In brief: liability for securities law violation in Greece

Liability

Who may be primarily liable for securities law violations in your jurisdiction?

Each piece of securities legislation provides separately for the liable persons in combination with general tort provisions.

Law 4443/2016 provides that any person violating the framework on insider dealing, unlawful disclosure of inside information and market manipulation (market abuse) is liable and subject to either administrative or punitive sanctions. According to article 37 administrative sanctions can also be imposed on legal entities that benefited from the infringements.

Under Law 4514/2018, transposing MiFID II credit institutions or investment service providers may be held liable if they fail to adequately inform the investors of risks involved in their investment decision.

Auditors or accountants may be accountable if they fail to comply with accounting standards (International or Greek) when preparing financial statements and audit report or with the confidentiality duty.

According to law 4706/2020 the issuer, the offeror, the person requesting the listing of the securities for trading on a regulated market or the guarantor, the directors of the aforementioned if they are legal entities, the financial institution that provides the underwriting of financial instruments and the consultant for the issuance of the prospectus may be held liable for untrue or misleading statements or omissions in prospectuses .

Law 3461/2006 on mandatory public offerings provides for the liability of the offeror should the offeror fail to launch a mandatory bid under said provisions. It also foresees the civil liability of the offeror, the advisor and the persons responsible for the issuance of the prospectus when they fail to comply with the obligation to issue an accurate and complete prospectus.  

The provisions of Law 3556/2007 establish obligations for a regular flow of information by the security issuers to the investors.

Are the principles of secondary, vicarious or ‘controlling person’ liability recognised in your jurisdiction?

Yes, these principles of liability may be recognised on the basis of the agency theory. The direct targeting of a controlling interest is envisaged in the mandatory public offerings. 

What are the special issues in your jurisdiction with respect to securities claims against directors?

The Greek corporate governance framework has mostly developed through Law 3016/2002, which was intended to foster transparency and investors’ confidence. However, corporate failures and global financial scandals have increased debate around corporate governance in Greece, increasing awareness that proper corporate governance mechanisms are fundamental to the efficient operation of capital markets. The introduction of Law 4706/2020 was a natural consequence of this. It aims to achieve real convergence with the business systems of the developed world. The new law introduces detailed duties and responsibilities of a board of directors, such as the implementation, monitoring and assessment of the corporate governance system and the successful operation of an internal auditing system in order to prevent, among other things, conflicts of interest. The requirement of a Fitness and Propriety policy for the members of the board of directors was also introduced. Such a policy has to be unambiguous and sufficiently detailed to respect the principles of transparency and proportionality and must be in accordance with the Operating Regulation and the Corporate Governance Code that the company follows.

Breaching this new law’s provisions can result in fines of up to €3 million. It aims to eliminate significant phenomena of that result in the underperformance of the capital markets.

Also, directors may be held liable under the statutory provisions on market abuse (Law 4443/2016) in cases of:

• insider dealing arising when a director possesses inside information and uses that information by acquiring or disposing of financial instruments to which that information relates;
• the unlawful disclosure of inside information when a director possesses inside information and discloses that information to any other person; and
• market manipulation.

Breaches of the periodic and ongoing information requirements for security issuers pursuant to Law 3556/2007 may grant investors a claim against directors on the basis of tort provisions.

Further, the directors’ involvement in the preparation and issuance of the prospectus, either under Law 4706/2020 provisions on prospectus liability or under Law 3461/2006 on mandatory public offerings, may result in them being held liable.

Additionally, investors may bring a claim against directors under tort provisions on the basis of securities fraud.

What are the special issues in your jurisdiction with respect to securities claims against underwriters?

Law 4706/2020, implementing the Prospectus Regulation No. 2017/1129, provides for the express liability of underwriters for the preparation and issuance of the prospectus and the information contained therein.

When the investor incurs damage from the underwriter with respect to the provision of investment services, the underwriter may be held liable under the Consumer Law provisions.

Investors may also seek protection under the Consumer Law provisions (Law 2251/1994) in cases involving unfair commercial practices (mainly by financial institutions, in the majority of cases brought before Greek courts).

What are the special issues in your jurisdiction with respect to securities claims against auditors?

Investors may bring an action against statutory auditors and audit firms in any of the following cases:

• the damage was incurred by the use of the audit report (ie, failure to comply with international or Greek accounting standards);
• for the incorrect, misleading or omitted information contained in corporate documentation that the statutory auditor or audit firm was obligated to review (eg, the prospectus); or
• for the violation of the strict rules on confidentiality and profes­sional secrecy.

The compensation awarded by the court cannot be more than ten times the audit fee.

Law stated date

Give the date on which the information above is accurate.

19 February 2021.