GREEK LAW DIGEST

196 What happens if there is a conflict between the Articles of Association and a Shareholders Agreement? As mentioned hereinabove, the Shareholders Agreement is an Agreement between Share- holders and is binding only between the parties that have signed it. The Articles of Associa- tion, from the other hand, is a document that is binding vis-à-vis all the shareholders and to some extent vis-à-vis third parties. So, to take one example, if there is a first refusal right in the Articles of Association, if not respected then the transfer of shares is null and void. On the other hand, if such right (first refusal) is provided for in the Shareholders Agreement and not respected, this does not affect the validity of any transfer, it only creates a right for damages (or whatever other sanction the parties have agreed upon) between the contracting parties. In view of the above how can a Shareholders Agreement be enforced? As any contract, the Shareholders Agreement can be enforced through courts or arbitration. The contractingpartymay be obligedby court ruling or by arbitral award to buy or sell through or perform the contract in a feasible way. Also, any violation of the Shareholders Agreement creates a liability of the violating party for indemnity or agreed penalty. This means that the party who has suffered damages can seek compensation before the Civil Courts or the Arbitra- tion Tribunal. In order to avoid having to prove the amount of damage, usually the Sharehold- ers Agreement has specific monetary penalty clauses in cases of defaults (e.g. if one sells the shares although subject to a first refusal right, the agreed penalty may by equal to their value). DRYLLERAKIS &ASSOCIATES, since 1971 5, CHATZIGIANNI MEXI STREET 115 28 ATHENS Tel.: +30 211 00 03 456 Fax: +30 211 00 05 200 E-mail: lawoffice@dryllerakis.gr Url: www.dryllerakis.gr Languages English, German, French, Italian Contact John C. Dryllerakis jcd@dryllerakis.gr Emmanuel J. Dryllerakis ed@dryllerakis.gr AREAS OF PRACTICE SPECIALIZATION IN CORPORATE LAW Banking & Finance Competition Corporate/M&A Distributorship Energy Environment & Planning European Law Foreign Investment Gaming Law Employment Law Litigation & Arbitration Privatisation and Projects Real Estate Securities & Stock Exchange Tax Trade Marks - Establishment of companies. “One-stop shop” procedures - M&A cases - Legal Due Diligence procedures - Setting up Joint Ventures. Shareholders agreements - Legal opinions and day- to-day advice (all aspects of corporate works, stock option schemes, corporate governance compliance, data protection etc) - Secretariat of the Board of Directors of major clients - Handling disputes between shareholders - Compliance with Stock Exchange & Capital Market regulations