[co-authors: Dimitris Emvalomenos, Maria Tranoudi]*
World Law Group member firms recently collaborated on a Global Venture Capital Guide that covers more than 30 jurisdictions on investment approval processes, typical investment sectors and investment structures on Venture Capital deals (and more!).
The guide does not claim to be comprehensive, and laws in this area are quickly evolving. In particular, it does not replace professional and detailed legal advice, as facts and circumstances vary on a case-by-case basis and country-specific regulations may change.
This chapter covers Greece. View the full guide.
Bahas, Gramatidis & Partners
- In your jurisdiction, which sectors do venture capital funds typically invest in?
In Greece, venture capital (VC) funds primarily invest in tourism, travel, agriculture, technology and e-commerce.
- Do venture capital funds require any approvals before investing in your jurisdiction?
No, foreign VC funds do not require any prior approval; however, the managers of VC funds have to comply with the provisions of Law 4209/2013, as amended, which transposed Directive 2011/61/EU regarding Alternative Investment Fund Managers (AIFMs). Notwithstanding the legal structure and the form of the AIFs managed, the following fall within the scope of Law 4209/2013:
- EU or non-EU AIFMs that manage one or more Greek AIFs, and
- EU or non-EU AIFMs that market one or more AIFs in Greece.
A foreign manager performing fund management activities or providing services in Greece may not do so without a prior authorization by the Hellenic Capital Market Commission (HCMC) or an EU passport.
- Are there any legal limitations to an offshore venture capital fund acquiring control or influencing the business, operations, or governance of an investee entity?
Generally, there are no restrictions on a foreign VC acquiring control or influencing the business, operations or governance of an investee entity. An exception to this rule applies to a transaction by which a foreign entity/person acquires shares of any type of company that owns real estate in the so-called Greek border areas.
In case the investee is a listed entity according to Law 3461/2006 (the Takeover Bid Law), if the percentage of voting rights which the acquiring entity possesses, as a result of the acquisition, exceeds the threshold of one-third (1/3) of the total voting rights of the investee entity, then a mandatory bid must be launched, within a 20-day time period from the acquisition, for the acquisition of the total outstanding capital of the investee entity by paying an equitable and fair consideration.
- Would an investor be required to undertake an antitrust analysis prior to investment? When would such a requirement be triggered?
According to article 6.1 of Law 3959/2011 (the Competition Law): “All concentrations of undertakings shall be notified to the Competition Commission within thirty (30) days of conclusion of the agreement or the announcement of the bid or the acquisition of a controlling interest, where turnover by all undertakings in a concentration within the meaning of Article 10 totals at least EUR 150 million on the global market and each of at least two of the undertakings involved generate turnover totaling over EUR 15 million on the Greek market.”
Within the meaning of concentration falls: i) a merger of two or more previously independent undertakings or parts thereof; ii) an acquisition of sole control over another undertaking or part thereof; or iii) an establishment of a full-function concentrative joint venture; or iv) an acquisition of joint control of an existing undertaking.
Acquisition of control may be either direct or indirect and may take place in a variety of ways including by contract and/or the acquisition of shares or other assets. The following transactions are, however, not considered a concentration: i) the acquisition of titles by credit or financing institutions or insurance companies for a maximum period of one year (which might be extended for a reasonable time period, not exceeding three months); ii) such control being exercised by a person appointed in the context of company liquidation, bankruptcy, reconciliation or other similar proceedings; and iii) the acquisition of whole or part of an undertaking by investment companies for the purpose of preserving its market value, rather than managing its business behavior and decision-making.
- What are the preferred structures for investment in venture capital deals? What are the primary drivers for each of these structures?
In Greece, a VC investment usually takes the form of acquiring a shareholding percentage of the investees’ equity or acquiring bonds convertible to shares, issued by the investee entity. The primary driver in determining the specific structure is the level of control over the activities of an investee company.
- Is there any restriction on rights available to venture capital investors in public companies?
No, in public (listed) companies, no special restrictions apply to venture capital investors, apart from the general rules applicable to any person buying shares of such companies.
- What protections are generally available to venture capital investors in your jurisdiction?
Generally, VC investors are protected by standard clauses in the investment documents (e.g., representations, warranties, guarantees, put option rights, tag-along rights). Aside from that, law 4548/2018 (art. 141) provides minority shareholders with a level of protection depending on the percentage of share capital that such shareholders hold i.e., 1/20, 1/10, 1/5 (a higher percentage gives a higher protection).
- Is warranty and indemnity insurance common in your jurisdiction? Are there any legal or practical challenges associated with obtaining such insurance?
In Greece, warranty and indemnity insurance (W&I Insurance) is not common at all and Greek insurance firms do not market such a product. Thus, W&I Insurance would have to be obtained from a foreign insurance firm. No legal restrictions apply in relation to obtaining such insurance as long as the insurance firm providing the policy has the permission to offer such policy.
- What are common exit mechanisms adopted in venture capital transactions, and what, if any, are the risks or challenges associated with such exits?
Three exit mechanisms exist, namely: i) the sale of the investee entity, ii) an IPO, and iii) a leveraged buyout. The most common exit mechanism is the sale of investee entity. No risks are associated with this exit strategy but the negotiations for the sale between sellers and buyers can sometimes be challenging.
- Do investors typically opt for a public market exit via an IPO? Are there any specific public market challenges that need to be addressed?
No, investors typically exit via the sale of the investee entity.
*Bahas, Gramatidis & Partners