Ch. Kapourani - Shareholders' Agreements: The Parallel Order in the S.A. – What the Articles of Association Don't Say

Legal insight

February 2026

Christina Kapourani, ΜΔΕ (mult.), Pgcert, Ph.D. Candidate.

Summary – Introduction: Shareholders' agreements are contracts concluded between shareholders of a Société Anonyme (S.A.), aimed at regulating their relationship with respect to the exercise of corporate rights, company management, share transfers, and, more broadly, shaping corporate policy and power balance among the parties. Although these agreements are not, in principle, incorporated into the company’s articles of association and are not subject to its publicity requirements, they play a decisive role in practice, especially in investment-heavy corporate structures, joint ventures, family businesses, or generally where majority and minority shareholders with divergent interests coexist. This paper provides a brief overview of the nature of shareholders' agreements in the S.A., their enforceability vis-à-vis the articles and mandatory law (i.e., can a shareholders' agreement produce legal effects even if it contradicts the law or the articles?), as well as their judicial treatment, with emphasis on their practical consequences for shareholders and investors.

I. Purpose and Basic Content of Shareholders' Agreements:

a) Purpose: Shareholders' agreements developed in practice due to the lack of a contractual relationship between the company and shareholders and the potential broad dispersion of shares that necessitates further protection for certain shareholder/investor categories. These parties usually seek to secure control and participation in the company beyond the formality and rigidity that characterizes S.A. law. Primarily, such agreements aim to exploit gaps in the articles to ensure uniform conduct among participants, particularly through commitments to vote in a specified manner.

Thus, these agreements aim to: i) create a framework parallel to the articles that shapes corporate affairs, usually by overriding or modifying them, and ii) bypass strict statutory and bylaw provisions by defining corporate matters (especially shareholder rights) in favor of the parties to the agreement.

b) Content: The content usually includes provisions concerning the company’s governance, decision-making on significant matters, share transfer restrictions, crisis management clauses, applicable law, jurisdiction, etc. A basic classification includes:

i. Corporate governance, management, and institutional control: Provisions on the composition and operation of governing bodies, management and representation, signing rights, and shareholders' rights to appoint, replace, or remove key management (removal rights). Transparency and oversight mechanisms through information and audit rights. Control is often a condition for investor participation, financing, guarantees, or credit provision.

ii. Allocation of decision-making powers and reserved matters (consent/veto rights): The agreement’s control core typically includes decisions requiring supermajority or express consent of specific shareholders, covering key business actions like borrowing, granting security interests, significant investments, change of corporate purpose, budget/operational plan approvals, and related-party transactions.

iii. Financing, capital support, and financial policy: Economic arrangements sustaining the envisioned investment/business plan, such as financing methods, capital increases, shareholder loans. Often includes pro rata obligations in future financing, crisis avoidance mechanisms, distribution policies, etc.

iv. Share transfers and restrictions: Ownership rules and restrictions such as lock-up periods, rights of first refusal/offer, permitted transfers to affiliates, pledge/assignment restrictions. To protect rights in future changes of control, clauses like tag-along (minority joins majority sale) and drag-along (minority is compelled to sell) are included, as well as call/put options and share valuation methods.

v. Protective clauses, deadlock resolution, and dispute framework: Clauses protecting company value, such as non-compete clauses, repurchase clauses with defined value. Penalties or liquidated damages for breaches, notices, dispute resolution mechanisms with applicable law and jurisdiction/arbitration.

II. Binding Nature of Shareholders' Agreements: They are obligations between contracting parties and do not bind the company unless it is a party or the agreement is statutorily incorporated. They cannot, by themselves, amend the articles or produce direct corporate effects. Breach gives rise to civil claims (damages, penalties, forced share transfers) without automatically invalidating corporate decisions. Their validity is subject to general legal provisions (Civil Code: 177, 178, 179, 180, 181, 183, 184, 281).

Such agreements aim to influence corporate matters in a seemingly lawful manner, which may diverge from the law and articles. However, not every conflict with the law or articles renders an agreement invalid. A shareholders' agreement remains valid (even if conflicting with statutory or bylaw provisions) when it:

• Does not violate the core functioning of an S.A. (e.g., operation and authority of mandatory bodies like the General Assembly and Board of Directors);

• Does not violate general principles of corporate law (e.g., minority protection, shareholder equality, fiduciary duty);

• Is not against good morals and does not conceal vote buying, excessive commitment (e.g., perpetual transfer prohibition);

• Does not conceal a criminal act (e.g., money laundering).

III. Judicial Treatment of Shareholders' Agreements: Greek courts consistently uphold the principle that shareholder agreements are separate from the articles. For example:

• Supreme Court decision 1121/2006 ruled that a shareholders' agreement binds only its signatories and has no corporate law consequences or binding effect on a non-signatory S.A.

• Court of Appeal of Athens 2805/2021 considered a share purchase agreement and shareholders' agreement as a unified contractual framework, interpreted per the economic intent of the parties (Civil Code articles 173 and 200). Breach allowed withdrawal and restitution due to unjust enrichment (article 904 Civil Code).

• Court of Appeal of Thessaloniki 1177/2019 held that invalidity of one clause does not nullify the whole agreement unless the parties would not have contracted without it (article 181 Civil Code). Shareholders' agreements are valid obligations among parties and do not affect the validity of corporate decisions taken contrary to them.

The court also held that statutory rights of the General Assembly (e.g., to remove/replace officers) cannot be restricted directly or indirectly through economically burdensome terms. Shareholders' agreements are useful for co-management but must respect mandatory corporate governance provisions.

IV. Conclusion: Experience shows shareholders' agreements are effective only when clearly structured and substantively targeted. Otherwise, they weaken in practice and are difficult to enforce judicially. While they do not replace the articles or produce direct corporate effects, they are vital tools for regulating corporate power and ensuring investment balance, with corresponding business benefits.