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GREECE: An Introduction to Corporate/Commercial

Theodora Karagiorgou
Chrysanthi Karlou
Yiannis Loizos
Spyros Roussakis
Konstantinos Papakonstantinou
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Greece: Corporate/Commercial 

Macroeconomic Developments 

The rapid spread of COVID-19 shaped Greece’s economic performance to a large extent in 2020. The Greek economy contracted by 8.2% compared to 2019, interrupting the recovery recorded during the previous years. The fallout of the tourist season in 2020 on the back of the pandemic had a significant effect given the weight of the tourism sector in the economy, which accounts for nearly 21% of the country’s GDP. Against this backdrop, the fiscal response to the crisis was well-organized and mitigated its impact, while market confidence and financing conditions remained favourable, as evidenced by the historically low sovereign yield spreads and the recent upgrade of Greece’s credit rating. Notably, according to recent surveys, the investment community credits Greece for the level of success in addressing the public healthcare crisis (77%), the speed of digitalization of the Greek state in response to the crisis (73%), and the weight and impact of the stimulus package (72%).

Transaction Activity & Market Trends 

The murky economic environment dampened deal-making confidence, driving a downward trend of deal volume. Overall, Greek companies attracted EUR 6 billion in total capital, a 50% decrease compared to 2019. This drop was particularly pronounced in the area of privatizations, where the completion of a number of transactions was extended to 2021 due to the COVID-19 outbreak. As a result, privatization proceeds declined from EUR 1.2 billion in 2019 to a mere EUR 45 million in 2020, driven by the successful closing of the Marina of Alimos concession. The value of listed corporate bonds issued by Greek companies dropped from EUR 5 billion to EUR 1.7 billion year over year, with six public offers in total, including issues by GEK TERNA SA and Lamda Development SA amounting to EUR 500 million and EUR 320 million, respectively.

According to a recently published survey, the volume of M&A transactions in 2020 fell markedly to 59 deals compared to 85 in 2019. However, the total deal value experienced only a marginal drop of EUR 160 million amounting to a total of EUR 4.1 billion. Notably, transactions valued above EUR 200 million accounted for 55% of total deal value in 2020, including the combination of the tower infrastructure assets of Vodafone Greece with those of Wind Hellas Telecommunications SA, Upfield Holdings BV’s EUR 500 million acquisition of Arivia SA, and Iliad SA’s EUR 440 million acquisition of 20.1% of PLAY Communications. In terms of industry performance, M&A activity was largely driven by the TMT sector, accounting for 44% of total deal value, while the food & beverage and energy sectors also remained active (16% and 10%, respectively). High-value acquisitions were also recorded in the e-commerce sector (Instashop Ltd, Skroutz SA, Caremarket), partly due to the impact of COVID-19 as a market disruptor.

2021 Outlook 

The evolution of the pandemic and the progress of the vaccination campaign hang over Greece, casting serious uncertainty over the country’s economic prospects, not least transaction activity. However, there is still reason for continued optimism in 2021. Fiscal policy is expected to remain accommodative, supported by low funding costs and the deployment of EU funds. Greek banks will redouble their efforts to reduce the stock of non-performing exposures and substantially improve asset quality. At the international level, large corporate cash reserves and record low interest rates across major markets will make it possible to fund deals in a variety of ways. Most importantly, the successful fight against COVID-19 coupled with the favourable risk/reward profile in a number of investment opportunities should pave the way for a solid economic recovery and spur transaction activity.

Insolvency Law 

The new insolvency framework enacted by law 4738/2020, transposing into Greek legislation the provisions of EU Directive 2019/1023, constitutes a coherent attempt to codify all previously available debt settlement tools and restructuring schemes in a single piece of legislation, while, at the same time, radically reforming the context for treatment of financial inability, collective satisfaction of creditors and discharge of debts for any natural person or legal entity carrying out financial activity. The main objective of the new framework is to increase transparency and effectiveness of preventive restructuring, pre-insolvency and insolvency resolution proceedings, in order to establish a more investment friendly environment where debt recovery rates for creditors and investors are higher. At the same time, the new provisions ensure that viable enterprises and entrepreneurs that face financial difficulties have access to effective mechanisms which enable them to continue operating, whereas non-viable businesses with no prospect of survival will be liquidated as quickly as possible. To that end, the simplification of procedural requirements, the shortening of the length of restructuring and insolvency procedures, the introduction of quantitative criteria for debtor qualification as well as the utilization of new technologies, such as the creation of central electronic platforms and an electronic insolvency registry to serve as points of reference for all parties concerned, are among the major reforms of the new legislation, which will speed up and increase transparency and effectiveness of preventive restructuring and insolvency proceedings. What’s more, the entry into force of law 4738/2020 has set the ground for a better assessment of the risks involved in lending and borrowing decisions, facilitating at the same time the adjustment for insolvent or over-indebted debtors, thus minimizing the economic and social costs involved in their deleveraging process.

Corporate Governance Framework 

Law 4706/2020 introduced a new, long awaited corporate governance framework for listed companies, with a view to reinforcing investor confidence and strengthening their transparent and efficient operation in line with international trends. The new provisions focus primarily on the composition and operation of the board of directors. Listed companies are obliged to adopt a suitability policy for the selection of board members, in accordance with guidelines provided by the Hellenic Capital Market Commission, whilst the law sets forth fit-and-proper principles and formal conditions for the composition of the board. The distinction under the previous regime between executive, non-executive and independent non-executive members remains, however the new provisions further delineate the responsibilities of each group and strengthen the role of independent non-executive members. The new corporate governance framework provides for the mandatory establishment of a Remuneration Committee and a Nomination Committee and introduces changes to the operation of the Audit Committee, while also including provisions on the company’s Operating Regulation and Internal Control Systems.

Online Platforms & Business Users 

A further notable development within 2020 is law 4753/2020, which introduced a number of supplementary measures aimed at reducing distortion of competition and the imbalance of negotiation power often presented in the case of intermediary platforms and search engines. Such measures are transposed into Greek legislation from Regulation (EU) 2019/1150 on platform-to-business relations (P2B Regulation) and aim to ensure that business users of online intermediation services and corporate website users in Greek territory, in relation to online search engines, are granted appropriate transparency, fairness and effective redress possibilities.

Digital Governance, Electronic Documents and E-Signatures

In many areas the COVID-19 pandemic has not been a change agent so much as an accelerant of trends already underway. This is most evident in the enaction of law 4727/2020 on Digital Governance (implementing EU Directives 2016/2102 and 2019/1024) and Electronic Communications (implementing EU Directive 2018/1972) which introduces a new framework on digital environment and electronic communications applicable to administrative procedures as well as to natural persons and legal entities. The overall objective of the new law is to facilitate business and good administration, transparency and accessibility, as well as ensure protection of personal data and privacy. The main and most important innovation of the law with respect to Digital Governance relates to the provision of digital public services and particularly the fact that the circulation of electronic documents, public or private, between administrative authorities and natural persons or legal entities will be carried out through the Single Digital Portal of Public Administration (, through a user authentication system. Furthermore, the law includes provisions on qualified electronic signatures, seals and time stamps, setting forth the requirements under which a public or private electronic document may be accepted by any public authority, court, natural person or legal entity.

Meetings of Corporate Bodies 

The COVID-19 pandemic prompted the Greek legislature to further facilitate the use of electronic means in meetings of corporate bodies. With regards to sociétés anonymes – the most common type of corporate business entity in Greece – the general meetings of shareholders as well as the meetings of the board of directors can now take place via teleconference even if this is not provided in the company’s constitutional documents, pursuant to the provisions of law 4712/2020. This is also permitted for meetings of members of private companies, another common type of corporate entity.