GREECE Law and Practice Contributed by: Elizabeth Eleftheriades, Theodore Rakitzis, Angeliki Chalikia and Angelos Charalampidis, Kyriakides Georgopoulos Law Firm
9. Portfolio Company Oversight 9.1 Shareholder Control and Information Rights In Greece, PE fund shareholders typically retain a high level of control over their portfolio companies, par - ticularly through a combination of board and observer appointment rights, reserved matters and extensive information rights – all formalised in the sharehold - ers’ agreement and the articles of association of the target company. PE funds almost always have the right to appoint one or more directors to the board (subject to Greek cor - porate law restrictions), depending on the size of their shareholding. In most cases, board decisions may require the approval of the PE-appointed director(s) on critical matters. The shareholders’ agreement typically includes a list of reserved matters that require either the consent of the PE fund or a qualified majority of shareholders, even where the fund does not hold a majority of the shares. Standard reserved matters include prior con - sent on new securities issuances, dividend distribu - tions, liquidation/dissolution, asset sales, related party transactions and new indebtedness. In addition, PE sponsors benefit from comprehen - sive information rights, including access to monthly or quarterly financial reports, budgets, management accounts, and the right to inspect books and records or request meetings with management. These rights ensure close monitoring of performance and compli - ance with covenants or agreed key performance indi - cators (KPIs). 9.2 Shareholder Liability Under Greek law, a PE fund backing the majority shareholder – but not holding shares directly in the portfolio company – will generally not be held liable for the actions or obligations of the company. How - ever, in exceptional cases, Greek courts may examine the substance over form of the structure and consider whether the fund exercised effective control over the company’s operations through its influence on the majority shareholder. Liability could arise if the fund is found to have manipulated the portfolio company’s
do not infringe on fundamental rights (eg, free speech) and are framed narrowly to prevent reputational harm. 8.5 Minority Protection for Manager Shareholders In Greek PE transactions, minority protection for man - agement shareholders is generally provided through a combination of contractual rights in shareholders’ agreements and, less frequently, through govern - ance rights linked to equity ownership. Management teams may be granted limited veto rights over specific reserved matters – such as changes to the business scope, amendments to the articles of association, issuance of new shares, or related-party transactions – particularly where they hold a meaningful minor - ity stake. However, broad veto or blocking rights are uncommon and are typically resisted by PE sponsors, who seek to retain full control over strategic decisions and exit timing. Director appointment rights for management are also occasionally granted, especially where the manage - ment team holds a larger equity position, but in most cases management input is exercised through infor - mation rights, board observer status or participation in advisory committees rather than full voting control. Anti-dilution protection is not typical in Greek PE deals for management shareholders, as their equity is usu - ally structured as incentive equity rather than capital at risk. Where granted, it is often limited to broad-based anti-dilution protection (eg, on a new issuance at a discount) rather than full ratchet mechanisms. As for exit control, management teams do not typically have the right to block or influence the PE fund’s exit, though they may be subject to drag-along provisions requiring them to sell their shares alongside the fund. In some cases, management may negotiate tag-along rights or be consulted in the context of a sale, but this falls short of actual control.
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