The Greek Trademark Registry System

Process for obtaining a registered trademark

Filling trademark application.

The application includes a respective sign, as well as a list of goods or services in connection to which legal protection is sought.

Search for prior rights (i.e. earlier national or community trademarks) by the Registry and report on prior rights.

The Registry carries on an ex officio search for prior rights.

Note that in other jurisdictions an ex officio search for prior rights is not carried on. It is a matter of policy whether to carry on an ex officio search for prior rights or not; some countries provide for such a search and some not; in the Community Trademark (CTM) system there is no ex officio search for prior rights.

Review of the application by the Trademark Committee. This review is in the form of judicial proceedings. The applicant may submit written arguments and evidence in support of its application. The Committee adjudicates both relative and absolute grounds of refusal.

Intervention. A party who enjoys a prior right, or a party who holds that the trademark application is covered by an absolute ground of refusal, may intervene in the proceedings for the granting of a trademark to the applicant. Intervention is filed before the trademark application is reviewed by the Trademark Committee and is adjudicated together with the trademark application. The intervener may file written arguments and evidence to the effect that the trademark should not be granted. The intervener invokes either absolute, or relative grounds of refusal, or both. In order to file an intervention, one should be informed that a particular trademark application is filed and is about to be adjudicated by the Trademark Committee. There is no official and efficient means to obtain such information, but the possible ways to be so informed are the following: (a) from market information, (b) by regularly reviewing trademark applications that are filed, (c) by regularly reviewing the list with the cases that are to be heard before the Trademark Committee, (d) any other means that one could possibly imagine, etc. However, even if one looses the chance to file an intervention, he may file an Opposition at a later stage, which has the same legal consequences and results.

Publication of the Decision of the Trademark Committee. The Trademark Committee, having reviewed the trademark application issued its decision. This decision, if negative is served to the applicant, who may file a recourse at the 1st instance administrative court; if positive, it is forwarded for publication to the National Gazette. Publication to the National Gazette is the official means (and the only efficient means) to let third parties, who may have prior rights, that a particular trademark rights is about to be granted and to alert such parties and to give them the opportunity to raise any objections. Such objections may relate to either absolute, or relative grounds of refusal. Objections are expressed through filling an Opposition. So, publication to the National Gazette is a disclosure process. The important about publication (disclosure) is that through it third parties are officially informed about applications that are about to be granted exclusive (trademark) rights and are invited to oppose. So, third parties are given a fair chance to raise their respective objections; should they fail to do so, then, there is adequate justification for the legal system to grant to the trademark rights that have successfully passed through this publication procedure an increased and enhanced protection, even in cases where relative grounds of refusal (that is prior rights) may have been violated. In plain words, should a trademark application that violates a prior rights successes in passing the publication procedure, that is the owner of the prior rights is not vigilant enough and fails to take notice of the respective publication in the National Gazette and to file an Opposition, so as to stop the granting of exclusive rights process, then exclusive rights are granted and the earlier (prior) rights should coexist with the later rights granted; this is a, let us say, ‘concurrent’ use and validity situation, in the sense that both trademark rights (i.e., earlier and later) are not so exclusive, since one can not exclude the other.

Opposition. An ample period of about four months is granted under local law to third parties to Oppose to the granting of (exclusive) trademark rights to a trademark application. This period commences as from the publication to the National Gazette and to be more accurate it commences on the 16th day of the month following the month when publication occurred. So, if publication occurred on the 10th day of February, then the four months period commences on the 16th day of March and lapses on the 16th day of July. So, there is plenty of time for third parties to take notice that a trademark application is about to be granted exclusive trademark rights and to make a decision whether to oppose or not and to prepare your opposition in terms of legal argumentation and evidentiary support, which is important particularly to foreign trademark owners; however, some argue that this long period for opposition represent a serious delay in terms of time in the whole process that leads to the granting of exclusive trademark rights and propose that the opposition period should be shortened and that the whole process should be made shorter in terms of time. Bear in mind that, although through the opposition proceedings third parties may raise both relative and absolute grounds of refusal, the purpose of the legislator was to allow through the opposition proceedings third parties to raise their respective earlier rights (that is relative grounds of refusal).

If an opposition is filed, the mark applied for is not registered, unless opposition proceedings are finalised by a final decision that is not subject to any further legal review (i.e. an appeal or cassation can not be filed against it). Opposition is reviewed by the Trademark Committee; its judgment is subject to recourse to the 1st instance administrative court; the decision of this later court is subject to appeal to the 2nd instance (appeals) administrative court and the judgment of this appeal court is subject to cassation to the Supreme Court. The same judicial process applies to any other decisions of the Trademark Committee, i.e. decisions on trademark applications, interventions, etc. According to one view, this judicial process which includes four stages (i.e. Trademark Committee, 1st instance court, 2nd instance (appeal) court and Supreme Court) is very long, time consuming and expensive. It seems that this is more or less correct; one could propose that at least appeal proceedings before the 2nd instance court could be abolished.

Registration. If Opposition is not filed within the prescribed time period, the trademark application is registered with the trademark registry and exclusive trademark rights are granted. It is then that the trademark application becomes a trademark registration and it is only then that the applicant acquires trademark rights and becomes a trademark owner.

Registered trademarks can not be challenged before civil courts. An important difference of the Greek trademark system from other countries is that when a trademark is registered and as long as it remains in force, it can not be challenged before civil courts. Civil courts are bound by the decisions of the Trademarks Committee regarding the validity of trademark registrations (art. 32 of Greek law 2239/94 on trademarks). As a result, a trademark owner who initiates legal proceedings against trademark infringement by a third party may safely rely on its trademark registration and may be certain that the validity of such registration will not be challenged in the context of the trademark infringement legal proceedings that he initiated.

Cancellation. The validity of trademark registrations can be challenged only through separate proceedings before the Trademark Committee and only after filling an application for Cancellation. Cancellation follows the same judicial process as intervention and opposition, that is, decision by the Trademark Committee, recourse to the 1st instance administrative court, appeal to the appeals administrative courts and cassation before the Supreme court. It is important that the decision on cancellation becomes effective only when it becomes final and can not be challenged before any other court; in other words, if one wishes to cancel a registered trademark, he has to carry on the judicial process up to the Supreme Court, which is time consuming and expensive; in the meantime the trademark owner enjoys exclusive trademark rights. Furthermore, the decision to cancel a trademark has legal effects only for the future. In other words, it has no retrospective effects; so when the cancellation decision will become final, the registration will be cancelled, but this will not affect the past legal status of the trademark owner, who has enjoyed in the meantime (until the final cancellation decision) exclusive trademark rights.

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Notes on Greek Company Law

LEGAL ENTITIES

• General characteristics
• civil law & commercial law legal entities (depending on the purpose)
• with legal personality (note an exception: the civil law partnership may have or may not have legal personality)
• association of persons, or a variety of assets, or both
• there is always a contract behind a legal entity
• acquisition of legal personality always through some publication procedure

CIVIL LAW LEGAL ENTITIES

Civil Law Associations

• founded by at least 20 natural persons or legal entities
• established after application to the court, issue of court judgment and registration in a public registry
• civil purpose
• association of persons
• legal personality

Civil Law Foundations

• founded by one or more founders
• established by act of government published in the National Gazette
• civil purpose
• contribution of assets
• legal personality

CIVIL CODE PARTNERSHIP

• may have or may not have legal personality, depending on the purpose and the maintenance of publication procedure
• purpose: civil, economic, or commercial
• association of at least 2 founders and contribution of assets

COMMERCIAL LAW COMPANIES

• legal personality (publication procedure)
• commercial purpose
• association of at least two persons and contribution of assets

COMMERCIAL LAW COMPANIES

• General Partnership
• All partners are personally liable to company creditors
• Administration and representation of the company is carried on by each partner separately, but the partners may stipulate otherwise (i.e. to appoint only one partner who is authorized to administer and represent the company)

Limited Partnership

• There must be at least one partner personally liable to company creditors (unlimited liability partner) and at least one partner who will not be personally liable to company creditors (limited liability partner) this last partner is actually in investor, not a partner.
• Administration and representation of the company is carried on by each unlimited liability partner separately, but the partners may stipulate otherwise (i.e. to appoint only one partner who authorized to administer and represent the company – however, the partners are not allowed to appoint a limited liability partner to carry on representation of the company)

Limited Liability Company

• Only the company is liable to company creditors
• Administration and representation of the company is carried on collectively by all partners, but the partners may stipulate otherwise (i.e. to appoint one partner who authorized to administer and represent the company)

Company Limited by Shares

• Only the company is liable to company creditors
• Administration by two collective corporate bodies: Board of Directors and General Assembly of Shareholders – The BoD is appointed by the GA and is authorized to carry on the day to day management, administration and representation
• The partners (shareholders) are actually investor, rather than partners, in the sense that they have invested their capital in the company and they are not personally involved in the management.

Sources of Law

Civil Code

• Civil Law Associations
• Civil Law Foundations
• Civil Law Partnership

Commercial Code

• General Partnership
• Limited Partnership
• In both General and Limited Partnership the Civil Code provisions on Civil Law Partnership also apply

Law No. 2190 dated 1920, as amended

• Company Limited by Shares (Societe Anonyme)

Law No. 3190 dated 1955, as amended

• Limited Liability Company

Both personal and capital company The limited liability company is a type of corporation that lies in between strictly capital companies (i.e. companies limited by shares) and personal companies (i.e. general and limited partnerships).

It gathers characteristics from both capital companies and personal companies.

It is a capital company, in the sense that it is a limited liability company (only corporate assets are liable to corporate creditors, while the partners themselves bear no personal liability towards corporate creditors). It is a capital company in the sense that for its establishment there is a prerequisite for contribution of assets amounting at least 18.000 euro.

It is a personal company in the sense that the way it is administered and represented towards third parties is very close to the administration and representation of a personal company.

Both ius cogens and ius dispositivum The law as to corporate liability towards creditors and the law as to the existence of corporate capital is strict law that can not be derogated by contract (ius cogens). However, the law as to the way of administration and representation can be derogated by special agreements among the partners that are to be found in the by-laws of the company (ius dispositivum). So the partners are allowed, if they wish, to enhance the personal characteristics of the company.

Personal characteristics

Some personal characteristics are the following:

• corporate resolutions are made on the basis of both the capital represented and the number of partners represented,
• partners are entitled to participate in the administration of corporate affairs, however, the partners are allowed, if they wish, to appoint one of them to carry on the day to day administration and representation of the company,
• partners may agree in the by-laws that transfer of corporate participation may be subject to unanimous decision by other partners as well,
• partners may agree that death or bankruptcy of one partner may be a reason for termination, dissolution and liquidation of the company,
• partners are granted a right to information regarding corporate affairs, as in personal companies; so the right to information is not a minority right.

However, bear in mind that partners may waive some of the above by agreeing otherwise in the by-laws of the company.

Capital characteristics

• limited liability,
• corporate capital,
• transferability of company participation (unless otherwise agreed by the partners),
• death or bankruptcy of one partner does not necessarily lead to dissolution and liquidation of the company (unless otherwise agreed),
• corporate resolutions are made on the basis of the capital represented in the General Assembly as well as on the basis of the number of partners.

Minority rights

There are fewer minority rights in comparison to companies limited by shares. The minority rights are:

• right to convene the General Assembly of the partners,
• right to apply to the court to declare that the company dissolute and become under liquidation,
• right to revoke and replace liquidators.

Creditors protection

The main means for creditors’ protection is the requirement for a corporate capital, which needs to amount to at least 18.000 euro.

Creditors may also file a legal action against the manager of the company for mismanagement; this legal action is deemed to be filed on behalf of the company (actio pro socio).

State supervision

Unlike the company limited by shares, there is no state supervision, either during the establishment, or during the operation of the company. Companies limited by shares are established after an approval granted by the state. Limited liability companies are established when their articles of incorporation and by-laws are filed with the secretariat of the court residing at the place of their registered office.

Transfer of company participation.

Company participation is not incorporated into shares (which are negotiable instruments). So its transfer is not as easily practical as in the company limited by shares. Partners may agree in the by-laws that transfer of company participation is subject to agreement by other partners also. An other difference from the company limited by shares is that in a limited liability company we can not have company participation to the bearer, while shares may be the bearer.

Legal relationship among partners

Unlike the company limited by shares, where there are no legal relationships among the shareholders, in limited liability companies a legal relationship is created among partners themselves, as well as among each partner and the company.

Single partner company

Unlike all other types of companies, a limited liability company may be established as a single partner company; that is even one person may establish a limited liability company by contributing to it assets amounting at least 18.000 euro.

Auditors

Unlike companies limited by shares, limited liability companies do not have auditors, save for limited liability companies that achieve a high net financial position.

Actio pro socio

Actio pro socio is a legal action by the partners against the managers for mismanagement. In a limited liability company such a legal action can be filed by every partner separately (that is even a single partner may file such a legal action on behalf of the company). So actio pro socio is not a minority right in limited liability companies, but an individual right of each partner. Company creditors may also file Actio pro socio.

Administration and representation

Unless otherwise agreed in the by-laws, administration and representation is carried on by all partners collectively and unanimously; however, usually partners agree to appoint one of them to carry on the day to day management. They can not, though appoint as manager a person who is not a partner to the company.

Corporate resolutions by the General Assembly

The General Assembly needs two types of majority in order to take corporate resolutions: numerical majority (that is a majority of partners) and capital majority (that is a majority of corporate capital).

A. CORPORATE ASSETS Personal companies may have, or may not have, legal personality.

I. Companies with legal personality

In companies with legal personality, the assets are property of the company.

Corporate assets are owned by the company itself as a legal entity. The partners do not have a proprietary share (participation) to corporate assets; they only have a participation to the company, that is a participation to corporate profits and losses.

When the manager of the company assigns and transfers corporate assets, he does so in the name of the company and on behalf of the company in his capacity as its manager.

II. Companies without legal personality

In companies without legal personality, the assets are not, legally speaking, “corporate assets”, since the company is only a contractual relationship. So, in such cases the assets are joint property of all partners; each partner has a proprietary share (participation) over each and every asset, corresponding to his respective participation to the company.

Assets consist of either the contributions of the partners at the stage of establishment (foundation) of the company, or the assets acquired during the operation of the company through its management.

Contributions by partners

Assets contributed at the stage of establishment are transferred by the partner who initially owned them, to all other partners who become co-owners.

Assets acquired through the operation of the company

Assets acquired during the operation of the company are acquired either in the name of and on behalf of all partners together, or by the manager in its own name, but on behalf of all partners together; in the latter case, the manager who acquired assets in his name, but on behalf of other partners as well, is under a legal obligation to transfer such assets to other partners as well, so that the latter become co-owners.

Management of assets

Since corporate assets are jointly owned by all partners, their disposition is a matter to be resolute by the partners, according to the rules of company management and administration they have agreed on. If they have not agreed on any specific such rules, jointly owned assets are managed and disposed of according to joint unanimous decisions.

Obligation not to dispose of corporate assets

In companies without legal personality, corporate assets are not distinct from personal assets of the partners. However, each partner has a legal obligation towards other partners not to dispose of in any way his share (participation) to jointly owned corporate assets. This includes an obligation not to allow the seizure of assets by creditors of the partner himself for his personal (not corporate) debts.

B. CORPORATE LIABILITIES

I. Companies with legal personality

There is a distinction between corporate assets and personal assets of the partners.

As a result, personal creditors of the partners can not seize corporate assets.

It would follow that corporate creditors can not seize personal assets of the partners, due to the existence of legal personality and the resulting distinction between corporate and personal assets.
- However, this is not so: Corporate creditors may seize either corporate assets, or personal assets of the partners, although there is a distinction among corporate assets and personal assets of the partners. This is due to creditors’ protection concerns. The absence of personal liability of the partners for corporate debts is justified only in capital companies, that is companies that employ the mechanism of the existence of corporate capital as a means of creditors’ protection. Corporate capital is a mechanism for the “preservation” of corporate assets in favor of potential corporate creditors who may need to seize property, in order to satisfy their claims. Such “preservation” of corporate property is achieved through a series of legal rules and legislative provisions that are destined to safeguard that the companies will always posses property amounting at least the value of its corporate capital. The corporate capital mechanism appears only in companies limited by shares and limited liability companies. So, in personal companies, with or without legal personality, there are not mechanisms of creditors’ protection, other than the personal liability of the partners for corporate debts. If this rule were abandoned, this would lead to serious frustration of legitimate interest of corporate creditors, as well as to lack of confidence and creditworthiness of this type of companies.

The above refer mainly to the civil law partnership only.

Bear in mind that in general partnerships and limited partnerships, that are also personal companies with legal personality, there are specific legislative provisions in the Commercial Code providing for the personal joint and several liability of the partners towards corporate creditors with their personal property.

II. Companies without legal personality

The absence of legal personality leads to the absence of a distinction between corporate assets and personal assets of the partners.

Liabilities towards corporate creditors

So corporate creditors are allowed to seize either corporate assets, or personal assets of the partners, in order to satisfy their claims. Corporate creditors are not under an obligation to seize corporate assets first.

No joint and several liability

Partners, although personally liable towards corporate creditors (i.e., liable with their personal property for corporate liabilities), they are not, however, jointly and severally liable. So, each partner is not liable towards corporate creditors for the whole volume of a debt, but instead he is liable only up to a volume corresponding to his respective share (participation) to the company. This is the rule on civil law partnerships.

Joint and several liability in general and limited partnerships

However, in respect to general partnerships and limited partnerships, each partner is jointly and severally liable towards each and every corporate creditor, even though general partnerships and limited partnerships have legal personality. In general and limited partnerships the rule of joint and several liability towards corporate creditors by each and every partner personally arises from specific provisions of the Commercial Law.

So, we need to mention that in general and limited partnerships (that are companies with legal personality), the legal regime as to liability towards corporate creditors is more strict, than in other personal companies that do not have legal personality. This is because the liability of the partners is joint and several. This stricter legal regime seems to be something abnormal, since one would expect liability to be deduced in companies with legal personality (bear in mind that legal personality was a legal innovation destined to limit liability). However, such stricter legal regime is justified on the basis that general and limited partnerships are destined to serve commercial law purposes, while other personal companies without legal personality may serve civil law purposes also.

Liability in tort

Partners are also liable towards third parties for torts committed by the manager in the context of the management.

Liability against other partners

There is also liability of each partner towards other partners in the context of the legal relationship that is created through the establishment of the company (i.e. a partner may have a claim against other partners for expenses incurred in favor of the company). However, this liability does not extent beyond corporate assets; so, the partners are not personally liable towards each other with their respective personal property, unless the corporate assets are inadequate to satisfy such claims. This means that a partner who takes legal action to satisfy a claim arising from the legal relationship created through the establishment of the company is under an obligation to seize corporate assets first and only if such assets are inadequate he may seize personal assets of other partners.

Share capital – Corporate capital

• mathematical quantity
• fixed amount
• specified in the by-laws
• represents the value of contributions to the company
• can be changed mainly by resolutions by the General Assembly
• different that corporate property (assets)
• it is divided into shares
• (number of shares X face value of the share = share capital)
• minimum capital 60.000 euro / listed companies: 12 m. euro
• it is a mechanism for the protection of corporate creditors, that replaces that absence of personal liability of shareholders for corporate debts
• contributions may be in money, in transferring any type of property rights to the company, in transferring the use of assets to the company

Shares

• it is not obligatory to issue shares
• if issued, shares are negotiable instruments
• the face value of the share can not be less than 0,3 euro, or more than 100 euro

Corporate capital & corporate property (assets)

corporate property exceeds corporate capital

• profits that have been capitalised
• reserves
• increase of the market value of its assets

in such cases it is possible to proceed with an adjustment of corporate capital (increase of corporate capital) by issuing and distributing new shares without collecting new contributions from shareholders

corporate property may be less than corporate capital

• losses

in such a case adjustment of share capital may again take place either by deleting certain shares or by devaluating the face value of shares (decrease of corporate capital)

Corporate capital and creditors protection

Two company law principles render corporate capital a creditors protection mechanism

• The principle of payment of corporate capital
• Specific legal provision safeguard that corporate capital will actually be paid to the company, or, in other words, that the company will actually collect contributions from shareholders
• When the shareholders agree the articles of incorporation and by-laws of the company they undertake a legally binding obligation to pay contributions; if such obligation is absent in the by-laws, then there is invalidity in the process for the establishment of the company
• The obligation to pay contributions to the company must be fulfilled (performed) until the completion of the establishment process; the establishment process is completed when the appropriate public authority (a prefecture) issues an administrative decision to approve the articles of incorporation and by-laws and files such decision with the company registry.
• Payment of contributions that are in the form of money, must necessarily be made through a bank; that is shareholders deposit money in a corporate bank account
• Within two months as from establishment, the Board of Directors must convene and confirm that contributions have actually been paid to the company.
• Non payment of contribution by one or more shareholders is not a ground for invalidity of the company; however, the shares of the shareholder who failed to perform its obligation to pay its contribution should be deleted and the share capital should be adjusted accordingly.
• The public authority (company registry) may revoke its approval for the establishment of the company, if it is proved that contributions have not been paid in full.
• The principle of preservation of corporate capital
  Specific legal provisions safeguard that the company will not dispose off the value that corporate capital represents, or in other words, that an assets value equal to the mathematical quantity of corporate capital will be in the possession of the company at all times
• Corporate property can not be returned to shareholders, either by way of distribution of profits, or by way of return of contributions, if this leads to a deduction of corporate capital. In simple words, unless the corporate property well exceeds the mathematical quantity (or the value) of share capital, plus the value of reserves, the company is not allowed to distribute profits or to return contributions to shareholders
• In case of losses in one financial year, profits of the next year will cover past losses first; in simple words the company is not allowed to distribute profits, before covering past years losses by new profits
• The company can not acquire its own shares
• The company is not allowed to issue new shares at a price below their face value
• However, the company is allowed to make use of corporate capital in the context of its corporate purpose. So when corporate capital is formed by money contributions, the company is allowed to use such money and carry on transactions with it. Of course if such transactions fail, the corporate property will become less than the corporate capital, which will necessitate additional, new funding to increase the corporate capital; otherwise legal problems will arise.

Partial payment of corporate capital

1/4 of the face value needs to have been paid from the beginning

The minimum share capital (i.e. 60.000) has to be paid from the beginning

The time schedule for the payment of pending part of the capital should not exceed 10 years

Transfer of immovable property to the company by shareholders, or members of the Board of Directors within a period of two years as from establishment or as from increase of capital

The ideals to be achieved
a democratic system of shareholders representation

• promoting shareholders interests
• safeguarding minority shareholders interests
• safeguarding corporate creditors interests
• safeguarding interest of other parties who may have an interest in corporate affairs, i.e. employees
• achieving efficiency between operational management and strategic management

Two boards systems

One supervisory board and one management board (this is so in France, Germany and the Netherlands); the supervisory board elect the management board and can not revoke it without cause; certain decisions are reserved to the management board only; the supervisory board may be overruled by a three-quarters supermajority of the management board

Other types of two board systems

• Strategic management board and operational management board
• Management board and executive committees consisting of board and non board members

Single board systems

Single board systems are considered to be less responsive to minority shareholders interests; even in single board systems, members of the board of directors are usually divided to executive and non-executive (independent); in some cases independent members are entitled to take certain decisions in cases where executive members would not be considered impartial.

Revocation of directors

Again there are jurisdictions where elected directors can be easily revoked by the shareholders, i.e. without cause and with ordinary majority voting (France), and other jurisdictions where directors can be revoked only when there is a cause and only with a supermajority voting (U.S., Germany, Japan).

Modern trends in corporate governance

Executive (decision making) committees; the legal issue is whether the law permits full delegation of board powers by the board to committees.

Committees: auditing, nomination, compensation; all these usually consists of non-executive (independent) directors or even non-board members.

Allocation of corporate resolutions among shareholders and the management

In all jurisdictions there is a system of allocation of decision making power between shareholders and the management. Certain major corporate issues, i.e. mergers, amendments of by-laws, etc. are reserved for resolution by the shareholders only; however, the initiative to convene a general assembly of the shareholders to deal with such issues relies with the board of directors. In jurisdictions like the U.S. and Germany the law grants a limited role to shareholders in respect to direct decision making.

Investor protection is the equivalent of consumer protection in the field of capital markets.

Why investor protection?

Because it is essential for the efficient operation of capital markets

Capital markets depend on the confidence of investors; should they loose confidence in capital markets, the large size corporation can not any longer operate as a mechanism for the raising of finance.

Basic methods for investor protection:

• margin requirements for institutional investors
• qualification requirements and standard of conduct for brokers and dealers
• rules on structure and performance of stock exchanges
• regulation of public (listed) companies

General objectives of investor protection:

• freedom of flow and equality of information regarding the listed companies and the value of their respective shares that are traded (quality information is deemed to be the mechanism for fixing reasonable and just prices in a free market like the stock exchange)
• quality corporate governance institutions, so that investors are protected from opportunistic managers or controlling (majority) shareholders

On information

• the company may not reveal all available information in terms of quality and quantity
• investors may not be sophisticated enough to evaluate the information for the purpose of price fixing for listed shares

MANDATORY DISCLOSURE OF INFORMATION

Disclosure of information is a prerequisite for efficient enforcement of many company law basic principles aiming at achieving an equilibrium between conflicting interests within the company (i.e. a general assembly of shareholders is meaningless without efficient information of shareholders)

Disclosure may is required in case of new listings, as well as during the life of a listed company.

The volume of disclosure should mainly depend on whether there will be a public or private (to sophisticated investors only) offering.

What is usually disclosed in case of a new listing:

• use of capital to be obtained (business plan)
• managers and major shareholders
• recent performance of the company during the past years
• financial accounts
• predictions about the future (soft information)
• information about corporate governance issues, ie, type of corporate administration, cash flows to managers and shareholders

CHALLENGING THE MERITS OF AN ISSUE

Regulatory authorities (i.e. the Capital Markets Committee) usually have the power to challenge the merits of a new listing and in this context to forbid listing which seem to be very risky in financial terms

SAFEGUARDING THE QUALITY OF LISTED SHARES

Listing rules are imposed by regulatory authorities.

Listing rules set the prerequisites for listing with a stock exchange.

Some basic listing rules refer to:

• minimum size for corporate issuers, in terns of assets etc
• minimum float for listed shares
• minimum history of public accounts

While rules of company law are mainly addressed to the protection of corporate creditors (i.e. company law rules on the payment and preservation of capital), listing rules are directly addressed to the protection of investors

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by Incredible Networks