Today we are focusing on Article 177 of Law 4548/2018 on (criminal) “offenses by board members”, which aims, among other things, to safeguard the company’s capital and the interests of creditors.
The provision in question criminalizes five different behaviors with a common cohesive element being the status of the perpetrator: any (even non-executive) board member. We categorize the behaviors into two sections:
(a) The first section (§§ 1, 2 & 5) includes: (aa) the primary obligation to draw up and approve essentially accurate, non-misleading (see our related article of 17.03.2022) and by the law, in terms of their content, financial or consolidated statements of the company, management reports (which are not included in the financial statements) and any other annual report required by law and (ab) the secondary prohibition of distribution of profits or other benefits to shareholders of the company or a third party, in cases where the primary (under aa ) duty of veracity, accuracy and compliance with the law is not respected, especially when the statements in question have not been drawn up, etc.
(b) The second section (§§ 3 & 4) includes: (ba) the prohibition of the knowing acquisition of redeemable shares or of causing the acquisition by the company of its own shares or shares of its parent company or other titles of its parent company, in violation of the law ( art . 39, 48, 49, 52 & 57) but also (bb) the prohibition of granting an advance, loan or guarantee either by charging the company, with the aim of acquiring its shares by a third party, or by charging its subsidiary, in order for a third party to acquire shares of its parent company, in violation of the law (art. 51).
Any member of the Board of Directors who commits any of the above offenses (whether of the first or the second section) is severely punished: with imprisonment (up to 5 years) and with a fine from 10,000 to 100,000 euros.
We consider it important to underline the evaluative asymmetry (now antinomy) which is found in this case between SAs on the one hand and Limited Liability Companies (art . 60 n. 3190/1955) and Private Capital Companies (art. 119 n. 4072/2012) on the other:
the essentially similar acts of the first section (aa, ab), in the case of the SA are punished and even most severely, while in the cases of the LLC and the PPC they are not punished even in the least – they were misdemeanors which were abolished in their entirety.
by no means are we insinuating a preference towards LLCs and PPCs, where, in the end, the provisions of the common Criminal Code apply.
Nor do we give in to the temptations of an unconditional criminal intervention in the other corporate forms or an unjustified repeal of art. 177: it constitutes our moral and political defeat to comply (or not) with the law simply out of fear.
The legislator, however, must be consistent (: not to send contradictory messages), fair (: to apply, in this case, the principle of equality) and alert (: to realize when it is skewed): otherwise, it negates the reason for the existence of the provisions that establishes and proves ineffective and unfair in regulating such a complex phenomenon as entrepreneurship.
George Karanikolas
Senior Associate
P.S. A brief version of this article has been published in MAKEDONIA Newspaper (May 22nd, 2022).
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.