GREECE Law and Practice Contributed by: Elizabeth Eleftheriades, Theodore Rakitzis, Angeliki Chalikia and Angelos Charalampidis, Kyriakides Georgopoulos Law Firm
legislation, the underlying concept is implemented through differentiated classes of shares or participa - tion arrangements that align management’s upside with the PE sponsor’s return profile. Typically, the PE fund subscribes for ordinary or preferred shares with enhanced economic or governance rights, while man - agement acquires a smaller equity interest (often at nominal value) which is economically subordinated and subject to vesting, leaver provisions and exit- related restrictions. Under Greek corporate laws, a company can issue different classes of shares with tailored rights – includ - ing dividend priority, limited or enhanced voting, and preference in liquidation – provided these rights are clearly stated in the articles of association. In practice, such preference rights are usually contractual and implemented through a combination of the articles and a shareholders’ agreement, which also governs drag-along/tag-along rights, leaver mechanics, share transfer restrictions and liquidity events. While Greek law supports these mechanisms, the structuring of management participation tends to be simpler than in common law jurisdictions, and com - plex waterfall or preferred return models are less com - mon unless foreign structuring vehicles are involved. Overall, equity-based incentives for management remain an effective and increasingly used tool in aligning interests in Greek PE transactions, within the framework permitted by local corporate and tax rules. 8.3 Vesting/Leaver Provisions In Greece, vesting provisions are typical for manage - ment equity in PE transactions, especially where equi - ty is granted at nominal value or as part of a broader incentivisation structure. The most common arrange - ment is linear (pro rata) vesting over a three- to five- year period, often combined with a one-year “cliff”, meaning that no equity vests if the manager departs within the first 12 months. It is also common to include a lock-up period (typically two to three years) during which even vested shares may not be transferred or sold, aligning management incentives with the fund’s investment horizon. Leaver provisions are also standard and typically dis - tinguish between good leavers (eg, death, disability,
termination without cause) and bad leavers (eg, res - ignation without good reason, dismissal for cause, breach of duty). A bad leaver will usually forfeit all unvested shares, and in some cases may be required to transfer vested shares at nominal or reduced val - ue. A good leaver may retain vested shares and be required to transfer only the unvested portion, often at cost. These mechanics are governed by the share - holders’ agreement and are enforceable under Greek civil and corporate law. 8.4 Restrictions on Manager Shareholders In Greece, restrictive covenants such as non-compete, non-solicitation and non-disparagement undertakings are customarily agreed to by management share - holders in PE transactions. These covenants typi - cally apply both during employment and for a defined post-exit period, particularly in transactions where management holds equity or plays a strategic opera - tional role. It is standard practice for such restrictions to be included in both the employment agreement and the shareholders’ agreement, to ensure enforceability from both a corporate and labour law perspective. Under Greek law, restrictive covenants are enforce - able if they meet specific conditions – they must: • be proportionate; • be clearly defined in duration, scope and geogra - phy; and • protect a legitimate business interest. For example, a post-termination non-compete clause is typically limited to one to two years. It must be geographically and functionally relevant, and, to be fully enforceable, should include reasonable financial compensation – often a percentage of the departing manager’s salary or another agreed amount. In some cases, the purchase price paid by the PE fund for the acquisition of shares is also deemed to cover and justify the imposition of such restrictions, particularly where the manager has realised significant value from the transaction. Non-solicitation of employees, clients or suppliers is also enforceable if limited in time and scope. Non-dis - paragement clauses are generally valid provided they
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