Loans With Collateral

In brief: guarantees and collateral for acquisition financing in Greece

Guarantees and collateral

Related company guarantees

Are there restrictions on the provision of related company guarantees? Are there any limitations on the ability of foreign-registered related companies to provide guarantees?

Greek companies in the form of a société anonyme must comply with the provisions of Law 4548/2018 (the Company Law) governing related party transactions when granting their guarantee. The Company Law (article 99 et seq) requires that guarantees granted by a société anonyme in favour of any person defined as a related party under the Greek accounting standards may only be granted subject to:

  • prior approval by the board of directors and general meeting of shareholders (if so requested by shareholders holding 1/20 of the company’s share capital) that will set out the main terms of the transaction (value and date), the relationship to the related party, and any information necessary to evaluate whether the transaction is fair and reasonable for the company and non-related parties (such as minority shareholders); and
  • publication in advance of the above resolution with the General Commercial Registry.


The above general rule is subject to specific exemptions, notably guarantees granted in favour of a wholly owned subsidiary. Furthermore, special rules setting additional requirements apply to Greek listed companies, which are required to obtain a fairness opinion prepared by an auditor, an audit firm or another independent third party, assessing whether the transaction is fair and reasonable.

The above provisions apply only to Greek companies in the form of a société anonyme.

From a Greek tax law perspective, related entities should comply with transfer pricing obligations for transactions between them, including the provision of guarantees. Such transactions must be made at arm’s length, meaning that the company that provides its guarantee in favour of a related company should receive an appropriate fee for transfer pricing purposes. This fee should be exempt from stamp duty as it should fall within the scope of VAT and, further, should be exempt from VAT on the basis of VAT rules.

Assistance by the target

Are there specific restrictions on the target’s provision of guarantees or collateral or financial assistance in an acquisition of its shares? What steps may be taken to permit such actions?

A Greek société anonyme may, subject to limited exceptions, provide financing in the form of a loan or payment advances or guarantees to third parties acquiring its shares or shares of its parent company only if the following requirements are met.

  1. The transaction must be at arm’s length, especially as regards interest and guarantees received by the target as security for its claims.
  2. The transaction must be approved by a resolution of the general meeting of shareholders with a qualified quorum and majority, following submission and publication of a board report setting out the terms, rationale, liquidity and credit risks of the transaction and the share purchase price.
  3. The total amount of financial assistance may not result in a reduction of the target’s own funds below the aggregate of (1) non-distributable reserves and credit items and (2) the credit amounts that are not realised profits (ie, the financial assistance can be funded only through distributable capital gains and reserves). The company is obliged to include in the liabilities of its balance sheet a non-distributable reserve item equal to the total amount of the financial assistance.
  4. If the financial assistance is provided to the target’s parent entity or a board member of the target or its parent entity or persons acting on behalf of the above, the board report under point (2), above, must be accompanied by the report of an auditor confirming that the transaction does not conflict with the target’s interests.

Types of security

What kinds of security are available? Are floating and fixed charges permitted? Can a blanket lien be granted on all assets of a company? What are the typical exceptions to an all-assets grant?

Greek law provides for specific types of in rem security over assets that are located in Greece and these are:

  • mortgage or mortgage prenotation over real estate;
  • usufruct over any types of assets, including claims;
  • pledge over movable assets in its simple (possessory) form governed by the Greek Civil Code or non-possessory pledge over movable assets (other than money and securities) governed by Law 2844/2000;
  • pledge over a group of assets (fixed or floating, possessory or non-possessory);
  • assignment by way of pledge over rights and claims (either individual or a group of claims and in the latter case either fixed or floating); and
  • pledge or financial collateral over shares and other negotiable instruments.


There is no Greek law equivalent to the English law floating charge, which extends over all assets of a company. Under Greek law, a security right must be created over assets that are adequately specified, either individually or as part of a group, and all requirements for the creation of a security over the relevant type of asset must be fulfilled. It is also possible to create security over future acquired assets and claims subject to specific perfection requirements.

Requirements for perfecting a security interest

Are there specific bodies of law governing the perfection of certain types of collateral? What kinds of notification or other steps must be taken to perfect a security interest against collateral?

Yes. Each type of collateral is governed by its own set of perfection requirements, which may also vary depending on whether the collateral is granted in favour of a financial institution or constitutes financial collateral in the sense of Law 3301/2004 (transposing the EU Financial Collateral Directive into Greek law), or both.

Security over real estate assets is granted either by a notarial deed (mortgage) or a court decision (mortgage prenotation) and must be registered with the competent land registry or cadastre to enter into effect.

Security over monetary claims must be granted by a written agreement notified to the third-party debtor by a court bailiff. In the case of security over groups of claims, the pledge is also registered with the pledge registry of the place where the collateral giver has its registered seat.

Pledges over movable assets are not registered unless the assets are not delivered to the creditor (non-possessory pledge) or are pledged as a group (floating or fixed), or both.

Pledges over unlisted shares must, in principle, be registered with the issuing company’s books of shares and shareholders, and must be endorsed on the share certificates (if any). Any additional requirements provided by the issuing company’s articles of association must also be complied with.

Pledges over shares listed on the Athens Stock Exchange (ATHEX) are subject to special technical rules, including the execution and submission of a special notification form, also served to the Central Securities Depository (ATHEXCSD) by a court bailiff, as well as registration of the pledge in the records of the Dematerialised Securities System (DSS), which is operated by the ATHEXCSD. Financial collateral over listed securities is also subject tο registration in the DSS.

Special requirements apply to collateral created over special types of assets, such as trademarks and patents.

There is no centralised registry (such as Companies House in the United Kingdom) where the security granted by a company over its assets is registered and disclosable to the public.

Renewing a security interest

Once a security interest is perfected, are there renewal procedures to keep the lien valid and recorded?

Renewal procedures apply to security interests registered with the pledge registry according to Law 2844/2000 (non-possessory pledge over movable assets other than money or securities, and claims). The security interest is extinguished 10 years after its registration, unless the creditor renews its duration (for 10 years each time) by submitting to the pledge registry and notifying to the debtor a statement to that effect at least three months prior to the expiration of the 10-year period.   

Stakeholder consent for guarantees

Are there ‘works council’ or other similar consents required to approve the provision of guarantees or security by a company?

Not applicable.

Granting collateral through an agent

Can security be granted to an agent for the benefit of all lenders or must collateral be granted to lenders individually and then amendments executed upon any assignment?

Security may be granted in favour of an agent only in the case of a bondholder agent who may represent bondholders and creditors of claims related to a bond loan. In all other cases, collateral is granted to individual lenders who may decide to act as a group and contractually appoint one of them to act as the group’s representative, but in practice this solution (which is sometimes used by banks) has not been tested in Greek courts in the context of enforcement and bankruptcy-related proceedings. In the latter case, if a secured creditor assigns its claim, the security follows the secured claim and no amendment is necessary in principle for the collateral to survive, despite the need to complete certain formalities in cases of registrable collateral.

Creditor protection before collateral release

What protection is typically afforded to creditors before collateral can be released? Are there ways to structure around such protection?

No special protection is afforded by law to creditors in relation to the release of collateral. Collateral is released for specific reasons set out in the law, such as repayment of the secured debt, the consent of the secured creditor, return of the collateral to the debtor or a merger between the creditor and the debtor. In syndicated bond loans it is customary for the loan terms to require an increased majority for decisions pertaining to the release of security.

Fraudulent transfer

Describe the fraudulent transfer laws in your jurisdiction.

The Greek Civil Code (articles 939 to 946) allows creditors to apply for the invalidation of transfers of assets by a debtor to the creditors’ detriment provided that the remaining property of the debtor does not satisfy the creditors’ claims. This is possible only if the transferee knew that the debtor was transferring assets to the detriment of its creditors, unless the transfer was by way of a gift (namely without consideration). Such knowledge is deemed to exist when the transferee is the debtor’s spouse or a relative up to a certain degree (such as third degree by blood), but only if the creditors file a lawsuit within one year of the transfer. The result of the invalidation has effect only for the benefit of the creditors that challenged the transfer and leads to an obligation of the transferee to restore things to their prior condition. If the transfer was by way of a gift then the transferee is only liable according to the more lenient provisions on unjust enrichment.

Transfers by a debtor that have taken place during the five years preceding declaration of its bankruptcy with intention to cause losses to its creditors or benefit some of them to the detriment of others are revocable if the transferee knew of such intention at the time of the transfer. The declaration of bankruptcy does not prevent creditors from applying to set aside a transfer on the basis of the general provisions described above.

Law stated date

Correct on:

Please state the date on which the law stated here is accurate.

10 March 2021