(The case was handled by our law firm)

According to the “principle of separation”, which applies under Greek law, a Société Anonyme (SA) bears its own rights and obligations. However, this principle of the economic autonomy and liability of the legal person of the SA vis-à-vis its shareholders or members of its management is set aside where reliance on its separate legal personality serves to “legitimise” a result contrary to the rules of good faith, namely where the acts of the company are, in reality, acts of its controlling shareholder.

The use of the SA for the pursuit of different purposes, and indeed purposes disapproved of by the legal order, constitutes an abuse of the institution. Abusive conduct manifested as an abuse of an institution is not specifically regulated by law. Nevertheless, it must also fall within the scope of Article 281 of the Greek Civil Code, and its consequences must be addressed by analogy with the consequences of an abuse of rights.

Case law has developed forms of abuse which give rise to the lifting of the separate legal personality of the SA and the joint liability of its principal shareholder or CEO, such as inadequate funding, the use of corporate assets for the individual activities of the shareholder, the fictitious nature of the legal person, etc.

Case successfully handled by our law firm:

The case concerned an action for the return of a security deposit in the amount of €42,000.00 under a lease agreement for office premises, seeking to establish the joint liability of the SA, as lessor, together with its principal shareholder and CEO. The Athens First Instance Court ruled in favour of our client – the lessee – and held that the principal shareholder and CEO of the lessor had abusively used the SA as a mechanism for collecting rent from properties owned by another company in which he had an interest, knowing that the lessor company was undercapitalized and had no assets, with the aim of avoiding the performance of contractual obligations, such as, in the present case, the failure to return the security deposit upon termination of the lease. This conduct was held by the Court to be abusive (doctrine of abuse of the institution of the SA) pursuant to Article 281 of the Greek Civil Code, thereby establishing the joint and several liability of the second defendant, who was the principal shareholder and also CEO of the company and who is, therefore, liable with his personal assets, together with the SA itself, which owns no assets.