In line with global trends, the Greek M&A market in 2023 was characterised by a relative downturn, at least in terms of deals announced. Factors such as macroeconomic events, high interest rates and inflation continued to hold back deal making as in the last quarter of 2022, with valuation gaps between sellers and buyers becoming apparent and delaying more than a few M&A work streams. There is no doubt that some of the transactions being negotiated by players in the Greek M&A market for the better part of the past year will be completed within early 2024, thus producing a boost in deal volumes and values.

On the other hand, COVID-19 implications seem to be less of a concern for deal activity these days. Deal makers have adapted to the “new reality” brought about by the pandemic and are delineating their M&A strategies in a more planned fashion. They are also becoming more nuanced as regards key points of focus, so that the previously highly debated issues of material adverse change and force majeure clauses are no longer dominating negotiations.

The overall market sentiment for the year ahead is quite optimistic and well founded on the country’s prolonged period of stability and the transformation of its economy, which recently culminated in Greece’s return to investment grade after 13 years. M&A activity has significantly benefited from these developments (even amidst some inevitable slowdowns) and is expected to continue to do so.

Technology and innovation have become key drivers of M&A activity in Greece in recent years. Clear manifestations of this trend are the shift from traditional business models, the increased focus on technology as a component of both M&A work streams and deal-making strategies and, of course, the hype around GenAI and its implications for the M&A life cycle. The Greek state continues to enact legislation and incentives to promote innovation and the country’s emerging role as an innovation hub.

Corporate transformations and restructurings are also taking place at an increased pace. Greece has recently consolidated its previously fragmented legal framework regarding corporate transformations, which has led to an upturn in M&A opportunities. Market players are utilising these tools as part of their overall M&A strategies, but also as a means of facilitating more efficient deal structures through divestitures, demergers, spin-offs, etc. The foregoing, combined with the continued introduction of tax incentives, have enabled deal makers to unlock values even in sectors that have historically seen very little transactional activity.

The Greek energy market is one of the sectors that have traditionally witnessed significant M&A activity, including during the past 12 months. Transactions targeting renewable energy sources, especially regarding wind and solar farms, are now at the top of the list of many deal makers who are prioritising their ESG objectives and underpinning their commitment to the transition to a green era. Joint ventures are also becoming increasingly popular in this sector, in an effort of key operators to jointly develop significant projects in the wider region of South-Eastern Europe.

Some notable deals in the technology market were also completed in the past 12 months, with Greek start-ups attracting the interest of global tech giants. The most recent example was the acquisition of BETA CAE Systems by Cadence Group for approximately USD1.24 billion, making BETA CAE the third Greek unicorn (following Viva Wallet and PeopleCert). Private equity and venture capital funds, both local and foreign, have also been particularly active in this sector, while more traditional companies are also on the lookout for opportunities to buy or invest in technology.

On the other hand, deal flow in the food and beverage industry seems to have slowed down following the outbreak of COVID-19 and has not reached pre-pandemic levels since. The valuation gaps between the sell side and the buy side have significantly delayed negotiations and have also resulted in certain promising deals falling through.

Greek M&A transactions may be structured as either share deals or asset deals depending on the investment appetite of the parties involved as well as the particularities of each specific investment opportunity.

Besides the ‘cherry-picking’ transfer of assets, a buyer may opt also for a business transfer, ie, the acquisition of a stand-alone economic unit or the seller’s business as a whole. The practical consequences are: (a) the different tax treatment; (b) application of the provisions of Presidential Decree 178/2002, which has transposed EU Directive 98/50/EC (known as Transfer of Undertakings (Protection of Employment), or TUPE), by virtue of which all personnel associated with the business or business unit (as the case may be) are entitled to continue their employment with the acquirer under the same terms; and (c) application of the mandatory provisions of Article 479 of the Greek Civil Code, which provide for liability of the acquirer jointly with the seller in respect of debts of the transferred business, but up to the amount of the value of the said business.

Furthermore, pursuant to Law 4601/2019 on corporate transformations, the acquisition of a company may be concluded as a merger, demerger or spin-off which benefits from the universal succession of the business undergoing corporate transformation by the transferee by operation of law.

In terms of regulatory bodies, in principle, business combinations meeting the jurisdictional thresholds prescribed by Greek Law 3959/2011 on protection of free competition must be notified to the Hellenic Competition Commission (HCC), and the parties involved must abstain from consummating the transaction until it has been cleared by the HCC.

In addition, depending on the type of M&A transaction, the following regulatory bodies may need to be involved in the process:

• the Bank of Greece, as regards financial and credit institutions (or the European Central Bank as regards the Greek systemic banks) and insurance companies;
• the Greek Ministry of Development, if a corporate transformation involves an entity of public interest, or an entity in receipt of an operation licence from the Hellenic Capital Market Commission (HCMC), or otherwise when specifically provided for in the law;
• the HCMC, as regards listed entities, investment firms and any other entities supervised by it;
• the Regulatory Authority for Energy, Waste and Water; and
• the Hellenic Gaming Commission.

The laws in Greece generally encourage and facilitate foreign investment, with limited restrictions on foreign control or ownership and no sector-specific restrictions. Greece limits foreign ownership of real estate located in certain regions designated as border areas; however, it does not yet have a formal Foreign Direct Investment (FDI) screening mechanism in place. Following the adoption of the EU FDI Screening Regulation, it is expected that Greece will shortly be requested to amend its liberalised framework and adopt an FDI screening mechanism in line with the standards of the EU FDI Screening Regulation to tighten its openness regime to FDI.

Greek antitrust legislation reflects EU competition law principles, namely Articles 101 and 102 of the Treaty on the Functioning of the European Union and the respective European merger control rules. Greek Law 3959/2011 prohibits certain business agreements whose object or effect is the restriction of free competition as well as the abuse of a dominant position. The HCC is entrusted with monitoring adherence to the national framework.

Notification obligations are triggered in the event of contemplated concentrations (ie, changes of control on a lasting basis, such as mergers, acquisitions of control, etc). In particular, in order to qualify for notification to the HCC, a concentration must cumulatively:

• meet the turnover thresholds specified in Article 6 (1) of Law 3959/2011, ie, the total turnover of the parties to the concentration in the worldwide market must exceed EUR150 million, and at least two of the undertakings concerned must have a turnover exceeding EUR15 million each in the national market; and
• not be otherwise subject to merger control by the European Commission, ie, it must not meet the European dimension requirement under EU Regulation 139/2004.

Concentrations meeting the above criteria must be notified to the HCC within 30 days from the date of the relevant “triggering event”, such as the conclusion of the agreement giving rise to the concentration.

The main labour law considerations relating to Greek M&A transactions usually arise in business transfers and the protection of employees’ rights in the context of such transactions. Given that in share deals the identity of the employer remains the same, the most common occasions on which such issues are identified are in transactions structured as asset deals, business transfers or corporate transformations contemplating a specific business unit (eg, spin-off, demerger).

The main question that arises from an employment law perspective in relation to a transaction structured as an asset or business transfer is whether such transaction would fall within the ambit of the Greek TUPE legislation (Presidential Decree 178/2002). A transfer of business within the meaning of the Greek TUPE legislation occurs when the transferred economic entity retains its identity, meaning an “organised grouping of resources” (eg, tangible and intangible assets, licences, personnel, customers) “which has the objective of pursuing an economic activity, whether that activity is central or ancillary”. The tendency of the Greek courts is to interpret the above definition in a wide manner and in favour of the employees. Indicatively, the courts base their assessment on the following: transfer of (tangible and intangible) assets, transfer of personnel, transfer of clientele, continuation by the transferee of the same or similar business activity, etc. In the event that an acquisition falls within the scope of the Greek TUPE legislation, there will be an automatic transfer of the respective employees to the new employer by operation of law. The acquirer will assume the obligations of the seller towards such employees, while the seller will remain jointly liable with the acquirer for any such obligations attributed to the period up until the transfer.

Under applicable law, the transferor and transferee are obliged to inform their employees in writing in good time before the transfer about the (proposed) date of the transfer, the reasons for the transfer, the legal, economic and social implications for the employees, and the envisaged measures in relation to the employees.

Generally, foreign investments do not require approval from Greek authorities, except for certain restrictions on foreign investments involving real estate occupation or ownership in border regions and on certain islands, with regard to national security considerations. In particular, non-EU/European Free Trade Association individuals or legal entities may not proceed with any transaction in which a contractual right or a right in rem is granted in their favour, or such individuals or legal entities may not acquire shares of companies (irrespective of the companies’ legal forms) that own real estate property located in certain border regions of Greece prescribed by Article 24 of Law 1892/1990, as amended and in force, without the prior approval from the competent decentralised administration office, which shall lift the relevant restrictions upon the interested parties’ filing of a lawful petition to that end. Another example is Legislative Decree 210/1973, which allows special approval of contracts for the transfer to foreign (natural or legal) persons or for the use/exploitation of mining rights by such persons.

Over the last three years there have been a number of interesting legal developments surrounding Greek M&A transactions. More specifically:

Merger Control

Greek Law 3959/2011 has been recently amended and the HCC has been empowered to impose remedies in “Phase I” clearance decisions, whereas previously it was only empowered to impose remedies in the context of “Phase II” clearance decisions. Moreover, the Minister of Finance and the Minister of Development and Investments may now, by joint decision published after a public consultation, amend the turnover-related thresholds as well as imposing ad hoc thresholds for different economic sectors. Such decision must be based on statistics collected by the HCC, following mapping of the relevant markets, as well as the competitive conditions therein for the past three years.

Tax Incentives

Recently introduced, Law 4935/2022 aims to provide for tax incentives to foster company transformations of SMEs, the 30% reduction of the income tax premium imposed on pre-tax profits for the entity that will ensue from the company transformation being the most prominent, subject to specific conditions. The reduction presupposes, among others, that the turnover of the new company will amount to or exceed EUR375,000 (consisting in the sum of the transformed companies’ turnover) and that the novel company will fully employ at least nine persons. The reduction will apply for up to nine fiscal years, commencing from the fiscal year following the transformation’s completion, during which term the total tax relief will not surpass EUR500,000 million. Said law was also followed by Codified Law 5039/2023 replacing Law 4399/2016 aiming at promoting the economic development of the country by providing incentives to specific activities and sectors. Law 5039/2023 provides for 13 investment schemes and it introduces provisions aiming at the acceleration of the evaluation, approval, audit and certification processes of the schemes falling into the ambit thereof.

Cross-Border Corporate Transformations

Recently passed, Law 5055/2023 transposed Directive (EU) 2019/2121 on cross-border conversions, mergers and demergers of capital companies into domestic legislation, aiming at systematising the regime of cross-border corporate transformations into a single framework, through the completion of the existing legislative framework (which has until now only concerned cross-border mergers) with the addition of regulations concerning cross-border demergers and conversions of capital companies. Moreover, the provisions of the new law on cross-border conversion constitute an explicit legal regime for the transfer of seat of a company to another member state, unlike the non-regulated process previously followed, fostering the fundamental principle of freedom of establishment.

Takeover bids for the purchase of shares of companies listed on the Athens Exchange are regulated by Law 3461/2006 on takeover bids, as amended and in force, implementing in Greece Directive 2004/25/EC on takeover bids. Such law has not been subject to any recent significant changes nor any changes are foreseen in the near future.

Stakebuilding in Greek public companies is permitted subject to the notification requirements when exceeding the material shareholding thresholds provided by law (see 4.2 Material Shareholding Disclosure Threshold). Prospective bidders may utilise stakebuilding strategies prior to launching an offer, but need to remain conscious of potential insider dealing implications when doing so.

In accordance with Greek Law 3556/2007 on disclosure obligations in the case of acquisition of significant holdings in listed companies, a disclosure requirement to the issuer is triggered if any person reaches, exceeds or falls below 5%, 10%, 15%, 20%, 25%, 33.33%, 50% and 66.66% of the total percentage of voting rights in a listed company. The same requirement is applicable if a person holding more than 10% of the voting rights has an increase or a decrease of such percentage equal to or more than 3% of the issuer’s total voting rights. The calculation of the relevant thresholds needs to take into account voting rights held both directly and indirectly by the respective person. The notification must be also submitted to the HCMC.

The reporting thresholds are set out in 4.2 Material Shareholding Disclosure Threshold. Additional hurdles to stakebuilding may arise from restrictions imposed on the transferability of a company’s shares, as reflected in the company’s articles of association. Regulatory approvals, including merger clearance from the competent competition authorities, may also come into play in this regard.

Dealings in derivatives are permitted under Greek law. The main pieces of legislation in this regard are Regulation (EU) No 648/2012 on over-the-counter (OTC) derivatives, central counterparties and trade repositories, and Regulation (EU) No 236/2012 on short selling and certain aspects of credit default swaps, as well as the relevant decisions and guidance issued by the HCMC from time to time.

The same reporting obligations provided in 4.2 Material Shareholding Disclosure Threshold apply to any persons that acquire or dispose of, directly or indirectly through a third party, financial instruments that (a) on maturity, provide the holder, under a formal agreement, either the unconditional right to acquire or the discretion as to the right to acquire shares of the company to which voting rights are attached and which are already issued or (b) are not included in point (a), but concern shares mentioned therein and have an economic effect similar to that of the financial instruments listed therein, whether they provide a right of physical settlement or not.

For the purposes of the above assessment, the following are considered as financial instruments, provided they meet the requirements set out above: securities, options, futures, swaps, forwards, contracts for difference and other contracts or agreements with a similar economic effect, for which a physical or cash settlement or arrangement may apply.

Generally, shareholders are not required to disclose the purpose of their acquisition. However, in accordance with Greek Law 3461/2006, any person intending to submit a public offer (whether voluntary or mandatory) has to notify in advance in writing the HCMC and the board of directors of the target company. The offeror is required to publish an information memorandum (following approval thereof by the HCMC), which must set out the offeror’s intentions regarding the continuation of the business activities of the offeree company and the offeror company and in relation to the safeguarding of the jobs of their employees and management, including any material change in the conditions of employment, as well as in particular the offeror’s strategic plans for the two companies and the potential impact on employment and the locations of the offeree company’s places of business.

In transactions concerning private companies, the target is typically not required to disclose the deal. Most of the times, the contracting parties have also entered into non-disclosure agreements and provided for similar undertakings in the transactional documentation, so that the deal is only announced once completed and to the extent the parties wish to announce the deal.

On the other hand, in the case of listed companies a bid is made public either when an offeror decides to proceed with a (voluntary) offer or when the mandatory offer thresholds set out in 6.2 Mandatory Offer Threshold are met. In such a case, the offeror must notify in writing the HCMC and the target company’s board of directors. Within the following business day, the offeror must announce the takeover bid on its website and in the daily bulletin announcements of the Athens Exchange.

The boards of directors of the target company and of the offeror inform the representatives of their employees or, in case there are none, the employees directly about the takeover bid without undue delay.

Market practice on timing of disclosure rarely differs from legal requirements. In private M&A deals, the contracting parties tend to reach a mutual agreement as to the timing, form and content of any announcements, except in certain instances with the involvement of institutional investors that may want to retain a unilateral right to announce. As regards takeover bids, the disclosure requirements, including the timing thereof, are prescribed by law and need to be respected by all parties involved.

Although the main areas of focus in a due diligence exercise remain constant in most cases, the delineation of the exact scope of due diligence largely depends on the business carried out by the target, the type of business combination opted for (eg, share deal vs asset deal), the timeframe for the completion of the transaction and the negotiating power of the parties. Legal and tax/financial due diligence are at the top of the list of prospective buyers, whereas technical due diligence is becoming more popular, especially in tech deals.

In the COVID-19 era, “full” due diligence exercises are rather rare and mostly preferred either by investors that have not previously done business in Greece or in cases of targets operating in sectors that have not been particularly open to M&A activity (eg, due to regulatory constraints), thus necessitating a better understanding of the nuances of such sectors. Deal makers are now adopting a more pragmatic approach focusing on “red flags”, and the due diligence exercise is shaped accordingly to identify issues for which contractual protection or specific contractual arrangements will be required.

Exclusivity or no-shop arrangements are very common in private M&A transactions and primarily intended to secure the interests of the potential buyer. The specific undertakings are either included in an initial non-binding offer/letter of intent or in a separate exclusivity agreement, and may vary depending on the anticipated timeline of the transaction between three and 12 months. A breach of these obligations can result in the breaching party being held liable for damages.

In public M&A transactions, exclusivity arrangements are less frequent, but still an option depending on the nature of the transaction and the contemplated structure.

The offeror typically sets out the respective terms and conditions in its offer document. The offeror prepares the tender offer in accordance with the requirements of Greek Law 3461/2006 without going into individual negotiations with each recipient. A definitive agreement in respect of the tender offer is essentially concluded by means of a written declaration of acceptance from the recipients and on the basis of the terms and conditions prescribed in the offer document.

The length of the process for acquiring/selling a business highly depends on the specific sector market standards and the particularities of each case (namely, whether the acquisition is structured as a share or an asset deal where timing may vary if notaries or public authorities are involved for the completion of the transaction). In cases where a split signing and completion process is in place, the interim period may often be extended to include the receipt of any regulatory approvals or the fulfilment of conditions precedent which may affect timing.

The above also applies to the acquisition of securities of Greek listed entities subject to specific regulatory requirements within the applicable deadlines. In the case of acquisition of securities through a tender offer, the acceptance period may take no less than four weeks (minimum duration) and up to eight weeks as of the publication of the tender offer prospectus. The HCMC may resolve on the extension of the acceptance period for up to two weeks upon a relevant request of the offeror.

Regarding corporate transformations (at either a national or cross-border level), the relevant framework under Greek Law 4601/2019 on corporate transformations includes provisions in relation to cool-off periods for the protection of creditors and other stakeholders (30-day or two-month periods, as the case may be).

COVID-19 pandemic-related legislation did not seem to heavily affect the landscape of the Greek M&A market in terms of timing and the deal-closing process, while most of relevant restrictions have been lifted at time of writing.

On the other hand, Greece has enacted Law 4727/2020 on digital governance, which, in conjunction with Regulation (EU) No 910/2014 on electronic identification and trust services for electronic transactions in the internal market (eIDAS Regulation), has enabled remote signing processes since it rules that a qualified electronic signature has the same legal effect as a handwritten signature.

Greek Law 3461/2006 provides for the following mandatory offer thresholds:

• If a person acquires in any way, directly or indirectly, securities of a company, and if, due to such acquisition, directly by it or indirectly by persons acting in concert with it, its holding of securities exceeds one-third of the total voting rights in that company (namely a percentage of 33.33%), it is obliged to make a takeover bid within 20 days as of such acquisition (or within 30 days as of such acquisition in the event a valuation of the securities is required subject to the applicable provisions of Law 3461/2006) addressed to all the holders of securities in the company under acquisition for all their holdings, at a fair and equitable purchase price.
• The same rule applies to any person that holds more than one-third of the securities without crossing the threshold of one-half of the total voting rights in the company under acquisition, and where such person acquires within six months, in any way, directly or indirectly, as a result of its own acquisition or the acquisition by persons acting on its behalf or in concert with it, securities in the company under acquisition which exceed a percentage of 3% of the total voting rights in that company.

• Private M&A transactions: Cash is more commonly used than shares as consideration, while share-to-share exchange schemes have become more and more attractive to investors due to introduced tax incentives.
• Public M&A transactions: Both cash and shares may be used as consideration. Specifically in a tender offer, the consideration may consist of cash or securities (whether listed or not on a stock exchange market) or a combination of both. In the case of a mandatory tender offer, the offerees must be provided with the option to receive only cash as consideration in exchange for their holdings.

Bridging Valuation Gaps

Different valuation models and methods in a business combination in conjunction with regulatory, legal, political or financial factors often lead to valuation gaps which may cause frustration and uncertainty for both parties. In response to such discrepancies, the legal market has introduced mechanisms to bridge parties’ different approaches with variations on a case-by-case basis:

• Earn-outs: Earn-out structures may be negotiated when the parties do not seem to agree on the valuation of the business and thus the proposed purchase price. Earn-outs also play a key role as an additional incentive offered to the sellers to aim for higher business performance within a specified timeline. Often based on a pre-agreed business plan, such mechanism may provide comfort against a valuation gap but should be carefully formulated in terms of the method of calculation and the exact earn-out period.
• Escrow agreements: In cases where potential risks have been identified during the due diligence process, the parties may agree on a specific amount of the purchase price to be retained by the buyer and put in escrow until the risk has materialised or been resolved, at which point the amount may be released to the relevant party. Such arrangements are governed by escrow agreements negotiated between the parties in the context of the transaction, while key considerations may relate to the length of the escrow period, the release notices, etc.

Pursuant to the provisions of Law 3461/2006, a takeover offer may not be subject to any conditions precedent, except for conditions that have been included in the tender offer prospectus and solely relate to the receipt of regulatory approvals and/or the issuance of securities which are offered as consideration under the said tender offer.

There are no minimum acceptance conditions in terms of control thresholds for tender offers under the applicable provisions in Greece. An offeror may proceed with a voluntary tender offer for the acquisition of any number of securities issued by the company under acquisition.

Α takeover offer may not be subject to any conditions precedent apart from any prior regulatory approvals as set out in the tender offer prospectus. Considering this, a business combination through a tender offer (whether mandatory or voluntary) may not be conditional on the bidder obtaining financing. Nevertheless, information on the financing of the tender offer is included in the tender offer prospectus.

On the other hand, based on the specific type of consideration, the offeror shall be required to provide proof of its means to pay the offered price. In this regard, if the consideration consists of cash, a confirmation by a Greek or an EU credit institution that the offeror will be able to pay an amount equal to the total amount that may be payable under the tender offer must be provided and remain in place up to the completion of the tender offer. Also, any applicable fees and taxes must be taken into account in the tender offer prospectus. Accordingly, if the consideration consists of securities, a confirmation by a Greek or an EU investment services firm or a credit institution must be provided, setting out that the offeror holds the securities that are being offered under the tender offer or, as the case may be, that it has taken any appropriate means so that it will be able to provide the offered consideration.

Any other business combination could be subject to the bidder obtaining financing, which will be contractually structured between the parties as a condition of closing the transaction or otherwise.

Deal security measures are occasionally applied in the Greek private M&A market. Break-up fees and restrictive covenants are a few of the tools that a buyer may seek to include in the transaction documents.

In the case of public M&A deals, deal security measures are not that common. Force-the-vote rights may not be included in accordance with Greek corporate law, while break-up fees could be agreed between the principal shareholders and the potential buyer but would still be subject to the general principles of the Greek Civil Code and could be challenged and ruled as abusive and therefore void . It should be noted that financial assistance is restricted under Greek law; therefore, it could be ruled unenforceable if provided as security for the completion of the bid. In any case, deal security measures could be considered as defensive measures and thus could be subject to the board neutrality rule (see 9.2 Directors’ Use of Defensive Measures).

Also, there seem to be no new contractual considerations for managing “pandemic risk” in the interim period. Such risk could be negotiated and addressed within the transactional documentation using traditional tools.

Finally, there have been no material changes to the applicable regulatory provisions impacting the length of the interim periods.

Notwithstanding the particularities of each case, governance rights may consist of several veto rights of the purchaser entitling it to actively participate in specific areas of the company’s business ranging from decisions on the development of the company’s business to the approval of a business plan, debt or equity financing of the company, entry into material contracts, etc (often referred to as reserved matters), in the sense that the company will not be able to validly decide on such matters without the purchaser’s approval. Additionally, a right of the purchaser to directly appoint up to two-thirds of the directors of the board or nominate directors for their election by the general meeting of shareholders may also be included. It goes without saying that the bidder’s governance rights are also protected if the holdings of the other shareholders are locked-in for a specific period where their transfer would be restricted. The amendment of the company’s articles of association to include the above rights would be recommended for a higher protection of the purchaser against third parties.       

Under Greek law, shareholders of Greek entities (whether private or public listed corporations) can vote by proxy in shareholders’ general meetings.

Law 3461/2006 provides for a squeeze-out and a sell-out right:

• Squeeze-out right: An offeror that acquires at least 90% of the total voting rights of the company during the course of a tender offer for the entirety of the securities issued by the company has the right to demand to acquire the remaining securities issued by the company within three months as of the lapse of the acceptance period, provided a relevant clause for the exercise of the squeeze-out right has been included in the tender offer prospectus. The consideration must be in the same form and at least equal to the one offered during the tender offer, and the minority shareholders can request a cash payment or appeal before the competent court for the determination of a fair and equitable price without obstructing the squeeze-out procedure.
• Sell-out right: An offeror that acquires at least 90% of the total voting rights of the company during the course of a tender offer for the entirety of the securities issued by the company is obliged, within three months as of the publication of the tender offer results, to purchase any securities of the company offered to it. The consideration must be in cash and equal to the tender offer price.

Given that the public M&A market in Greece is held and driven by relatively few players, it is quite common for the offeror to negotiate with the shareholders of the target company and even reach agreements with them prior to the acquisition of the shareholdings, triggering a mandatory offer subject to compliance with applicable law requirements and restrictions.

The undertakings of the parties usually take the form of share purchase agreements or other binding arrangements. Their terms may be agreed upon by the parties in accordance with Greek law.

In accordance with Law 3461/2006, the offeror, before announcing the tender offer to the public, must notify the HCMC and the board of directors of the target in writing. The notification must be made immediately after the relevant decision of the bidder to launch a voluntary offer or, in the case of a mandatory offer, within 20 days as of the triggering of the provided thresholds. Along with such notification, the offeror submits to the HCMC and the target’s board a draft of the tender offer prospectus.

On the next business day and before the commencement of trading of the relevant securities of the offeree company in the stock exchange, the offeror makes a public announcement of the tender offer disclosing the minimum required content under the applicable provisions, which shall also include its intention (if any) to acquire additional securities issued by the target company within the tender offer period and up to the lapse of the acceptance period, other than those which will be offered to it in the context of the tender offer. The HCMC must approve the tender offer prospectus within ten days of its submission by the offeror. Once the prospectus is approved by the HCMC, it is published within three business days on the ATHEX website, its daily statistical bulletin and the website of the offeror. The official publication of the prospectus marks the start of the acceptance period, and following such publication, the board of directors of the target company informs the representatives of the employees or, in their absence, the employees of the company directly.

The official publication of the prospectus is followed by the publication of the justified opinion of the board of directors of the offeree company regarding the tender offer. The board’s opinion is also accompanied by a detailed report of the offeror’s financial adviser.

Finally, as of the initial publication of the tender offer and up to the completion of the acceptance period, a ban on advertisements is in place and any public announcement must be strictly limited to the information which is necessary and appropriate for the due publication of the bid, its terms and the acceptance procedure.

When securities are offered to the public or admitted to trading in the stock exchange market, Regulation (EU) 2017/1129 and the provisions of Greek Law 4706/2020, as in force, shall apply providing for the publication of a prospectus for any public offering of securities with the minimum total aggregate considerations provided therein. The ATHEX regulation on disclosure requirements of listed companies shall also apply.

The disclosure thresholds of Greek Law 3556/2007 are set out in 4.2 Material Shareholding Disclosure Threshold.

In the context of a tender offer, there are also additional disclosure requirements, including the disclosure of the acquisition of the below holdings, the purchase price and relevant voting rights.

These disclosure requirements are triggered if the offeror, any individual or legal entity holding at least 5% of the voting rights in the offeree company, as well as any member of the board of directors of the target company or the company the securities of which are offered as consideration, acquires securities, on the stock exchange or over the counter, of the target company or the company the securities of which are offered as consideration.

They are also triggered if any person acquires at least 0.5% of the voting rights in the target company or the offeror company or any other company the securities of which are offered as consideration.

The offeror shall disclose in the tender offer prospectus all information required under Law 3461/2006. There is no relevant requirement for the bidder to produce financial statements (pro forma or otherwise) in its disclosure documents; however, within the tender offer, the HCMC may request that the offeror includes additional data if such are deemed necessary for the adequate information of the recipients.

Greek non-listed entities are obliged to draft their financial statements in accordance with the Greek Accounting Principles under Greek Law 4308/2014 as in force. In accordance with the applicable European regulations, Greek listed entities must draft their financial statements in compliance with the International Financial Reporting Standards.

Neither in public nor in private M&A deals must the parties disclose or publish any transaction documents in full. Greek entities must comply with the applicable corporate law provisions setting out any publicity formalities as well as disclosure requirements in the case of listed corporations (substantial shareholdings). Considering this, entities must disclose transaction-specific information in the case of transactions among affiliated companies qualifying as “related-party transactions” or within the course of a tender offer by means of the tender offer prospectus.

On the other hand, documents relating to corporate transformations as provided for under Law 4601/2019 on corporate transformations are all submitted for publication with the General Commercial Registry’s website and constitute publicly available information.

As a general Greek corporate law principle, without differing in the case of a business combination, directors have four main fiduciary duties towards the company when managing its affairs, namely:

• a duty of loyalty (to promote the company’s best interests, accomplish the company’s objectives and omit actions that could be harmful to the company’s interests);
• a duty of care (to abide by their obligations provided in the law, the company’s articles of association and the resolutions of the general meeting of shareholders, nοt to pursue own interests which are contrary to the interests of the company, and to refrain from voting on issues with a potential or factual conflict of interests);
• a duty of confidentiality (to keep confidential information and matters of the company that were made known to them in view of their capacity as directors); and
• a non-compete obligation (not to engage in acts that are considered competitive to the company’s operation, unless special permission has been granted by the general meeting, and not to participate as partners in general or limited partnerships or as sole shareholders/partners of companies with the same purpose, unless special permission has been granted by the general meeting or the company’s articles of association.

Under Greek law, a director is liable only vis-à-vis the company for any default (either wilful misconduct or negligence, including slight negligence), namely any act or omission that took place during the management of corporate affairs that was harmful to the company. The director’s liability vis-à-vis third parties may be on the basis of tort if it is established that an illegal act or omission has a direct causal link with damage sustained by the third party, including moral damages. This liability may apply where the company’s suppliers, employees, shareholders or the Greek state are concerned.

The establishment of special or ad hoc committees in business combinations by the board of directors is not very common in Greece. The Hellenic Federation of Enterprises has also issued the Code of Corporate Governance, which is not mandatory for companies but rather constitutes “soft law”. The code provides that companies admitted to a regulated market should, in addition to the board, establish an audit committee to audit financial information, operate the internal audit of the company efficiently, handle risk management and audit the independence and objectivity of the auditors of the company. As noted above, under Greek law there is in any case a requirement for directors to disclose conflicts of interest and to refrain from voting on any such matters.

As a general rule, not applying merely to takeover situations, a director’s liability towards a company shall not exist if the director proves that they demonstrated the diligence of a prudent director operating in similar circumstances and thus met the requirements of the “business judgement rule” in the performance of their duties, taking into consideration their particular skills and capacities, their respective position and/or the duties that were assigned to them. Having said that, liability does not exist, under the “business judgement rule” test, where acts or omissions: (i) were performed on the basis of a lawful resolution of a general meeting of shareholders; or (ii) constitute a reasonable business decision that was reached in good faith in order to further the corporate interest, based on sufficient information available at the time.

When it comes to business combinations, directors can be supported by a wide range of advisers. Indicatively, these can include financial, legal, tax and technical advisers engaged during different stages of the transaction and depending on the specific needs. For example, Law 4601/2019 on corporate transformations provides that, in the case of a merger, demerger or spin-off, the draft transformation deed needs to be examined by one or more independent experts (such as certified public accountants, auditing firms, etc), who will then need to produce a written report thereon addressed to the company, while where required by law, a valuation report for the assets of the entities involved must be undertaken by independent chartered auditors or an audit firm to be appointed by the board.

A conflict of interest is specifically regulated under corporate law, while directors are obliged to timely and duly disclose to the other board members any personal interest or interests of their close family which may arise from the company’s transactions and which fall within their duties, and to abstain from voting on issues with a potential or factual conflict of interests. Although conflict of interest can very often substantiate a claim challenging the validity of a corporate decision or appointment before the court, it is not de jure scrutinised by a pertinent authority.

Hostile tender offers are permitted under Greek law but are rather uncommon in the Greek M&A landscape mainly due to the size of the companies and the level of sophistication of the market.

Greek Law 3461/2006 does not allow directors to use defensive measures within a mandatory or voluntary tender offer. The Greek legislature has implemented the board neutrality rule providing that, as of notification by the offeror of its intention to proceed with a tender offer and up to the publication of the tender offer’s result (or its revocation), the board of directors of the offeree company must obtain prior authorisation from the general meeting of shareholders before taking any action that might result in the frustration of the tender offer. Also, any decisions of the board of directors prior to such period that have not been put in place in whole or in part, require the consent or confirmation of the general meeting. The only exception directly applicable to the board of directors’ powers is its right to search for alternative offers.

In light of this, decisions made by the board of directors but previously specifically authorised by the general meeting of shareholders, resolving on defensive measures against the tender offer, could be applicable during a tender offer process. However, given the structure of the M&A market and subject to the applicable market abuse regulations, it seems highly unlikely that the existing shareholders will not be acting under an arrangement with the offeror for it to acquire the required shareholdings which will trigger a mandatory offer.

As mentioned in 9.2 Directors’ Use of Defensive Measures, the applicable legislation does not allow directors to use defensive measures within a mandatory or voluntary tender offer unless upon the prior authorisation or approval by the general meeting of shareholders of the target company. In practice, the main measure that may be used by the board of directors of the target company as a defence is actively searching for alternative tender offers competitive to the one that has already been launched. However, in order for the recipients to be able to recall their acceptance declarations regarding the initial tender offer, a relevant right should have been provided for in the tender offer prospectus. The co-operation and arrangements between the board and the offerors are disclosed in the board’s justified opinion on the tender offer published with the HCMC.

The above has not changed in the context of the COVID-19 pandemic. On the other hand, aside from the board of directors’ use of defensive measures, Law 3461/2006 has introduced provisions for the neutralisation of any pre-existing statutory defensive measures which had been included preventively in the target’s articles of association in order to secure the company from any future actions that could lead to its acquisition. The beneficiaries of any such neutralised statutory defensive measures are entitled to receive compensation for any damage they suffered due to such process.

It should be noted, though, that it is highly unlikely for Greek listed companies to have included such statutory defensive measures in their articles of association.

See 9.2 Directors’ Use of Defensive Measures.

Directors’ duties within a tender offer process are generally the same as in 8.1 Principal Directors’ Duties and mainly consist of a duty of loyalty – including a duty of non-competition – which requires the directors to promote the company’s best interests, accomplish the company’s objectives and omit actions that could be harmful to the company’s interests, as well as a duty of secrecy safeguarding any information relating to the company’s operations and any tender offer-specific information which may not be disclosed until the official launch of the tender offer.

Under the applicable framework, the board of directors of a Greek entity is not entitled to “just say no” to a business combination. The board of directors is only entitled to resolve on day-to-day issues which concern the operation of the company and seek alternative offers while they may make only the decisions they have been specifically authorised to make by the general meeting.

In general, litigation is not very common in Greek M&A transactions. In practice, duration of proceedings, bureaucracy and costs are the main deciding factors that influence parties’ decision to opt for or initiate litigation proceedings in Greece or seek other ways to resolve a dispute, such as arbitration. In the case of medium-sized or large M&A deals with a multi-jurisdictional background, the parties mostly agree on arbitration as a more neutral means of jurisdiction, since it allows the parties involved to receive a swift decision on a dispute away from the public spotlight, compared to litigation proceedings that sometimes drag on for years and are open to public scrutiny.

In private M&A transactions, disputes between the acquirer and the target company often relate to termination clauses, a breach of warranties or the due date of variable purchase price payments.

“Broken-deal” disputes regularly involve the application of material adverse change clauses. In general, there has not been publicity around disputes due to “broken-deal” issues on the basis of the pandemic outbreak or the war in Ukraine. It may be the case that there are ongoing disputes concerning “walk-aways”, but the overall impression is that there are not many of those in the Greek market.

Instances of shareholder activism in Greece have been rather rare over the years. The cap tables of Greek companies frequently include shareholders with significant majority stakes who act as the key decision-makers in the companies’ life cycles. Many Greek enterprises also operate under a family ownership regime, which leaves little room for shareholder activism, except when seeking to protect certain statutory minority shareholder rights or as a reaction to management decisions in the context of companies in financial distress.

Activists generally seek to protect their own interests in companies, rather than actively seeking to influence corporate strategies, including in respect of M&A transactions. In that sense, the COVID-19 pandemic does not seem to have had a particular impact on that front.

There have been instances of activists seeking to interfere with the completion of transactions, especially through the exercise of their statutory minority shareholder rights such as putting additional items on the agenda of the general meeting. In most cases, though, such efforts have resulted in delaying the completion of announced transactions, rather than blocking them. It should be noted, though, that there is now a trend for more public-to-private transactions in the Greek market, which could potentially lead to an increase in shareholder activism.