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What types of debt securities offerings are typical, and how active is the market?
When discussing the Greek capital market, the primary interest focuses on the Athens Exchange (ATHEX). ATHEX has some unique characteristics, being in an advanced emerging market (as per the latest FTSE classification of markets as at September 2018) that is fully harmonised and operating under the EU capital markets legislation.
The main market is the Regulated Market of ATHEX, where typical debt securities offerings include corporate common unsecured bonds, targeting both retail and professional investors, as well as Greek government bonds. Other categories of corporate bonds that can be listed include convertible bonds, exchangeable bonds and bonds with the right to participate in gains. This is where large corporations, usually already listed on the stock exchange market, list their debt securities.
There is also the ATHEX Alternative Market, which is the multi-lateral trading facility operated by ATHEX, and which is mostly preferred by small and medium-sized companies for debt securities listings.
Finally, there is the Electronic Secondary Securities Market of the Bank of Greece, the Greek regulated market for Greek government securities and bonds or other fixed-income debt securities issued by corporations and other entities with a Greek government guarantee, which has shown decreased activity in recent years owing to the sovereign financial situation in Greece.
ATHEX has already proved its resilience, even in the latter years of the Greek crisis, with an estimated €52,861 million of capital raised in 2012-2016 (ATHEX Group, Axia Numbers publication, 31 March 2017). Moreover, international investors’ trust in ATHEX is self-explanatory, with their holding approximately 62.44 per cent of ATHEX market capitalisation (both debt and equity securities) as at November 2018 (ATHEX Group, Axia Numbers publication, November 2018).
Such characteristics, as well as the need for corporations to find alternative funding streams other than from the banking system, have led to a significant growing trend recently. Specifically, during 2016, companies started listing common corporate bonds on ATHEX for the first time, raising debt and developing a secondary market for common bonds. Housemarket SA’s issuance of a common bond loan pursuant to Law 3156/2003 ‘On Bond Loans, Securitisation of Claims and of Claims from Real Estate’ (the Greek Bond Law) and its debt securities offering and listing on ATHEX, the first ever of this kind, signalled a new era for debt capital markets in Greece. In another notable transaction, the first listed guaranteed common bond loan was issued by Terna Energy Finance SA, with Terna Energy SA as guarantor. Notably, as of 1 January 2019, the new Law 4548/2018 ‘Reform of the law of Sociétés Anonymes’ came in force, implementing, among others, a more modern, improved regime for the bond issuances. Currently, eight corporate bonds are traded on the Regulated Market and three corporate bonds on the Alternative Market of ATHEX.
Describe the general regime for debt securities offerings.
Debt securities offerings are governed by the following rules and regulations, at the European and Greek levels.
At the EU level, the following apply:
- Directive 2003/71/EC (Prospectus Directive);
- Regulation 2017/1129 (Prospectus Regulation), to be applied from 21 July 2019;
- Regulation EC 809/2004 regarding information contained in prospectuses;
- Directive 2001/34/EC (listing requirements);
- Directive 2014/65/EU (MiFID II), Regulation 600/2014 (MiFIR);
- Regulation 2015/2365 on transparency, Directive 2013/50/EU on the harmonisation of transparency requirements;
- Directive 2007/14/EC for the implementation of certain provisions of Directive 2004/109/EC; Regulation No. 596/2014 (MAR); and
- Regulation (EU) No 1286/2014 on key information documents for prepackaged retail and insurance-based investment products (PRIIPs).
In general, the Greek laws are merely a translation of the EU directives, regulations and other secondary legislation, and include:
- the Greek Bond Law;
- Law 3401/2005 on the Prospectus Directive (transposing Directive 2003/71/EC);
- Law 3371/2005 (transposing Directive 2001/34/EC);
- Law 4548/2018 on sociétés anonymes;
- the ATHEX Rulebook; and
- the Dematerialised Securities System (DSS) Operation Regulation of the Hellenic Central Securities Depository.
Apart from the aforementioned legislation, the ATHEX board of directors and the Hellenic Capital Markets Commission (HCMC) has published several decisions regarding procedural and reporting issues, specifying matters, such as indicatively any additional information to be submitted, and the Electronic Book Building Service (EBB).
The regulator of the market is HCMC, and the securities exchanges are the ATHEX Regulated Market and the ATHEX Alternative Market.
Finally, key industry groups are the Association of Members of the Athens Exchanges; the Hellenic Bank Association; the Hellenic Fund and Asset Management Association; and the Union of Listed Companies.
Filing and documentary requirements
General filing requirements
Give details of any filing requirements for public offerings of debt securities. Outline any requirements for debt securities that are not applicable to offerings of other securities.
The general conditions for debt securities offerings, and particularly bonds, on the Regulated and Alternative Markets are the following:
- approval by HCMC and publication of a prospectus (subject to the latter being required under the applicable provisions of Law 3401/2005 (and as of 21 July 2019, the Prospectus Regulation). On the Alternative Market and for public offerings of securities with total value of less than €5 million on a 12-month basis, an informative memorandum is drafted pursuant to HCMC Decision 12/697/10.2014;
- bonds must be freely negotiable;
- under the law the minimum issue amount is €200,000. On the Alternative Market, no minimum issue amount applies;
- in particular with regard to convertible and exchangeable bonds, these shall be admitted solely subject to the underlying transferable securities having been previously listed on a regulated market or being listed at the same time; and
- paperless foreign bonds (or paper foreign bonds following their dematerialisation) may be admitted to trading.
If the debt securities offering is conducted by an already listed company, there is no obligatory presentation of the issuer before the board of directors of ATHEX. The requirements for listing securities in the ATHEX Regulated Market are set out in Law 3371/2005 and in the ATHEX Rulebook. Listing requirements refer both to the securities to be listed as well as to their issuer and to a large extent do not differentiate from the ones set by Directive 2001/34/EC. Apart from the aforementioned, Regulation (EC) No. 809/2004 sets out the basic rules as regards the publication and mandatory documents to be included in the prospectus.
Special reference will be made to the listing requirements set out in the ATHEX Rulebook, which specify the general listing requirements that apply to the Greek jurisdiction.
With respect to the issuer, the following requirements must be met:
- if the issuer is a Greek company, it must operate in the form of a société anonyme (ie, a company limited by shares) (SA) and in accordance with the provisions that regulate the incorporation and operation of SA companies (Law 4548/2018). If the issuer is a foreign company, it must comply with all relevant laws governing its incorporation and operation, and be in a form corresponding to a Greek SA;
- the issuer must also comply with the applicable corporate governance requirements. It must especially comply with Law 3016/2002 ‘On Corporate Governance, Remuneration and Other Issues’, Law 4449/2017 ‘On Statutory Audits of Annual Accounts and Consolidated Financial Accounts’, HCMC Decision 5/204/2000 ‘On the rules of conduct of companies that have listed their shares on the Athens Stock Exchange and of persons related to them’, as in force, and the recently introduced soft-law rules pertaining to the adoption by the issuer of a corporate governance code on a ‘comply or explain’ basis (the Corporate Governance Rules);
- the financial statements of the issuer must have been drafted pursuant to the IAS/IFRS;
- there is no provision for a specified credit rating; however, it generally reduces the fundraising cost; and
- the information published by the issuer must have acquired prior HCMC approval and must be in accordance with the prospectus publication rules.
Finally, the ATHEX Rulebook provides for more specific requirements, terms and documentation when the issuer is an insurance or a construction company.
The requirements for debt securities are materially the same as for other securities.
In a public offering of debt securities, must the issuer produce a prospectus or similar documentation? What information must it contain?
Yes, the issuer, in accordance with the EU prospectus regime, must produce a prospectus, which shall contain all the significant information for the upcoming public offering in order to enable future investors to make an informed decision as regards the company’s status as well as to enable them to make an assessment regarding their investment. The prospectus, pursuant to the relevant EU legislation, is a ‘tripartite’ document, meaning that it consists of the three following parts:
- the registration document, which contains all the required information regarding the issuer;
- the securities note, which contains the information concerning the securities that are going to be offered to the public; and
- the summary, which includes all the important information for the future investor in relation to possible risks, the issuer’s nature and the securities to be offered.
The aforementioned summary must be read in connection with the other two documents in order for the investor to conclude a detailed assessment regarding the public offering.
In general, the prospectus shall include all the significant information that would enable a future investor to make an informed decision. Thus any decision to invest in the securities should be based on a consideration of the prospectus as a whole by the investor.
Apart from the above, pursuant to EU Regulation No. 1286/2014, which came into force on 1 January 2018, product manufacturers (including the issuer) must produce a key information document when the issuance includes PRIIPs to retail investors.
Describe the drafting process for the offering document.
The key issues concerning the offering document are related to all the significant information about the issuer, the related risk factors, the financial information in connection to the issuer and information regarding the securities to be offered, including the terms and conditions of the respective loan.
As regards to the issuer’s information, a description of the history and development of the company is deemed essential, including the legal and commercial name of the issuer, the place of registration of the issuer and its registration number, the date of incorporation, the length of life of the issuer, the memorandum and articles of association and the legal form of the issuer.
Apart from the above, the issuer needs to provide information regarding the adequacy of the company’s properties as well as regarding the existing organisational structure, including its directors, managers and major shareholders, so as to enable investors to assess their experience, control and influence inside the company.
Additionally, any other material events connected to the issuer, such as any related-party transactions and existing or future investments, need to be mentioned.
Furthermore, the issuer needs to provide a business overview, including a description of the issuer’s principal activities as well as the issuer’s liquidity and capital resources.
Risk factors regarding the material and specific risks connected to the issuer and the offered securities are also included in the prospectus documentation.
The issuer needs to include in the prospectus documentation annual and interim financial information, audit reports, financial statements, management reports or corporate governance statements. In general, a selection of historical key financial information presented for each financial year of the period covered by the historical financial information, and any subsequent interim financial period accompanied by comparative data from the same period in the prior financial year and the balance sheet information shall be satisfied for a comparative assessment for the investors.
In cases of private placement, the issuance of a prospectus is not required. However, an information document needs to be drafted in accordance with the ATHEX regulations.
It is common for some materiality thresholds to be agreed between the issuer, its advisers and the underwriters, regarding the disclosure of information, such as in relation to important agreements of the issuer or important litigation.
Finally, some notable changes brought by the Prospectus Regulation are the following:
- risk factors will be categorised according to their nature and presented in order of ‘materiality’;
- less stringent disclosure requirements where securities are admitted to trading on a regulated market that is only open to qualified investors;
- management reports and corporate documents shall be able to be incorporated by reference; and
- a new EU Growth prospectus with a ‘proportionate’ disclosure regime for SMEs.
Which key documents govern the terms and conditions of the debt securities? Who are the parties to such documents? How can such documents be accessed?
The key documents governing the terms and conditions of the debt securities are the bond loan programme, the bondholders’ representative appointing agreement, the paying agent appointing agreement, the bond loan subscription agreement and the security agreement(s), if any.
The parties to such agreements include the issuer, the guarantor (where applicable), the bondholders’ representative and the paying agent. The initial bondholders acquire the bonds through recording in the relevant bondholders’ Central Securities Depository (CSD) accounts.
Notably, it is provided by law that if the applicable legislation requires the drafting and publication of a prospectus for the bond issue (as is the case for listing the bonds on ATHEX), the programme must be annexed in such prospectus. The prospectus and other key documents are available to the investors in hard copy in the offices of the issuer and the underwriters, as well as in soft copy on the websites of HCMC, the issuer and the underwriters.
Does offering documentation require approval before publication? In what forms should it be available?
The issuer must file the prospectus with HCMC for approval. Before such filing, the issuer must have obtained a listing pre-approval by ATHEX. HCMC must provide comments on the prospectus within 10 to 20 business days. Following its approval, the prospectus must be published by the issuer as soon as possible and at latest six days before the completion of the public offer, by the means provided in Law 3401/2005 (and as of 21 July 2019, in the Prospectus Regulation).
The prospectus must be produced as a hard copy and must also be published electronically on the ATHEX website and on the issuer’s website.
Are public offerings of debt securities subject to review and authorisation? What is the time frame for approval? What are the restrictions imposed, if any, on the issuer and the underwriters during the review process?
Yes, HCMC reviews and approves the prospectus documentation in a period of 10 business days and subsequently publishes a relevant decision to the issuer. The aforementioned period is extended to 20 business days if the debt securities are being offered for the first time in the regulated market. In this case, HCMC requires additional information from the issuer and, hence, each time the prospectus is resubmitted HCMC has a further 10 business days.
The issuer and the underwriters must comply with certain publicity restrictions ensuring that any information released in connection with the offering meets regulatory requirements. Thus the whole procedure before prospectus approval is considered as confidential and the public offering is not allowed to start prior to final approval of the prospectus.
On what grounds may the regulators refuse to approve a public offering of securities?
HCMC examines the prospectus in accordance with the requirements imposed by Greek legislation and related EU legislation. The prospectus has to be complete in light of the required information set out in the relevant rules. HCMC may prevent a public offering of securities if the information provided in the prospectus is not sufficient pursuant to the prospectus rules or if the issuer does not comply with the legislation applicable to it, including indicatively, but not limited to, the legislation in relation to issuers with securities listed on regulated markets.
How do the rules differ for public and private offerings of debt securities? What types of exemptions from registration are available?
In a private offering, the prospectus rules do not apply. Hence, no prospectus is required in such cases; instead, on the Alternative Market, an information document should be published.
However, the prospectus regime contains specific exemptions from the requirement to produce a prospectus in the case of public offerings. The most common exemptions are:
- where the offer is addressed to fewer than 150 natural or legal persons per EU member state;
- where the offer is only addressed to qualified investors;
- where the minimum denomination per unit of the debt securities is at least €100,000 or equivalent in another currency; and
- where the total value of the offered securities in the EU is less than €100,000, a limit calculated over a 12-month period.
Describe the public offering process for debt securities. How does the private offering process differ?
Public offering process
Preparation of the issuer (eg, financial and legal due diligence, compliance with listing and corporate governance obligations, etc)
Up to 10-12 weeks (depending on the issuer)
Submission of the application for listing or admission to trading to ATHEX, evaluation of relevant documentation and issuer’s suitability
Submission of prospectus to HCMC
ATHEX approval for listing on the Regulated Market or admission to trading on the Alternative Market (subject to submission of a qualified application)
Review of prospectus and approval by HCMC
Publication of prospectus or information memorandum or document (where required)
Submission of documentation for admission to trading
Commencement of trading
In contrast, a private offering differs substantially. Potential investors are approached prior to the launch of the transaction to solicit demand for the product and the procedure is considerably shorter.
The key parties involved in the process are the following:
- the issuer of the securities;
- the auditors or reporting accountants of the issuer: the issuer’s auditors are responsible for assisting the company in preparing the company’s financial statements and any pro forma financial information that may be required. The reporting accountants are responsible for conducting financial due diligence;
- a credit institution or an investment firm acting as underwriters: the underwriters play an essential role before and following the public offering. The (lead) underwriters are also responsible for conducting due diligence, drafting the prospectus and other marketing materials to address queries that investors may have, referring to the issuer’s management and positioning the issuer in the market, coordinating and organising roadshow meeting, advising on the optimum allocation of the securities and recommending the offer price;
- the legal advisers to the issuer and to the underwriters: the legal advisers assist their respective clients in the preparation of the prospectus, manage relationships with regulators and the Securities Market, draft and negotiate the agreement and ensure the smooth completion of the offering;
- ATHEX, which operates the Securities Market and approves the listing application; and
- HCMC, which approves the prospectus.
What are the usual closing documents that the underwriters or the initial purchasers require in public and private offerings of debt securities from the issuer or third parties?
The usual closing documents in debt securities offerings include the following:
- legal opinions;
- courts certificates and certificate from the General Commercial Registry; and
- legal and financial due diligence reports.
What are the typical fees for listing debt securities on the principal exchanges?
As regards debt securities initial listing or admission to trading, the fees vary based on the market. In the Regulated Market, the listing fee is €3,000 regardless of the issue amount and the admission fee in the Alternative Market is €1,500, regardless of the issue amount. DSS registration fees are 0.025 per cent on the issue value, with a minimum fee of €3,000 and a maximum fee of €10,000.
Special debt instruments
How active is the market for special debt instruments, such as equity-linked notes, exchangeable or convertible debt, or other derivative products?
The Greek market for special debt instruments can be considered active, since there is a convertible bond currently trading on ATHEX, as well as the Athens Derivatives Exchange, which has a lot of options in derivative products.
What rules apply to the offering of such special debt securities? Are there any accounting implications that the issuer should be aware of?
In general, there are no material differences in the offering of such special debt securities. However, convertible and exchangeable bonds shall be admitted in the market solely subject to the underlying transferable securities having been previously listed on a regulated market or being listed at the same time. Due care must be given to any implications arising from the possible ‘conversion’ or ‘exchange’ of such special debt securities, and thus before proceeding to such issue, the issuer should receive special professional advice.
What determines whether securities are classed as debt or equity? What are the implications for instruments categorised as equity and not debt?
Pursuant to Law 3401/2005 and the Prospectus Directive, as well as the Prospectus Regulation, ‘equity securities’ include shares and other transferable securities equivalent to shares in companies, as well as any other type of transferable securities giving the right to acquire any of the aforementioned securities as a consequence of their being converted or the rights conferred by them being exercised, provided that securities of the latter type are issued by the issuer of the underlying shares or by an entity belonging to the group of the said issuer. Hence, all the other types of securities can be regarded as debt. The disclosure requirements, pursuant to the prospectus regime, do not differ for equity or debt securities offerings. However, the instruments categorised as debt should include an analysis of the risks regarding the company’s solvency, whereas instruments categorised as equity should include a detailed analysis of the risk factors regarding the profitability of the issuer.
Transfer of private debt securities
Are there any transfer restrictions or other limitations imposed on privately offered debt securities? What are the typical contractual arrangements or regulatory safe harbours that allow the investors to transfer privately offered debt securities?
There are no regulatory requirements imposing transfer restrictions on privately offered debt securities nor regulatory safe harbours. Permission for the transfer of debt securities, as well as any terms thereof, is a matter of private agreement between the parties.
Are there special rules applicable to offering of debt securities by foreign issuers in your jurisdiction? Are there special rules for domestic issuers offering debt securities only outside your jurisdiction?
The ATHEX Rulebook allows companies to issue bonds governed by Greek or foreign law. Hence, the same aforementioned requirements apply to foreign issuers as well. However, if the issuer is not a Greek SA, the applicability of the Greek provisions regarding the issuance of bond loans, including the offered tax advantages, is a matter of private international law.
As regards domestic issuers offering debt securities outside the Greek jurisdiction, the foreign law of each jurisdiction will govern the offering. However, according to the single passport rule, once a prospectus is approved in a European Economic Area (EEA) jurisdiction, the prospectus is valid in every EEA country. Thus debt securities, on condition of the existence of an already approved prospectus in an EEA jurisdiction, can be offered in Greece without prior approval of HCMC.
Are there any arrangements with other jurisdictions to help foreign issuers access debt capital markets in your jurisdiction?
The aforementioned regime (ie, the single passport rule) creates a harmonised strategy regarding the prospectus requirements inside the EEA. Hence, a prospectus that has already been approved in an EEA jurisdiction is valid in every EEA country, and thus only certain actions are required, such as translation of the prospectus.
What is the typical underwriting arrangement for public offerings of debt securities? How do the arrangements for private offerings of debt securities differ?
A credit institution or an investment firm (with licence to provide underwriting of financial instruments and placing of financial instruments on a firm commitment basis or placing of financial instruments without a firm commitment basis) shall act as underwriters. The (lead) underwriters are also responsible for conducting due diligence, drafting the prospectus and other marketing materials to address queries that investors may have, developing the ‘equity story’ with the issuer’s management and positioning the issuer in the market, coordinating and organising roadshow meetings, advising on the optimum allocation of the securities and recommending the offer price.
The underwriting agreement includes, in addition to the underwriters’ fees, specifications on liability matters and in particular limitation of liability, as well as indemnity matters in favour of the underwriters. Any liability limitation or exclusion regarding persons responsible for the information included in the prospectus is only valid inter partes and is invalid concerning the investors.
For private offerings, there is no substantial differentiation. Nevertheless, there is no mandatory provision for the existence of an underwriter.
How are underwriters regulated? Is approval required with respect to underwriting arrangements?
Since the underwriters in public offerings are either credit institutions or investment firms, the relevant legislation governing their regime applies respectively in those cases. However, the relevant Greek rules derive from the corresponding EU legislation.
No approval is required with respect to underwriting arrangements.
What are the key transaction execution issues in a public debt offering? How is the transaction settled?
Issuers and underwriters seem to have abandoned traditional bookbuilding and started to use the EBB, which is offered by ATHEX, according to Resolution ATHEX No. 34 ‘Electronic Book Building (EBB) Service’, as in force. Participants in the EBB may be all investment firms that have applied for their participation to the specific offering (ie, such application is repeated each time an investment firm wishes to participate in an offering conducted by the EBB), the underwriters or the issuer, as coordinator of the EBB. Through the EBB, the offers are concentrated, allocated and the allocation of the securities is finalised and executed. Members of the EBB enter into the EBB the bids on behalf of their clients or on their own account. The bids are prioritised in descending or chronological order if the disposal rate is fixed by the issuer. After the allocation of the securities, ATHEX provides the CSD with the data to be executed. Based on this data, the CSD informs the operators of the investors’ accounts of their respective financial obligations and their respective rights of receipt of the securities offered.
At the settlement date (t+2), the CSD informs ATHEX and the issuer for the amount raised and provides to the issuer the allocation data, in order for it to approve it. After such approval, the CSD credits the account designated by the coordinator with the amount raised in the public offering and registers the securities to the investors. The following business day, the trading of the securities commences. In the case of traditional book-building, investors who wish to participate in public debt offering file an application to the underwriter and the whole procedure is run by them and the issuer, in cooperation with ATHEX and the CSD.
How are public debt securities typically held and traded after an offering?
Debt securities may be issued ‘to the bearer’ or as registered or nominative bonds, depending on the terms of the issue. Pursuant to the relevant provisions of Laws 2533/1997 and 2396/1996, if a listing application has been filed, then the issuer does not issue bonds in physical form (ie, bond instruments) but the issued bonds are in dematerialised form (ie, they are recorded through book entry in the registry operated by the CSD).
Outstanding debt securities
Describe how issuers manage their outstanding debt securities.
Issuers have the ability to manage any outstanding debt securities in the market through purchases in the open market, unless it is otherwise provided in the documentation governing the offering. In addition, where a provision of a call option is included in a bond loan agreement, the issuer can proceed to the aforementioned action. In such cases, certain disclosure provisions may be applied.
Regulation and liability
Are there any reporting obligations that are imposed after offering of debt securities? What information would be included in such reporting?
Reporting and disclosure obligations for debt securities offerings derive from the EU transparency and market abuse regime (ie, Transparency Directive and Regulation and Market Abuse Regulation).
Such requirements are mainly provided in Law 3556/2007, which transposed Directive 2004/109/EC (transparency requirements) into Greek law and consist of the following:
- publication of the issuer’s annual financial report, pursuant to the same provisions as in Directive 2004/109/EC;
- publication of the issuer’s half-yearly financial report covering the first six months of the financial year, pursuant to the same provisions as in Directive 2004/109/EC;
- the credit institutions whose securities have been admitted to trading in a regulated market shall make public their quarterly financial report for the first and the third quarter of each financial year, at the latest three months after the end of each respective quarter. Such quarterly financial report consists of the consolidated financial statements when the issuer is obliged to issue consolidated financial statements, or at least the quarterly financial report, the quarterly income statement and relevant explanatory notes, when there is no consolidation obligation;
- annual report on payments made to governments of issuers in the extractive or logging of primary forest industries, pursuant to the same provisions as in Directive 2004/109/EC;
- announcements of the notifications received by shareholders regarding holdings disclosures, pursuant to the same provisions as in Directive 2004/109/EC, noting that Greece applies the thresholds of one-third and two-thirds instead of 30 per cent and 75 per cent respectively; and
- other notable reporting obligations:
- general meeting convocation;
- payment of dividends and other cash distributions;
- corporate actions and other matters that could be considered as inside information pursuant to the market abuse legislation as well as transactions performed by persons who discharge managerial duties in the issuer, as well as persons or entities closely related to them;
- any important change to use of proceeds raised by the issuer;
- material changes regarding the information included in the most recent prospectus;
- replies to questions addressed by ATHEX or HCMC;
- information to analysts;
- reporting in relation to the results of a tax audit conducted on the issuer;
- publication of information memoranda in case of certain corporate actions; and
- reporting of indirect listing.
Describe the liability regime related to debt securities offerings. What transaction participants, in addition to the issuer, are subject to liability? Is the liability analysis different for debt securities compared with securities of other types?
The potential liabilities in a debt securities offering in Greece are the same as in the EU market, since Greece has adopted the relevant EU legal framework.
In addition to the issuer, the transaction participants that may be subject to liability are the board of directors of the issuer, the underwriters and the issue adviser.
The bondholders’ representative in a bond offering may also be liable towards the bondholders, according to the Greek Bond Law and the terms of the bond loan, for any fault.
The aforementioned liability analysis would not differ substantially in the case of other types of securities. However, the category of investors will be taken into account during court proceedings in a possible liability case, owing to the different knowledge and information existing between a retail and a professional investor.
What types of remedies are available to the investors in debt securities?
The commonly provided remedies under the Greek law are: payment order (being the most popular and quickest procedure), lawsuit, application for provisional injunction and interim measures, appeal to the Court of Appeals and appeal to the Supreme Court.
Investors may be able to obtain monetary damages, depending on the circumstances. The main grounds for such remedies may be: mis-selling claims, pre-contractual wrongdoing, breach of the terms and conditions of the bond and prospectus liability.
What sanctioning powers do the regulators have and on what grounds? What are the typical results of regulatory inquiry or investigation?
HCMC, in its capacity as the competent authority, if it discovers that either an issuer or a holder of the financial instruments or a person related to an offering has failed to fulfil the obligations laid down in the respective legislation, can impose a fine of up to €3 million for any breach of the prospectus provisions. It can also decide, regardless of the sanctions, to suspend or terminate the public offering or the admission procedures for the negotiation of securities, when deemed essential in the interests of the investors.
The amount of the fine imposed shall take into account the seriousness of the offence, the impact of the breach on the orderly functioning of the market, the risk of damage to investors, the degree of liability, the action taken by the infringer to remedy the offence and the possible repetition in the future of any violation of the legislation concerning the capital market.
What are the main tax issues for issuers and bondholders?
Under the Greek Bond Law, there are certain tax advantages for the issuer, including the exemption from the imposition of stamp duty and of a contribution (pursuant to Law 128/1975) calculated on the nominal value of the bond loan.
Furthermore, it is noted that interest payments by the issuer are exempted from the issuer’s taxable income.
Additionally, the bond loan terms may provide that the bondholders shall receive payments without tax withholding. Notably, the current tax factor for tax withholding on interest income in Greece is 15 per cent.
A bondholder is recommended to pay attention to the tax section of the respective prospectus, where all tax aspects of the bonds and the related income should be described, such as, for example, tax on income from bonds and tax on bond transfers especially because of the unstable Greek tax environment.
Update and trends
Update and trends
- The licensing and full operation of ATHEX under the regulation (EU) 909/2014 (CSDR) in 2019.
- The full enactment of the new Prospectus Regulation in 2019.
- A focus on the corporate governance rules implementation by issuers, as highlighted by the recent scandal of a large Greek listed company from the retail/specialty retail sector.
- Sustainability of the debt capital markets as an alternative way of financing for Greek enterprises.
- Even more transaction-friendly legal framework for bond issuances with the new Law 4548/2018.
- 2019 is election year in Greece. This will affect debt transactions and capital markets in general - how much and whether it will be positive or negative are critical questions that are yet to be answered.