GREECE Law and Practice Contributed by: Elizabeth Eleftheriades, Theodore Rakitzis, Angeliki Chalikia and Angelos Charalampidis, Kyriakides Georgopoulos Law Firm
10.2 Drag and Tag Rights Drag-along and tag-along rights are standard features of equity arrangements in Greek PE transactions. These rights are typically set out in the shareholders’ agreement and, where relevant, may also be reflected in the articles of association of the company. In prac - tice, they are widely used and enforced, particularly in transactions involving minority management share - holders or institutional co-investors. The typical drag-along threshold is 50% or more of the voting rights, allowing the PE fund (as majority shareholder) to compel the minority shareholders – usually management – to sell their shares on the same terms to a third-party buyer. In some cases, especially where there are multiple institutional investors or a lead sponsor, the drag threshold may be higher (eg, 66.67% or 75%) to reflect a supermajority require - ment. Very often, the exercise of drag-along rights is also made conditional upon the purchase price offer exceeding a predetermined threshold. Tag-along rights are also a common feature in Greek PE transactions, and are designed to protect minority shareholders in the event of a sale by the majority. These rights allow minority shareholders to partici - pate in the sale on the same terms and conditions as the majority seller. In practice, for both management shareholders and institutional co-investors, tag rights are typically exercised on a pro rata basis, allow - ing participation in proportion to each shareholder’s shareholding percentage in the company. However, in some cases – particularly where multiple PE spon - sors or institutional investors are involved – tag-along rights may be contractually limited to such PE spon - sors or institutional investors, excluding management shareholders or minority shareholders. 10.3 IPO In Greek PE-led IPOs, the typical lock-up period for the PE seller ranges from six to 12 months following the listing date, during which the sponsor agrees to not dispose of its shares without the consent of the underwriters. This lock-up is usually imposed as part of the underwriting agreement, with a view to sup - porting market stability and investor confidence post- listing. While relationship agreements – used in some jurisdictions to manage ongoing influence between
governance or decision-making in a way that amounts to abuse of rights, or if it used the corporate struc - ture to commit fraud, evade legal obligations or harm creditors – circumstances that could justify piercing the corporate veil. Furthermore, if fund-appointed individuals sit on the board of the portfolio company or exert de facto con - trol, they could incur personal liability under Greek corporate or tort law (eg, for breaches of fiduciary duties or unlawful interference). While such cases are rare and fact-specific, PE sponsors typically pro - tect against this risk by maintaining formal corporate separateness, ensuring that decision-making occurs at the shareholder or board level, and avoiding direct involvement in the company’s daily management. Over the past 12 months in Greece, PE exits have not been limited to trade sales or IPOs; alternative routes such as secondary buyouts (where one PE fund sells to another fund or to the management team), tender offer exits and structured recapitalisations have also been used, especially for mid to upper market assets. The dual track process – simultaneously preparing for an IPO and a potential sale – has been increas - ingly adopted in sectors with strong investor interest, such as renewable energy and tech-enabled services, though full IPOs remain relatively uncommon. “Triple track” processes, which add a recapitalisation option (eg, dividend recap or management buyout) in paral - lel are emerging but are still rare, reserved mostly for larger or platform-level assets. Additionally, management buyouts (MBOs) and management-led secondary deals are not unknown but are not widely seen. Rollover or reinvestment by management is typical, and in certain cases the sell - ing PE sponsor may also retain a minority position to support continuity and alignment in strategic exits or recapitalisations. 10. Exits 10.1 Types of Exit
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