXCSD).
The provisions for the Joint Bank Accounts (: Law 5638/1932) are favorable for the co-beneficiaries. Their application in the Joint Investment Accounts aims to provide (and it provides) to the latter and their co-beneficiaries corresponding facilities with those of the Joint Bank Account.
The possibilities presented by the creation of a JIA are clearly identified in matters of inheritance, as, in case of death of a beneficiary of a JIA, the assets that are in the Joint Investment Account automatically belong to their co-beneficiaries.
The advantages of the Joint Investment Account are multiple.
They can be enjoyed, without a doubt, (also) in the context of a wider tax (within a family or not) planning and scheduling, which (also) concerns the management of shares of listed companies and dividends.
Utilizing the benefits and facilities of both the Joint Bank Account and the Joint Investment Account is not always without pitfalls…
P.S. A brief version of this article has been published in MAKEDONIA Newspaper (July 18, 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.