LEGISLATIVE DECREE 2687/1953
"On the Investment Protection of capital from Abroad"
In order to foster the development of industry and the economy in general, an effort has been made to create a favorable investment climate by the promulgation of Legislative Decree 2687/53 "on the investment and protection of capital from abroad". The decree has increased legislative force given that it is based on article 112 of the 1952 Constitution and, subsequently, article 107 of the Constitution.
The Constitution provides increased protection for imported capital and safeguards the benefits granted
to such capital.
According to Legislative Decree 2687/1953, capital may be imported in all forms, such as: exchange, machinery, materials, inventions, technical methods, trade and industrial marks (provided the capital is used in productive investments or the marks designate industrial or commercial products). The term "improved capital" refers not only to the capital initially imported but also to the capital subsequently imported for the investment.The relevant decision of approval may also consider the profits realized, or a part thereof, as imported capital, provided they are re-invested in the enterprise.
Productive investments are considered to be those which aim at the development of national
production or which contribute in any way to economic progress. The term "productive investment" is broadly defined so as to cover all forms of economic activity in Greece, thereby enabling the competent Greek authorities (Ministries, Prefectures, etc) to examine and accept all types of proposals related to the investment of foreign capital.
Prospective investors submit applications for the approval of the importation of capital to the National Economy MInistry. The application must be accompanied by the following:
a) Technical/financial study.
b) Completed questionnaire (available from the National Economy Ministry).
c) Articles of Association (in the case that the company has already been formed).
d) Balance sheets for the last two financial years (in the case of investments involving expansion and modernization of a unit which is already operating).
e) In the case of investments involving tourist facilities, a certificate is required from the National Tourist Organization of Greece attesting the suitability of the site chosen.
The application is forwarded to a special committee (formed in accordance with the law) which subsequently issues its opinion.
If the committee's opinion is favorable, an act of approval is issued in the form of a Presidential Decree or ministerial decision (according to the importance of the investment), which is then published in the Government Gazette.
The aforementioned act of approval is irrevocable. The irrevocability of the act constitutes the guarantee of the Greek state to the investor who imported the capital which, following approval, becomes irrevocably subject to the provisions of Legislative Decree 2687/53. Any alteration to the terms of the act of approval may be made only with the consent of the investor.
Decisions of approval contain all the terms pertaining to the investment, such as: its type, the branch of production to which it belongs, the legal form of the company, the type of capital to be imported, the method of evaluating the capital in the event that it is imported in kind, the time period over which the capital is to be imported and the duration of the investment.
They also contain the specific terms governing the repatriation and servicing of the capital and the type of exchange, the Greek products to be exported, the penalties in the event that the terms of the act of approval are not adhered to , etc.
a)According to article 5 of Legislative Decree 2687/53, it is not permitted to repatriate capital before the lapse of one year from commencement of the company's productive activity and at all events, not until one year has passed since its importation.
b)The export of profits realized is effected with exchange issued by the commercial banks which are responsible for checking the legality and authenticity of the transactions.
In the case of companies which go into liquidation, an earlier time limit may be set for the repatriation of capital than that stipulated above (a).
When machinery or other forms of capital from abroad are leased, the rental which is stipulated in the act of approval may be transferred abroad in foreign exchange.
Duly authorized banks are obliged to issue the foreign exchange necessary for fulfillment of exchange obligations. For the purpose of repatriating the proceeds from liquidation and exporting profits, interest, dividends or installments for the servicing of debts, drachmas are converted into foreign currency at the rate of exchange applicable on the day of transfer.
Major tax allowances are granted to enterprises which fall under Legislative Decree 2687/53(1) and are considered to be of
national importance.
It is also permitted for such enterprises:
a)To hire foreigners as technical and administrative personnel, the remuneration of whom may be sent abroad in foreign exchange.
b) To export share certificates.
c)Keep account books with entries in a foreign currency.
Companies which are established with capital from abroad enjoy the same benefits as similar Greek
companies.
(1) Legislative Decree 2587/53 aimed at providing strong incentives in order to attract large-scale
industrial investments while at the same time safeguarding (even Constitutionally) their rights and privileges etc. Indeed, the decree resulted in large-scale investments such as those by the French multinational Pechiney (bauxite, alumina, aluminum), Esso-Pappas in Thessaloniki (refineries, petroleum products) which later became Greek Fuels and Mineral Oils (EKO)
In those cases where the present institutional framework provides for more favorable incentives etc (than those provided under Law 2687/53) the more favorable incentives are applicable.
In the case that terms are approved for a company which has been established with capital from abroad in accordance with Legislative Decree 2687/53 which are more favorable than those approved for a similar company which was established in the past in accordance with the same legislative decree, the more favorable terms may be extended to the later company at the request of the party concerned, by amendment of the relevant act of approval.
The assets of companies which have been made eligible for the provisions of Legislative Decree 2687/53 are exempt from all compulsory expropriations.
The requisition of the above companies 'assets is prohibited. According to the Constitution such requisit
ion is permitted only for the needs of the Armed Forces in time of war and only for as long as the conflict lasts.
In such cases, the company is awarded fair compensation for the use of its assets by the Greek state for the duration of the requisition. The size of compensation is determined by joint agreement between the Greek government and the company concerned. If the company does not accept the terms of the requisition, it may demand full compensation for the value of the requisitioned assets, the exact size of which is determined by agreement between the government and the beneficiary.
Settlement of Disputes
Disputes which may arise between the Greek government and companies which fall under the provisions of Legislative Decree 2687/53, concerning the interpretation or possible omissions in the act of approval, are resolved by arbitration as prescribed in the act. It is permitted to appoint as umpire a foreign natural or legal person, having an official capacity or of recognized legal standing (see Law 608/1968 "on the settlement of disputes pertaining to investments between states and citizens of other states").
According to Legislative Decree 2687/53, vessels meeting the following requirements are considered to constitute capital from abroad:
a)Greek -registered vessels.
b)Vessels of over 1,500 GRT.
The act of approval may contain terms by way of derogation from the provisions of law currently in force. In particular, it may contain terms referring to:
a)The age of Greek-registered vessels.
b)The constituting and registration of mortgages on vessels, by way of derogation from the provisions of article 243-262 of the Commercial Code and the relevant provisions of the Civil Code.
The enforceability in Greece of the decisions of foreign courts and documents drawn up by foreign notaries public and employees, without adherence to the enforcement provisions which are normally observed by the Greek courts, by way of derogation from the provisions of article 966 et. seq. of the Code of Civil Procedure.
The rights of mortgages, particularly those concerning their satisfaction on a preferential basis, e.g. the compulsory management of a mortgaged vessel or its sale by auction or otherwise.
In accordance with the above, the act of approval may contain terms providing for:
a)The liberty to sell and mortgage the vessel to foreigners, the nationality of whom shall be stipulated in the act of approval, without the prior permission of the administration.
b)The freedom to dispose of the foreign exchange from the sale of the vessel or of the amount of insurance compensation in the case of an accident or of the amount from a loan secured by a mortgage on the vessel, without the obligation to import the corresponding amounts in foreign exchange.
c) The freedom to dispose of the income from the vessel without any restriction.
d)Reduced contributions to the Merchant Seamen's Fund (NAT).
e)The recognition of vessels belonging to foreigners as Greek.
f)The calculation of tax and duty on the transfer of the vessel sold to foreigners, in proportion to its net registered tonnage, at a maximum of 2 dollars per net registered ton.
g)The fixing of the amount of compensation in the event the vessel is requisitioned.
h)The settlement of disputes which may arise from the implementation of the act of approval by arbitration.
In addition to the above terms, the act of approval may also contain others. The act will also stipulate the penalties to be imposed in the event that the said terms are contravened.
Greece and E.U. countries (Presidential decree 207/87)
Presidential Decree 207/87, which amended and replaced Presidential Decree 170/86, provides for the free movement of capital between Greece and the other .E.U. member-states.
Greece and non-E.U. countries
Act 825/86 of the Governor of the Bank of Greece regulates the movement of capital imported by residents of non-E.U. countries for direct investments in Greece, as follows:
a)The importation must be approved by the bank of Greece which carries out checks concerning the type, authenticity and lawfulness of the investment.
b)Before issuing exchange for the repatriation of the proceeds from the liquidation of an investment or the export of profits, dividends, interest and debt servicing instalments, the banks carry out checks to verify that the imported capital has been lawfully used and that the various transactions were authentic.
c)It is permitted to export accumulated interest, profits and dividends.
Direct investments are considered to be all types of investments carried out by natural persons, commercial, industrial or financing companies.
For the purpose of exporting profits, interest, dividends etc., drachmas are converted into foreign currency at the rate of exchange applicable on the date of transfer abroad.
Direct investments may be of the following type, inter alia:
a)Establishment and expansion of branch offices or new enterprises.
b)Participation in new or existing enterprises with the aim of establishing or maintaining long-term financial ties.
c)Long-term loans.
d)Reinvestment of profits.
In order for imported capital to be made subject to the provisions of Act 825/25.7.86 of the Governor of the Bank of Greece, the following supporting documents must be submitted to the appropriate department of the Bank of Greece.
a)Application from the prospective investor or the recipient of the capital, containing details of the parties concerned, the purpose of the importation of the capital, the type of investment etc.
b)Articles of association of the Greek company which is to use the capital.
c)Any other supporting documents (e.g. financial or technical/financial study, balance sheet etc.) showing the future or present activity and profitability of the investment.
The procedure for making imported capital subject to the provisions of the above acts is straightforward and applications are usually approved within two to three weeks.
Apart from act 825/86 of the Governor of the Bank of Greece , the movement of capital between Greece and non-E.U. countries is also governed by the following acts:
1.Act 1178/12.11.87 of Governor of the Bank of Greece . Repatriation of capital which has been imported from non-E.U. countries for the purchase of securities listed on the Stock Exchange.
2.Act 2022/28.1.92 of the Governor of the Bank of Greece. Transfer abroad of profits originating from investments in Greece by residents of non-E.U. countries.
3.Act 2024/28.1.92 of the Governor of Bank of Greece. Lifting of restrictions on the issuing of foreign exchange for the transfer abroad of property rentals.
4.Act 2098/7.7.92 of the Governor of the Bank of Greece. Liberalization of current transactions with other countries.
5.Act 2021/28.1.92 of the Governor of the Bank of Greece. Lifting of restrictions on the issuing of exchange to residents of Greece traveling abroad for commercial, professional, scientific and official reasons.
6.Act 2092/11.6.92 of the Governor of the Bank of Greece.Acquisition by residents of Greece of shares, bonds and certificates of participation issued by legal persons based in non-E.U. countries.
7.Act 2093/11.6.92 of the Governor of the Bank of Greece.Investments by residents of Greece in real
estate located within the territory of non-E.U. countries.
8.Acts 2019/28.1.92 and 2044/4.3.92 of the Governor of the Bank of Greece.Lifting of restrictions on the issuing of tourist exchange to residents of Greece traveling to non-E.U. countries.
9.Act 2020/28.1.92 of the Governor of the Bank of Greece.Liberalization of payments effected with the use of cards by residents of Greece traveling in non-E.U. countries.
10.Act 2023/28.1.92 of the Governor of the Bank of Greece. Transfer of pensions to beneficiaries who
have established themselves abroad.
11.Act 2025/28.1.92 of the Governor of the Bank of Greece. Lifting of restrictions on the issuing of foreign exchange to residents of Greece for the purpose of studying at institutions of education abroad.