Chicago Journal of International Law


A traditional subject matter falling under the general heading of our Article is related to the Greek and European legislators' reaction towards the negative consequences and unfair practices in which intragroup transactions may result. Such transactions may result in detriment to shareholders, employees, and creditors, as well as of the state's interests regarding taxation policies. Currently, these considerations are not fully addressed by the traditional legal regime in Greece; as a result, discussion is still in progress. At an EU level, the recent legislative initiatives-in particular Directive 2002/87/EC on the supplementary supervision of credit institutions, insurance undertakings, and investment firms in a financial conglomerate-seek to introduce specific prudential legislation for financial conglomerates. These directives also take the first steps to align the legislation on the European level with national laws concerning financial groups and financial conglomerates in the same sector, thus ensuring a minimum level of equal treatment of these groups throughout the European Union. The main objective, however, of the new EU regime is to ensure that separate state regulators-who typically focus on one sector in order to ensure capital adequacy of the entities under their supervision-are not hindered because of the existence of cross-sector financial conglomerates. This requires specific measures which will prevent situations, for example, where capital is used at the same time as a buffer against risk in two or more entities belonging in the same financial conglomerate ("multiple gearing") and situations where a parent company issues debt and directs the proceeds as equity to its regulated subsidiaries ("excessive leverage"). [CONT]