GREECE: An Introduction to Corporate/Commercial

Economic conditions, investment trends and developments

The Greek economy has maintained its development dynamic during 2023. Reforms in key areas have been the spearhead of this, including digitisation and digital transformation of the state, employment, public administration, justice, tax (administration, compliance, policy and the fight against evasion) and energy. Two key efforts deserve to be highlighted: the constant and rapid digitisation of the public sector has significantly improved the environment in which entrepreneurs and legal advisers operate, and the boosting of the number of digital transactions with the public administration marks a shift in the battle against bureaucracy. In parallel, the decrease in labour and capital taxes, combined with the establishment of special tax regimes to attract non-tax-residents, has strengthened the existing arsenal of investment incentives.

This structural improvement is already being rewarded, and foreign direct investment (FDI) into Greece is expected to reach one of the historic records for both FDI in Greece and exports, and investments are expected to increase at a high rate during the next three years, supported also by banks’ increased liquidity and available EU funding. The appetite for investments in Greece continues to rise. EY’s Attractiveness Survey Greece 2023 shows that FDI projects in Greece grew by 57% in 2022, at a time when investment in Europe increased by a mere 1%, and this trend continued in 2023.

In 2023, the Greek state initiated two major transactions, the sale of a 30% stake in Athens Airport via an initial public offering (IPO) and the long-term concession of the Attica Motorway, a 70 km (44-mile) ring road around Athens. In the retail sector, there were two big-ticket deals, PPC’s takeover of Kotsovolos and the acquisition of Attica Department Store by the Ideal Holdings Group. The information technology sector continues to show increased mobility, and a series of significant business consolidations and transactions took place covering several market sectors from cybersecurity to biotechnology.

In addition, venture capital and private equity financing are at quite a mature stage. A newly-born ecosystem of startups has been developed and is being systematically supported, together with SMEs, by the state. Indicatively, the Hellenic Development Bank of Investments continues to invest in funds supporting, among others, startups and SMEs, innovation and the green economy, whereas the Hellenic Development Bank has been very active in applying innovative financial instruments, delivered by financial institutions to the SMEs.

ESG (Environmental, Social and Governance)  

Greece places particular emphasis on achieving sustainable development and is committed to the implementation of the 2030 Agenda for Sustainable Development and its 17 Sustainable Development Goals (SDGs). Respectively, there has already been a significant increase in the number of enterprises that submit ESG data, according to the Athens Exchange ESG indicator.

Three pieces of legislation – (a) the Greek Environmental Law of 2022, (b) the Sustainable Finance Disclosure Regulation (SFDR) and (c) the ESG Taxonomy – set important milestones, as enterprises falling within their scope must perform risk assessments, implement risk management systems and enhance their procedures in order to ensure compliance.

ESG rules will have a significant effect on corporate compliance and M&A in Greece. Under the SFDR, which regulates disclosure obligations in the financial services sector, investment funds and asset managers are continually called upon to classify all portfolio investments in order to enable an ESG classification of the respective fund. Financing institutions in the context of their financing as well as investors in M&A transactions are conducting ESG due diligence to ensure their counterparties’ ESG compliance. Credit institutions are demanding ESG standards and are willing to reduce funding costs for ESG-compliant companies. Non-ESG-compliant SMEs may face increased funding costs or completely drop out of the investment universe of institutional investors.

New development law  

Law 4887/2022, passed on February 2022 and entitled “Development Law – Greece Strong Growth”, aims to accelerate new investment projects by introducing more efficient procedures for their evaluation, while offering more targeted incentives. To this end, the law provides for much shorter evaluation and approval periods and grants incentives for specific activities and sectors rather than horizontally, as per previous regimes.

The law introduces for the first time 13 thematic aid schemes, each focusing on specific sectors of the economy, that support new entrepreneurship, highly skilled employment, extroversion, digital and technological transformation, innovation and green energy. Furthermore, the law aims to strengthen less favoured regions of the country and regions included in the Just Transition Plan, and to improve competitiveness in sectors with a high added value. Each scheme will have an annual budget of EUR150 million, to be distributed on a region/type of incentive basis.

Beneficiaries are entities (commercial companies, social, agriculture producer cooperatives, joint ventures, companies in establishment or merger procedures, public and municipal companies, and personal companies under certain conditions) which are established or maintain a branch in Greece at the investment plan commencement date.

Each beneficiary may participate in the cost of the investment project (by equity or external financing), provided that at least 25% of the total investment cost does not contain any state aid, public support or subsidy. Incentives include tax exemptions, direct grants, leasing subsidies, subsidies for costs incurred to create employment, and risk financing. Eligibility thresholds are defined by the beneficiary’s size. Medium-sized and large enterprises may receive tax exemption, leasing subsidy and employment subsidy incentives, while the small and micro enterprises may receive all types of incentives.

The new law defines the level of aid according to the regional or national importance of the project, as well as the maximum amount of aid. The total amount of aid per investment plan submitted may not exceed EUR10 million. The aid granted to each single enterprise may not exceed a cumulative EUR20 million, or EUR30 million for a group of enterprises.

Competition Law modernisation 

Law 4886/2022, passed on January 2022, transposed Directive (EU) 2019/1 of the European Parliament and of the Council of 11 December 2018 and introduced both procedural and substantive amendments to the Greek Competition Law (Law 3959/2011).

The main amendments relate to the introduction of a new type of infringement, namely the invitation to collude and price signalling between competitors, extension of the Hellenic Competition Committee’s (HCC) powers concerning the imposition and immunity from fines, as well as information collection powers in the context of its newly established authority to undertake “mapping exercises”, increased scope of the settlement procedure, the leniency programme, the non-enforcement letter and modernisation of the methods used to investigate commercial conduct introducing advanced investigating tools, such as algorithmic methods. Furthermore, with respect to merger control, a very significant innovation is the possibility for conditional clearance in Phase I, which allows the parties to offer remedies within 20 days from their notification to address any concerns raised by the HCC relating to the transaction’s competitive impact. This was possible only during a Phase II investigation under the previous regime.