background image
50
T H E P R I M E R U S P A R A D I G M
Filippos Ziras
Companies by definition are collections
of individual entities (physical or legal)
that are organized into groups and share
a common goal, usually to amass as
much capital as possible for the benefit
of the entity itself and the people or
organizations they are comprised of.
A business deal between any of the
aforementioned entities and the company
itself is called a "Related Parties
Transaction." Often criticized as a gaping
wound on the body of modern globalized
capitalism, KPMG consulting firm sees
them as "an integral part of day-to-day
business for many entities."
Corporate governance (CG) was first
introduced in the Greek legal framework
with the 3016/2002 law which was
a result of all the research done on
corporate governance in our country
up to that date. The fact that it consists
of only five pages is indicative of the
sketchy work done by the government.
A more serious attempt to codify the
behavioral system of listed companies in
Greece has been done by the Hellenic
Federation of Companies (HFC) in
2011. The problem in this case is that
HFC could only recommend exemplary
behavior and could never sanction
the disobedience of a listed company
to its indicative rules. In 2011 HFC
proceeded with the publication of
a new reformed code that promoted
best practices and is based on the
Organization for Economic Cooperation
and Development (OECD) regulations
on CG and on the directive 2006/46/EC.
This text is much closer to international
standards and indicates the need for
Greece to modernize its CG system.
Apart from these texts, Greece also
complies to the IAS-24 regulation which
has become internal mandatory law.
A good way to evaluate the financial
way of thinking for a certain population
is to observe how minor shareholders
prefer to play the game. Greek minor
shareholders are risk averse. They prefer
to invest in major low risk companies
with shares of low market value. Is it
because they have no trust in smaller
companies that have no formulated
regulations about its governance and in
which they have no managerial say or is
it because they prefer shares that have
almost no default risk? I believe it's
the latter.
The positive news coming from recent
studies indicates that Greece is starting
to abandon the classical concentrated
model and is converging towards the
Anglo-Saxon model. This may be a result
of the severe economic crisis that has
tortured Greece for the last six years
and the series of privatizations of public
companies, but it still is a step forward.
The domestic implementation of a large
number of European Union directives,
regulations and communications; the
rise of diversified capital needs of
Greek corporations within the new
international environment of intensified
financial competition; and the gradual
transformation of domestic corporate
culture brought significant change in
corporate relations and behavior.
In the past decade, the absence of
relations between CG and corporate
scandals stalled the debate about CG
in Greece. The solution of auditing and
legal measures seemed to be sufficient.
Corporate Governance in Greece and
Related Parties Transactions
Europe, Middle East & Africa
Filippos Ziras is an associate at Karagounis & Partners, where he
specializes in corporate law, transportation and land logistics, claims
and competition.
Karagounis & Partners, Law Offices
18, Valaoritou Street
Athens, Greece 10671
+30 21 30 390 000 Phone
+30 21 30 390 088 Fax
filippos.ziras@karagounislawfirm.gr
www.karagounislawfirm.gr