Country snapshot

Trends and climate

What is the current state of the M&A market in your jurisdiction?

Although the M&A market continues to be affected by the macroeconomic conditions in Greece, M&A activity appears to have increased over the past year. Relevant transactions include:

  • the conclusion of the privatisation of 14 Greek regional airports by concession of their financing, upgrade, maintenance, management and operation to two special purpose vehicles owned by Fraport AG and Slentel Limited;
  • the sale of 100% of the Greek railway services operator Trainose SA to Ferrovie dello Stato Italiane;
  • the cross-border merger of Cenergy Holdings SA with Corinth Pipeworks Holdings SA and Hellenic Cables SA Holdings of the Viohalco Group of leading metal processing companies;
  • the acquisition by Atlas Merchant Capital LLC through its affiliated investment fund Atlas Merchant Capital Fund LP of 100% of Credicom Consumer Finance Bank SA;
  • the acquisition by CVC Capital Partners of the majority shareholding in Perseus Health Care SA (the company operating Metropolitan Hospital, one of the largest private hospitals in Greece);
  • the acquisition by Home Holdings SA (a special purpose vehicle of TEMES SA and D-Marine Investments Holding BV) of the majority shareholding in Ionian Hotel Enterprises SA (the company owning Hilton Athens);
  • the purchase by PUIG (a Spanish group with global activities in fashion and fragrance) of a majority equity stake in Apivita (a large Greek cosmetics company);
  • the acquisition by Sklavenitis (the company owning the biggest chain of Greek supermarkets) of Marinopoulos SA supermarkets, through an agreement for the rehabilitation of the latter; and
  • the sale of the subsidiary of IASO SA, IASO General, the owner and operator of a general hospital, to Hellenic Healthcare, a Luxembourg company controlled by CVC. 

Have any significant economic or political developments affected the M&A market in your jurisdiction over the past 12 months?

The government has adopted the legislative measures required for the conclusion of the second review of the Third Economic Adjustment Programme, under which Greece is provided financial assistance of up to €86 billion by the European Stability Mechanism. The first review of the programme was concluded in June 2016. The programme began on August 19 2015 and is scheduled to run until August 20 2018. In order for the financial assistance to be provided and sustainable economic growth to be secured, Greece must implement a number of measures and reforms conducive to increased competitiveness and investment, including reforms in the labour, product and energy markets, as well as  privatisations. On 22 May 2017, a preliminary technical agreement was reached between Greece and the Institutions in the context of the second review of the Third Economic Adjustment Programme, which had officially started in October 2016. On 22 January 2018, the Eurogroup welcomed the implementation of almost all of the agreed prior actions for the third review of the Third Economic Adjustment Programme, following the staff level agreement on the policy package that was presented to the 4 December 2017 Eurogroup. A small number of prerequisite reforms from the third review is still pending and the Eurogroup called on the Greek authorities to complete them in the following period. The reforms are expected to positively affect M&A activity in the country.

On the other hand, the cash withdrawal and capital transfer restrictions originally applied in July 2015 are still in effect, although partially relaxed. The restrictions may in certain cases adversely affect transactions which include the transfer of Greek-source money abroad.

Are any sectors experiencing significant M&A activity?

The retail, metal, hotels and healthcare industries are experiencing significant M&A activity. In addition, a considerable number of privatisation projects are either underway or have been recently completed.

Are there any proposals for legal reform in your jurisdiction?

The Council of the European Union recently adopted new rules on prospectuses for the issuing and offering of securities. Replacing Directive 2003/71/EC of the European Parliament and of the Council, the new regulation sets out to simplify administrative obligations related to the publication of prospectuses. Most provisions will apply 24 months after entry into force. Directive 2017/828 of the European Parliament and of the Council of 17 May 2017 amending Directive 2007/36/EC as regards the encouragement of long-term shareholder engagement  has been published .

In addition, there is a proposal to reform Codified Law 2190/1920 on sociétés anonymes – the most prominent type of corporate institution in the Greek legal system. The proposal seeks to address both technical issues and the need to modernise the law by:

  • removing the provisions regarding governmental supervision of the implementation of corporate law that cause bureaucratic impediments;
  • introducing linked notes and warrants to the securities that can be issued by sociétés anonymes;
  • providing for single-member boards of directors and staggered boards;
  • creating flexibility with regard to the general meetings of shareholders by permitting decision-making without holding a meeting and introducing entirely remote meetings;
  • introducing new shareholders’ rights, including the right to be individually informed of the company’s capital structure and individual holdings;
  • removing the liquidation stage after the dissolution of a company in cases where the company has no assets;
  • allowing Greek sociétés anonymes to use the law of their registered office instead of the law of the centre of their effective management; and
  • encouraging dispute resolution through arbitration and mediation procedures.

A draft of the proposal was delivered in April 2015 by the working group established for this purpose. The working group was reactivated in March 2018 and the draft law is expected to be adopted by June. If adopted, the new Codified Law 2190/1920 will constitute a wholesale change of Greek corporate law.

Legal framework

Legislation

What legislation governs M&A in your jurisdiction?

No specific legislation governs M&A activity in Greece. However, in relation to M&A transactions, the following laws generally apply:

  • for corporate aspects of transactions – Codified Law 2190/1920 on sociétés anonymes, Law 4072/2012 on private companies and Law 3190/1955 on limited liability companies;
  • for competition law issues – Competition Law 3959/2011 and the EC Merger Regulation (Council Regulation (EC) 139/2004);
  • for takeover bids in listed companies – Law 3461/2006 transposing Directive 2004/25/EC of the European Parliament and of the Council;
  • for information obligations in case of acquisition of significant holdings in listed companies – Law 3556/2007 transposing Directive 2004/109/EC of the European Parliament and of the Council; and
  • other special provisions of civil, commercial and tax law – Law 2166/1993, Legislative Decree 1297/1972 on tax incentives for business transformations and thus encourages M&A activity, and the Income Tax Code (Law 4172/2013), which provides tax incentives in certain M&A cases.

Regulation

How is the M&A market regulated?

Greece has no general M&A market regulator. Specific issues regarding takeover bids are regulated by the Hellenic Capital Market Commission, while concentration issues are dealt with by the Hellenic Competition Commission.

Are there specific rules for particular sectors?

Prior approval must be obtained to acquire holdings in:

  • financial institutions – approval must be obtained by the Bank of Greece;
  • credit institutions – approval must be obtained by the Bank of Greece and, where the credit institution ranks among the four systemic Greek banks (ie, the National Bank of Greece, Alpha Bank, Piraeus Bank and Eurobank Ergasias), by the European Central Bank;
  • insurance companies – approval must be obtained by the Bank of Greece;
  • gaming companies – approval must be obtained by the Hellenic Gaming Commission; and
  • certain energy companies – approval must be obtained by the Regulatory Authority for Energy. 

Types of acquisition

What are the different ways to acquire a company in your jurisdiction?

The most common way to acquire a company within Greece is through a share deal. Other ways include acquisition through an asset deal, where the underlying assets of the company are purchased, or acquisition through corporate transformation (eg, mergers, demergers or spin-offs). 

Preparation

Due diligence requirements

What due diligence is necessary for buyers?

No legal requirements exist for the performance of due diligence in Greece. A typical buyer will arrange for legal, accounting and tax due diligence exercises before deciding on an acquisition. Depending on the type of activity with which the target is engaged, a technical due diligence exercise may also be advisable. In any event, due diligence is based on the buyer’s risk profile.

Information

What information is available to buyers?

Both financial and legal corporate information is publicly available. Financial information primarily includes information included in the financial statements of the company to be acquired. For listed companies, these statements must be drawn up in accordance with the International Financial Reporting Standards (IFRS). For non-listed companies, financial statements are, in principle, drawn up in accordance with the Greek accounting standards, but IFRS may also be used. Legal corporate information can be obtained from commercial registries and the Official Government Gazette, on which material corporate acts were published on December 31 2014. Further information can be obtained by conducting due diligence exercises.

What information can and cannot be disclosed when dealing with a public company?

In principle, all information can be disclosed. Attention should be paid to the risks associated with a board of directors disclosing commercially sensitive information, as this could lead to breaches in the board’s fiduciary duty towards the company’s shareholders. Thus, the board must take all precautions to avoid breaches and ensure that all of the shareholders benefit from any disclosure in order for the disclosure to be justified.

Special provisions on information disclosure are included in Regulation (EU) 596/2014 of the European Parliament and of the Council on market abuse. Pursuant to Article 17, issuers of financial instruments admitted to trading must inform the public as soon as possible of any inside information which directly concerns them. However, issuers may, on their own responsibility, delay public disclosure of inside information provided that all of the following conditions are met:

  • immediate dislcosure is likely to prejudice the legitimate interests of the issuers;
  • delay of disclosure is unlikely to mislead the public; and
  • the issuers can ensure the confidentiality of the information.

Further, pursuant to Article 38 of Law 3959/2011, both public and private law entities must provide commercially sensitive information to the Hellenic Competition Commission before the acquisition of a concentration that requires the commission’s approval, if so requested.

Stakebuilding

How is stakebuilding regulated?

According to Article 7 of Law 3461/2006, the mandatory takeover bid obligation is triggered when a person exceeds, by way of acquisition of a target’s listed securities’ voting rights and by any means whatsoever (directly or indirectly, acting on its own or in cooperation with other persons acting for its account or in concert with it), up to one-third of the total voting rights in the target (either directly or indirectly, acting on its own or in cooperation with other persons acting for its account or in concert with it).

Anyone exceeding this threshold must launch a mandatory takeover bid for all of the target’s securities within 20 days of acquiring the voting rights or 30 days following the acquisition, in case where the offeror has the obligation to proceed to the drawing up of a valuation report to determine the relevant consideration. The offeror must provide for a fair and equitable consideration.

Law 3461/2006 was recently amended to include further assurance for the minority shareholders. Upon occurrence of certain conditions, the offeror will be obliged to prepare a valuation report with respect to the targeted securities to determine the equitable consideration.

This obligation also applies to any person that:

  • holds more than one-third but less than one-half of the total voting rights of the target; and
  • acquires (directly or indirectly, on its own or in cooperation with other persons acting for its account or in concert with it) voting rights of the securities of the target which represent more than 3% of the target’s total voting rights within six months.

In order to calculate the percentage limits above, ‘voting rights’ acquired or held by the responsible person(s) (directly or indirectly, acting on its own or in cooperation with other persons acting for its account or in concert with it) have been defined to include voting rights which are acquired or held under a contract for the constitution of pledge, usufruct, custody or management of securities, provided that their holder can exercise such rights at its discretion. In order to calculate the aforementioned limits, the total voting rights are taken into account, the exercise of which is not prohibited according to the legislation relating to the purchase of a company’s own shares (eg, where a company buys its own shares, the voting rights attached to those shares are not calculated for the determination of the threshold to submit a takeover bid).

If a person is obliged to submit a mandatory takeover bid, it must inform both the Hellenic Capital Market Commission and the target’s board of directors in writing of the intended bid before any public announcement is issued (Article 10 of Law 3461/2006).

Further, according to Article 9 of Law 3556/2007 (transposing EU Directive 2004/109/EC on the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market), where a shareholder acquires or disposes of the shares of an issuer whose shares are admitted to trading on a regulated market and to which voting rights are attached, it must notify the issuer and the Hellenic Capital Market Commission of the proportion of voting rights it holds as a result of the acquisition or disposal where that proportion reaches, exceeds or falls below the thresholds of 5%, 10%, 15%, 20%, 25%, 33.3%, 50% or 66.6%. The same requirement applies to certain cases of acquisition, disposal and exercise of major proportions of voting rights or acquisition or disposal of financial instruments, pursuant to Articles 10 and 11 of Law 3556/2007. According to the newly introduced Article 11A of Law 3556/2007, the notification requirements laid down in Articles 9, 10 and 11 shall also apply to an individual or legal entity when the number of voting rights held directly or indirectly by such person or entity under Articles 9 and 10 aggregated with the number of voting rights relating to financial instruments held directly or indirectly under Article 11 reaches, exceeds or falls below the thresholds set out above.

Documentation

Preliminary agreements

What preliminary agreements are commonly drafted?

Typically, preliminary agreements may include:

  • a confidentiality agreement ensuring the secrecy of commercially or otherwise sensitive information;
  • a non-binding memorandum of understanding with binding confidentiality clauses;
  • an exclusivity agreement by which the target is legally committed to the potential buyer not to deal with competing buyers for a period during which only the potential buyer can conduct due diligence and decide on the acquisition;
  • a framework agreement;
  • a letter of intent; and
  • a share purchase agreement with conditions for closing.

Principal documentation

What documents are required?

The documents typically required include: 

  • a sale and purchase agreement and a share transfer agreement – the only mandatory document in a share sale;
  • a shareholders’ agreement if the buyer will not acquire 100% of the target;
  • an offer document in case of public takeover bids under Law 3461/2006; and
  • in relation to mergers, demergers and, according to the prevailing view, spin-offs a:
    • draft merger agreement, draft demerger agreement or draft spin-off agreement, which is approved by the companies’ general meetings of shareholders; and
    • transformation notarial deed.

Which side normally prepares the first drafts?

Normally, the buyer prepares the first draft of the sale and purchase agreement, unless the parties are subject to competition procedures, in which case the first draft is prepared by the vendor. The vendor usually prepares the first draft of the shareholders’ agreement.

What are the substantive clauses that comprise an acquisition agreement?

The substantive clauses that comprise an acquisition agreement include:

  • a purchase price clause and a clause on the number of shares or the assets to be acquired and transferred;
  • clauses on conditions precedent;
  • representations and warranties clauses;
  • clauses on covenants that will apply between signing and closing;
  • clauses on specific indemnities, if any;
  • a clause on dispute resolution methods; and
  • a governing law clause.

What provisions are made for deal protection?

To date, deal protection is not heavily practiced in Greece. Break-up fees have been agreed in a small number of cases and are enforceable in principle. However, as there is no published case law, their enforceability has not yet been tested. Of course, limitations based on general principles of law (ie, the abusive exercise of rights) will apply. Notably, if a target’s board of directors agrees to such provisions, this may limit the shareholders’ ability to reject a merger proposal or bid.

Further, in order to mitigate the risk of not receiving the necessary approvals for the transaction (eg, approval from the Hellenic Competition Commission or the Hellenic Capital Market Commission), the parties often set the granting of the relevant approvals as conditions precedent for closing.

Closing documentation

What documents are normally executed at signing and closing?

The transfer documents – typically the share transfer agreement – are normally executed at signing and closing. If the shares to be transferred are listed, the stockbroker will receive an order to make the sale/purchase of the shares at the relevant price. In addition, the depositary or custodian of the shares will also receive an order to transfer the shares to the acquirer. If the purchased shares are registered but not listed, an order must be given for the registration of the transfer in the issuer’s book of shares and the share titles must be delivered to the acquirer and properly annotated. 

Are there formalities for the execution of documents by foreign companies?

There are no formalities for the execution of documents by foreign companies under Greek law.

Are digital signatures binding and enforceable?

Pursuant to Regulation (EU) 910/2014 of the European Parliament and of the Council, a qualified electronic signature, namely an advanced electronic signature (ie, an electronic signature which is uniquely linked to the signatory, capable of identifying the signatory, created using means that the signatory can maintain under its sole control and linked to the data signed therewith in such a manner that any subsequent change of the data is detectable) which is based on a qualified certificate and created by a qualified electronic signature creation device has the equivalent legal effect of a handwritten signature. However, this framework is uncommon in practice. Further, in cases where contractual type is not mandatory for the execution of documents, the exchange of PDF documents via email will suffice in order for them to be considered binding and enforceable.

Foreign law and ownership

Foreign law

Can agreements provide for a foreign governing law?

According to Article 3(1) of Rome I Regulation (593/2008), the parties to a contract may freely choose the governing law therein. This applies to contractual obligations but not to rights in rem over Greek assets for which the law of the situs of the asset applies (ie, Greek law for assets situated in Greece).

Foreign ownership

What provisions and/or restrictions are there for foreign ownership?

In principle, there are no provisions or restrictions on foreign ownership in Greece. Cross-border mergers between limited liability companies governed by EU law are regulated by Directive 2005/56/EC of the European Parliament and of the Council, which has been transposed into Greek law by virtue of Law 3777/2009.

In view of the absence of relevant special provisions, mergers between a Greek legal entity and an entity governed by the law of a non-EU member state will also be accepted, with the application by analogy of Article 49a of Codified Law 2190/1920 on minority shareholders’ right to request that the société anonyme buys their shares. However, Article 25(1) of Law 1892/1990 prohibits:

  • any transaction inter vivos (ie, between the living) by which an individual or legal entity of a nationality or registered seat outside the European Union or the European Free Trade Association is granted an in rem or in personam right on real estate in border areas; and
  • any transfer of shares or corporate units or any change of the shareholders or partners of any type of company which owns real estate in such areas.

Finally, certain sectors may have restrictions on foreign ownership (eg, the provisions governing the gas market applied to the privatisation of the Hellenic Gas Transmission System Operator SA as the Greek independent gas transmission operator).

Valuation and consideration

Valuation

How are companies valued?

The law does not prescribe a specific valuation method. Parties that provide valuation services (eg, investment banks and chartered accountants) may value companies using internationally accepted valuation methods (eg, the discounted cash-flow method). The method chosen depends, inter alia, on the sector to which the target belongs and other specifications. According to Article 71 of Codified Law 2190/1920, in cases of merger by absorption, a report must be prepared and submitted to the general meetings of shareholders in relation to the valuation of the merging companies’ assets. This report must refer, inter alia, to the method(s) used for the determination of the proposed exchange ratio between the shares of the companies.

Consideration

What types of consideration can be offered?

Any type of consideration may be offered, including:

  • cash;
  • securities;
  • deferred consideration; and
  • conditional consideration.

Strategy

General tips

What issues must be considered when preparing a company for sale?

When preparing a company for sale, potential considerations include:

  • ensuring that the transactions of a company that is part of a group are not affected by the group’s policies or agenda;
  • identifying and attempting to mitigate different risks (eg, tax-related risks);
  • identifying change of control clauses in material contracts; and
  • designing a strategy to ensure that the contracting parties’ approval is received.

What tips would you give when negotiating a deal?

A typical vendor would assess what risks are likely to deter buyers or reduce the purchase price and attempt to mitigate such risks. For example, as a vendor, the state may provide indemnities for any past liabilities which are not injurious to it and are also highly advantageous for the buyer. On the other hand, potential buyers identify and assess risks through due diligence exercises to avoid asking for excessive representations and warranties that may render the offer less attractive to the vendor. 

Hostile takeovers

Are hostile takeovers permitted and what are the possible strategies for the target?

In principle, hostile takeovers are permitted in Greece. However, Article 14 of Law 3461/2006 on takeover bids sets out limitations according to which the target’s board of directors must receive prior authorisation by the general meeting of shareholders before taking any action (except for seeking alternative proposals) not included in the ordinary course of the company’s business and may cause the takeover bid to be cancelled. These limitations apply from the date on which the person that has decided to launch a takeover bid or is obliged to submit a takeover bid informs the target’s board of directors on that takeover bid and until the publication of the bid’s outcome or the bid’s revocation. In view of this restriction, Article 30 of Codified Law 2190/1920 also provides for the ‘one-share-to-one-vote’ principle in relation to common shares.

As a rule, it is difficult for companies to defend against hostile takeovers. In theory, companies could create poisonous pills by issuing convertible bonds with special conversion rates in case of a tender offer or by including change of control clauses in material contracts. However, there is no known case of a company acting so deliberately to avoid a hostile takeover.

Warranties and indemnities

Scope of warranties

What do warranties and indemnities typically cover and how should they be negotiated?

Warranties and indemnities typically cover:

  • share capital;
  • past tax liabilities;
  • social security liabilities;
  • accuracy of financial statements;
  • lack of encumbrances on assets;
  • insolvency;
  • compliance with law;
  • environmental matters;
  • intellectual property; and
  • employment issues.

Specific items may be added to the above depending on the target’s sector, as well as the due diligence findings.

Limitations and remedies

Are there limitations on warranties?

No substantial limitations to the types of warranty that may be given are provided for under Greek law.

What are the remedies for a breach of warranty?

According to Articles 534 and following of the Civil Code –to the extent that the parties have agreed that Greek law will govern the relevant contract and that they have not otherwise agreed to limit or waive the protection under these provisions – the buyer will have the right (which may be exercised alternatively) to:

  • seek to repair or replace the purchased assets;
  • seek to reduce the purchase price;
  • rescind from the sale agreement; or
  • seek all damages suffered due to the non-performance of its counterparty under their agreement, in which case it must also return any assets received by the seller.

In addition to the above rights, the buyer may cumulatively seek additional consequential damages if these are causally linked to the warranties. Rescission of a transaction is generally considered an inappropriate remedy where a company is sold.

Are there time limits or restrictions for bringing claims under warranties?

The statute of limitation for buyers’ rights as per above, or as they may be further circumscribed by warranties given in the context of the sale agreement, is two years in case of movable assets or five years in case of immovable ones, starting from the date on which the assets were delivered to the buyer (Articles 554-555 of the Civil Code). According to the prevalent view, the statute of limitation in case of the sale of a business as a whole should follow the statute of limitation applied to movable assets (ie, two years), subject only to defects on any transferred real estate assets of the business under sale, in which case the statute of limitation applicable to immovable assets will apply (ie, five years). The statute of limitation will start at the time of the delivery of the business – namely, from the time that the buyer acquires full control over the transferred assets. Under certain conditions, the parties may contractually agree for a longer limitation period, during which the seller will be liable against the buyer. Further, an independent indemnity obligation may be undertaken by the parties, the statute of limitation of which is 20 years. Finally, a guarantee may be given with respect to any transferred assets; in such cases, the statute of limitation for the buyer’s rights will commence from the time that the guarantee was concluded. 

Tax and fees

Considerations and rates

What are the tax considerations (including any applicable rates)?

According to the Income Tax Code (Law 4172/2013) if shares are sold by an individual, the capital gain (if any) will be taxed at a rate of 15%. With respect to capital gains from the sale of shares of legal entities, generally applicable corporate tax provisions will apply at a rate of 29%.

Also, as per Article 43A of the Tax Code, all sources of income, even those that are exempt, are subject to a special solidarity contribution levied on the annual total net income of individuals, at rates ranging from 2.2% to 10%, depending on the volume of the net income. 

Exemptions and mitigation

Are any tax exemptions or reliefs available?

As a matter of Greek tax law, the following are excluded from the income tax on capital gains from the sale of shares:

  • legal entities that are not tax residents and have no permanent establishment in Greece or do not sell shares through a permanent establishment in Greece;
  • individuals who are not tax residents in Greece, if a double taxation avoidance treaty has been concluded between their jurisdiction of tax residency and Greece, whereby capital gains from the sale of shares are not subjected to tax in Greece; and
  • in case of sale of listed shares, individuals, regardless of their tax residency, that hold shares in the company equal to less than 0.5% of the share capital of the company at the time of sale.

What are the common methods used to mitigate tax liability?

In some cases, Greek legal entities and individuals that qualify as Greek tax residents will invest in Greek legal entities through foreign vehicles that are tax residents in jurisdictions that do not tax capital gains from share transfers and have concluded double taxation avoidance treaties with Greece. However, this structure may become problematic if it does not have a genuine commercial purpose and the sole purpose of the relevant transactions is to avoid tax. This is because of the provisions set out in Article 38 of the Tax Procedure Code (Law 4174/2013) and Article 66 of the Income Tax Code (Law 4172/2013).

According to Article 38 of the Tax Procedure Code, when determining tax, tax administration may ignore artificial arrangements which aim to avoid tax and lead to a tax advantage. For tax purposes, these arrangements are treated based on the features of their economic status. Further, Article 66 of the Income Tax Code provides that a person taxable under Greek law may also be taxed for non-distributed income of foreign legal entities under its control (controlled foreign companies). More specifically, the taxable income of a person subject to tax under Greek law will also include the non-distributed income of a legal entity that is tax resident in a another state, provided that a number of criteria are cumulatively met, including the following:

  • The taxable person under Greek law, on its own or jointly with its affiliated persons, holds (directly or indirectly) more than 50% of the shares, corporate units, voting rights or participation rights in the capital of the foreign legal entity, or is entitled to receive more than 50% of the profits of the foreign legal entity.
  • The foreign legal entity is taxable under a non-cooperative state or a state with a preferential tax regime.
  • The main category of shares of the foreign legal entity is not admitted to trading on a regulated market.

These provisions also apply to controlled companies that are tax residents in EU member states, where their establishment or economic activity constitutes an artificial situation created for the purpose of avoiding tax.

Fees

What fees are likely to be involved?

No standard fees are provided for in Greek law. Fees may be determined depending on factors such as the complexity of the due diligence process and the length of negotiations.

Management and directors

Management buy-outs

What are the rules on management buy-outs?

There is no specific legislation on management buy-outs.

Directors’ duties

What duties do directors have in relation to M&A?

In principle, directors have a duty of care towards the company as a legal entity. This also applies to M&A transactions. In particular, for listed companies, Law 3016/2002 on corporate governance provides that directors have a duty to promote the long-term value of the company. In view of this, arguably, in the case of a tender offer, directors should accept the highest offer.

According to Article 15 of Law 3461/2006 on takeover bids, the target’s directors must draw up and publicise their justified opinion on the takeover bid, as well as any amended or competitive bids. This document must be accompanied by a detailed report from the company’s financial adviser and be submitted both to the Hellenic Capital Market Commission and the bidder. It must include, among other things, the directors’ views on:

  • the effects of implementation of the bid on all of the company’s interests and specifically on employment; and
  • the offeror’s strategic plans for the target and the likely repercussions on employment and the locations of the company’s places of business.

In addition, Article 14 of Law 3461/2006 prohibits the target’s directors from engaging in actions (except for seeking alternative proposals) that exceed the scope of the company’s ordinary business and may cause the takeover bid to be cancelled without a prior authorisation by the general meeting of the shareholders, from the date on which the person that has decided to launch a takeover bid or is obliged to submit a takeover bid informs the target’s board of directors on that takeover bid and until the publication of the bid’s outcome or the bid’s revocation.

Employees

Consultation and transfer

How are employees involved in the process?

According to Presidential Decree 178/2002 on the safeguarding of employees’ rights in the event of transfers of undertakings, businesses or parts of businesses, the transferor and transferee must inform the representatives of the employees that are affected by the intended transfer (or all the employees where no representatives exist) of the following in a timely manner and before the transfer is effected:

  • the date or proposed date of the transfer;
  • the reasons for the transfer;
  • the legal, economic and social implications of the transfer for employees; and
  • any measures envisaged in relation to the employees.

In addition, where the transferor or transferee envisages measures which will result in material changes in the conditions of employment, it must consult with the employees’ representatives in due time in order for the parties to reach a mutual agreement on the measures. Moreover, a general obligation to inform and consult employees arises under Presidential Decree 240/2006, which implemented Directive 2002/14/EC of the European Parliament.

In addition, Law 3461/2006 on takeover bids provides for the following:

  • As soon as a bid is made public, the boards of directors of both the target and offeror must communicate this to their respective employees’ representatives or, if non-existent, to the employees themselves.
  • To enable the target’s securities holders to reach a properly informed decision on the bid, the offer document drafted by the offeror must include the offeror’s intentions in relation to safeguarding the jobs of employees and management (including any material changes in the conditions of employment) and, in particular, the offeror’s strategic plans for the two companies and the likely repercussions on employment.
  • As soon as the offer document is made public, the boards of both the target and offeror must communicate this to their respective employees’ representatives or, if non-existent, to the employees themselves.
  • The target’s board must draw up and make public a document setting out its opinion of the bid, including its views on:
    • how the implementation of the bid will affect the company’s interests, specifically employment; and
    • the offeror’s strategic plans for the target and their likely repercussions on employment, as set out in the offer document.

At the same time, the target’s board must communicate the above opinion to its employees’ representatives or, if non-existent, to the employees themselves. If the employees’ representatives submit a separate opinion regarding the impact of the bid on employment in a timely manner, this must be attached to the board’s public document.

  • The outcome of the takeover bid must be communicated to the employees’ representatives or, if non-existent, the employees themselves.

What rules govern the transfer of employees to a buyer?

Presidential Decree 178/2002 contains specific rules on the transfer of employees to a buyer. Pursuant to this decree, any rights or obligations arising from an employment contract or relationship held by the transferor on the date of the transfer will, by reason of such transfer, be shifted to the transferee. After the date of the transfer, the transferor and the transferee will be jointly and severally liable for obligations which arose before the date of the transfer from an employment contract or a relationship existing on the date of the transfer. The transferee must continue to observe the terms and conditions agreed in any collective agreement, arbitral award, regulation or private employment contract.

Further, while the transfer of an undertaking, business or part of an undertaking or business does not in itself constitute grounds for dismissal of employees, dismissals may take place for economic, technical or organisational reasons. However, this will not apply if the transferor is subject to bankruptcy proceedings or any analogous insolvency proceedings which have been instituted in order to liquidate the transferor’s assets and are under the competent public authority’s supervision. 

Pensions

What are the rules in relation to company pension rights in the event of an acquisition?

Company pension plans are rare in Greece. However, Presidential Decree 178/2002 contains provisions concerning employees’ rights arising from existing pension plans in cases of transfer of undertakings, businesses or parts of businesses. According to the decree, if the transferee:

  • agrees to the continuation of the relevant existing agreements with the same terms, then the agreements are renewed;
  • agrees to the continuation of the agreements with different terms, then it must consult with the employees and the transferor and sign new agreements. If an insurer or a private pension fund intervenes, the insurer’s representative or the trustee of the private pension fund must be invited to the consultation to submit suggestions, taking into account the existing reserves or credit balance of the pension funds’ deposits; and
  • disagrees (before the transfer) with the continuation of the agreements, then the relevant funds are liquidated (wound up) and belong to the employees.

Other relevant considerations

Competition

What legislation governs competition issues relating to M&A?

The EC Merger Regulation (Council Regulation (EC) 139/2004) governs competition issues relating to applicable M&A transactions. To the extent that the EC Merger Regulation does not apply, the Greek Competition Law (3959/2011) sets out specific requirements and timelines for the approval of acquisitions of control. 

According to Law 3959/2011, any undertakings acquiring sole or joint control must notify the Hellenic Competition Commission of the concentration within 30 days from the conclusion of the agreement or the announcement of the bid, the exchange offer or the acquisition of controlling interest in the target, where:

  • the aggregate worldwide turnover of all undertakings concerned is at least €150 million; and
  • the total turnover in the Greek market of each one of at least two of the undertakings concerned exceeds €15 million. 

Anti-bribery

Are any anti-bribery provisions in force?

Anti-bribery provisions in Greece primarily include the criminal provisions set out in Law 3666/2008, ratifying the 2003 United Nations Convention against Corruption. The law regulates the prevention, detection and prosecution of corruption as well as the freezing, seizing, confiscating and returning of proceeds obtained through offences established therein.

Further, Law 2957/2001 (ratifying the 1999 Civil Law Convention on Corruption of the Council of Europe) sets out civil law provisions for corruption. In accordance with Article 8, any contract or clause of a contract providing for corruption is null and void. In addition, all parties to a contract whose consent has been undermined by an act of corruption can apply to the court for the contract to be declared void. Further, persons that have suffered damage as a result of corruption can initiate an action in order to obtain full compensation for any damage, including material damage, loss of profits and non-pecuniary loss (Article 3).

Receivership/bankruptcy

What happens if the company being bought is in receivership or bankrupt?

Articles 135 and following of the Bankruptcy Code (Law 3588/2007) provide for the possibility of selling a company as a whole or by its individual sectors within the context of its bankruptcy. However, a company would more likely be transferred during pre-bankruptcy proceedings by virtue of a rehabilitation agreement to be entered into either between the creditors and the debtor (transferor) or between the creditors, pursuant to Articles 99 and following of the Bankruptcy Code. Finally, Articles 68 and following of Law 4307/2014 provide for the possibility of placing a company under extraordinary special administration (on application by its creditors) and allowing its assets (in whole or in part) or individual operational divisions to be purchased through a public tender. However, no exact equivalent to receivership exists under Greek law.