Home / National Industrial Relations / Countries / Greece / Financial Participation / Legal Background

Financial Participation

In the 1970s, legal provisions for employee financial participation were adopted. Further laws were implemented successively in 1984, 1987, 1990 and 1994, providing tax incentives for both employees and employers.

From 1974 (Law 396/1974) companies transferring shares to their own employees enjoyed favourable tax treatment, provided the shares remained non-negotiable for 5 years after transfer.1 Starting with 1984, several other laws were adopted up till the mid-1990s, providing positive incentives for employee financial participation on both the employee and employer side.

Since 1984, shares transferred to employees in the form of donations or legacies benefit from advantageous tax treatment, provided that they are not traded for a period of 5 years following transfer. Before these provisions could be implemented systematically, the first stage was to allow companies to purchase their own shares to be distributed to their employees. The preliminary conditions for participation schemes were defined by Law No. 1682/1987. The distribution of shares to the employees was covered by Law No. 1731/1987. As from the early 1990’s, companies were thus allowed to release shares to their own employees or those of their subsidiaries.

The distribution of shares was based on a resolution passed by the general meeting. The following forms could be chosen to acquire own stock and redistribute it:2

a) Purchase of shares on the stock exchange

Stock options were offered to employees, i.e. there is a share purchase right to be exercised within 5 years. Up to a maximum of 10% of a company’s share capital (including the stock options) could be distributed to employees and the shares had to be distributed within 12 months following the general meeting’s decision.

b) Capital increase by issuing new shares

The share of profits to be used for the capital increase (followed by the issuing of employee shares covering the capital increase) could not exceed 20% of the total. The shares cannot be transferred for three years without the consent of the general meeting. After this period, the shares become anonymous and are freely transferable. For employees, income from these shares were exempt from taxation and social security contributions. The dividends and interest paid on the shares distributed to personnel are liable to income tax. For the company, share capital distributed to employees is not taxable, but must not exceed 20% of profits.

Compared with the rest of Europe, legislation in this area is very complex, being based on several difference legal sources and with restrictive terms and conditions governing the introduction of participation schemes in joint-stock companies. Even before the economic and financial crisis this tended to prevent employee financial participation from becoming more widespread.3

Wilke, Maack and Partner (2014) Country reports on Financial Participation in Europe. Prepared for www.worker-participation.eu. Reports first published in 2007 and fully updated in 2014.