GREECE: An Introduction to Corporate/Commercial

Overview of the Economy 

The year 2023 has been a very challenging one with high inflation rates in the economies of the Western world and particularly in Europe. As a fast-growing member of the Eurozone, the Greek economy was affected, but unlike other seemingly more resilient economies, the consequences (higher interest rates in particular) were unable to halt the country’s strong economic growth. Based on a recent forecast, the Greek economy is expected to have a growth rate of 2.3% in 2024 and 2.2% in 2025. The radical programme of structural and economic reforms, alongside the accelerated digital transformation of the state and the prospect of stable leadership over the coming years provide a “safety net” for current and future investments. The credentials of the Greek economy have been affirmed by the recently recovered investment grade, according to the most accredited credit rating agencies. The upgrade of the Greek economy to investment grade status, after more than a decade, is a significant step forward, even for the most conservative investors and a much awaited and welcome milestone for any investor in general. The higher credit rating of the Greek State will also drag along the credit rating of the Greek banks. Financial institutions will have access to loans at a lower cost than the interbank market, and this liquidity will be able to flow into the market.

Latest Legal Trends and Developments 

Investment opportunities supported by the State

The latest Development Law 4887/2022 has seen much success with the main focus on being supporting long-standing activities in Greece, such as the tourism and hospitality industries, while promoting further innovations, including the digital and technological transformation along with the green energy transition of companies. The main goal was the introduction of provisions that accelerate all procedures of control, evaluation, approval, and licensing of any investment plan in an array of sectors. The beneficiaries of such aid will be eligible to receive tax exemptions, grants, leasing and job creation subsidies, and business risk financing for start-ups.

In the tourism sector, the tourism investment support scheme introduced by the Development Law 4887/2022 aimed at the creation, expansion, and modernisation of integrated tourism accommodation. The Development Law promotes private partnerships in the sector, aiming at co-operation between investors, private companies, and local stakeholders. The recently enacted legislation is a strategic tool for attracting investments in Greece.

Furthermore, in the scope of Greece 2.0 programme, the investment opportunities on energy projects (particularly renewable energy resources) have attracted funds from all over the world, amid the ongoing energy crisis. Greece seems like a “safe harbour” to these investors, since for the first time, the country’s geographical position has been massively supported by innovative regulatory and legislative changes, which further expedite the licensing process for the issuance of installation and operation licences for renewable projects.

Recent M&A activity 

The Greek M&A landscape has been shaped by many prominent deals during 2023, especially in the financial, energy, industrial and technology sectors with the total deal value estimated to be EUR10 billion. An ever-increasing interest in Greek start-ups has been noted in previous years and in 2023 many acquisitions of start-ups have been achieved. Furthermore, M&A activity is following international trends, suggesting the increasing quantity of RWI (representations and warranties insurance), the progressive reduction of escrow and hold-back mechanisms, and the removal of termination fees in private deals.

The aforementioned legal trends add extra value to private deals, which keep growing in the Greek market (whereas public transactions require strict disclosure formalities) with investors being mainly private equity funds, targeting mostly small and medium-sized businesses with growth potentials. Some prominent M&A deals completed in 2023 are the acquisition of Larsinos S.A. by Heracles Group, the acquisition of Depa Infrastructure SA by the leading Italian gas distributor Italgas, the acquisition of Code BGP by the US-based Cisco, the acquisition of the majority stake of Metropolitan College and IEK Akmi Group by BC Partners, the acquisition of Kotsovolos by the Public Power Corporation, and the acquisition of a major real estate portfolio by the consortium of Dimand and Premia Properties.

Latest law for cross-border M&A 

To support the increasing interest of foreign companies, the new Law 5055/2023 on cross-border conversions, mergers and splits of limited liability companies was recently introduced following the implementation of Directive (EU) 2019/2121. On the basis of the new legislation, cross-border corporate conversions and splits are allowed as well as the transfer of the registered seat of the company through the cross-border conversion.

Potential difficulties and ways to adapt 

Navigating through the complex web of regulatory and legal requirements is a significant challenge in M&A integration, for both the clients and the legal industry. Ensuring compliance with antitrust regulations, labour laws, intellectual property rights, and contractual obligations is crucial to avoid legal disputes and reputational damage. The obvious solution to address these issues is the early involvement of legal experts in the process. Conducting due diligence and developing a robust compliance framework are essential to addressing these challenges effectively. The findings of the legal due diligence should be assessed by the clients with the help of counsel, in order to reduce the possibility of a potential default by the parties or of encountering any hurdles in the later phases of a transaction.

In the scope of the above, an increasingly important step when it comes to M&A is the combined overview of the findings of every due diligence report (technical, legal or financial due diligence) by legal advisors in order to address every aspect of the potential findings. This further strengthens the overall understanding that a legal advisor involved in M&A should have, making them able to identify potential risks across a wide range of areas in a transaction and suggest ways to avoid them.