In addition to being able to withdraw from a limited liability company (LLC) through sale or cancellation of shares, a shareholder can be subject to withdrawal on reasonable grounds or expulsion, pursuant to Articles 101 and 102, respectively, of the Entrepreneurs and Commercial Companies Law (9901/2008). Both provisions are based on the principle that a partnership can be terminated on reasonable grounds.

In case of withdrawal based on reasonable grounds, the shareholder should notify the company of its decision and demonstrate the reasons for such withdrawal.

Under Article 101(1) of the law, a shareholder can leave an LLC if the other shareholders or the company:

• cause it damages by their actions;
• impede the exercise of its rights;
• impose on it unreasonable obligations; or
• for other reasons, render impossible the continuation of the shareholder's partnership.

On receipt by the administrator of the company of the shareholder's notification, the administrator shall immediately call a general meeting in order to resolve whether the outgoing shareholder will receive liquidation of its shares. If the company fails to convene in a general meeting or finds the grounds for withdrawal and liquidation of the shares to be unreasonable, the outgoing shareholder can initiate court proceedings against the company to claim (i) liquidation of the shares, and (ii) compensation for any damages from the company or the shareholders.

However, if the court finds that there were no reasonable grounds for withdrawal, the withdrawing shareholder must compensate the company for any damages caused.

In cases where the company intends to expel a shareholder, under Article 102 of the law, a general meeting can issue an ordinary decision to ask a competent court to expel the shareholder and for compensation for any damages caused by the shareholder if the shareholder has:

• failed to pay its contributions as provided by the company bylaws;
• inflicted damages on the company or other shareholders deliberately or through gross negligence;
• violated the company's bylaws or legal obligations deliberately or with gross negligence;
• become involved in an undertaking that renders impossible the business undertaking between the shareholder and the LLC; or
• damaged or hindered the company's business to a significant extent through its actions.

If the court rules that the claim for expulsion is not reasonably grounded, the shareholder shall be entitled to compensation for any damages from the company. Alternatively, it will not be entitled to seek liquidation of its shareholding but may offset any amount that would otherwise be due as liquidation of its share against any claim for compensation submitted by the company.

All the rights deriving from the shareholder's membership in a LLC shall terminate on the date of withdrawal or the final court ruling regarding the withdrawal or expulsion..

For further information, contact:

Bers Hado
Boga & Associates
Tel: +355 4 225 1050
Email: bhado@bogalaw.com
www.bogalaw.com

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