Post by dracon on Nov 14, 2019 4:37:02 GMT 4
Guarantees and security
Guarantees
Outline how guarantees among companies in a group typically operate in a high-yield deal in your jurisdiction. Are there limitations on guarantees?
The New Company Law allows the granting of upstream corporate guarantees or other securities, and generally guarantees granted to related parties subject to certain conditions. These guarantees and other securities can be granted upon a specific approval by the board of directors, which must be made public. Within 10 days of publication, shareholders representing at least 1/20 of the share capital may cause the company to subject the granting of guarantee or security to the approval of the shareholders. The process described above does not apply to guarantees or collateral provided in favour of wholly-owned subsidiaries or subsidiaries where no related party of the parent has a shareholding. In the case of affiliates that are both wholly-owned subsidiaries of the same parent, approval by the board of directors accompanied by a written statement of the 100 per cent parent that it approves the provision of this guarantee or security will suffice. The above restrictions apply only when the issuer is a Greek entity.
The New Company Law also prohibits the granting of a guarantee or security that falls within the provisions regarding financial assistance without the observance of specific requirements of the law.
Greek law provides for a number of defences to a contracting party, including, indicatively, defences related to the validity of the transaction if that transaction is found to be in contradiction with the company’s corporate interest or commercial benefit, or if that contract is found to be the product of mistake, fraudulent or negligent misrepresentation or duress and undue influence.
In the case of notes issued by a foreign entity, stamp duty on the guarantee granted by the guarantor may be payable in Greece upon the performance of any rights under the guarantee in Greece, or upon enforcement in Greece of a judgment obtained in any jurisdiction outside or within Greece or upon payment in Greece by the guarantor of its obligations under the guarantee, either voluntarily or pursuant to a judgment obtained in any jurisdiction outside or within (in which case any owed stamp duty amounts that have not been paid upon execution of the guarantee documents shall be subject to surcharges and penalties).
Collateral package
What is the typical collateral package for high-yield debt securities in your jurisdiction?
The vast majority of high-yield debt offerings by affiliates of operating Greek corporates are structured as unsecured deals owing to stamp duty and registration fees considerations.
Limitations
Are there any limitations on security that can be granted to secure high-yield securities in your jurisdiction? Are there any limitations on types of assets that can be pledged as collateral? Are there any limitations on which entities can provide security?
Regarding general limitations, see questions 19 and 20. Further, security cannot be provided for certain types of assets, such as administrative licences and relevant rights, or for rights that are personal in nature and cannot be transferred, or for contractual claims whereby the underlying contract prohibits the transfer.
Collateral structure
Describe the typical collateral structure in your jurisdiction. For example, is it common to see crossing lien deals between high-yield debt securities and bank agreements?
Secured high-yield debt issuances usually benefit from collateral in the form of share pledges over the shares in the operating group entities (for non-listed entities), as well as liens over bank accounts, insurance claims and claims from intra-group receivables. Because of the stamp duty and registration costs considerations, security over assets of the group located in Greece, such as mortgages, mortgage prenotations, floating charges over business receivables or other eligible claims, non-possessory pledges over equipment, is not usually provided. Such security is typically provided in bank loans and corporate bonds that benefit from the exemptions of the Greek Bond Loan Law or the New Company Law. In the case of direct issuance of high-yield debt by Greek corporates, which is now possible under the New Company Law, these types of security may become available for such deals. In the case of Greek corporates with more complex debt structure, whereby both high-yield and bank loans have been issued, crossing lien and collateral proceeds’ sharing arrangements may be put in place, depending on the overall indebtedness, group structure and associated costs.
Legal expenses
Who typically bears the costs of legal expenses related to security interests?
We would expect legal fees to be covered by the issuer.
Security interests
How are security interests recorded? Is there a public register?
Certain registration formalities exist for the perfection of the real estate collateral, as well as in relation to collateral in the form of floating charge and non-possessory pledge. Unless a bond loan structure under the Greek Bond Loan Law or the New Company Law is in place, the cost of these registrations is significant. That said, perfection requirements exist for other types of collateral, such as the annotation of share certificates and the registration of the share pledge in the shareholders’ book, or service by court bailiff of the pledge agreement to the counterparty of the underlying pledged claim, but these are usually not onerous to observe.
How are security interests typically enforced in the high-yield context?
To the extent that security over Greek assets has been provided, enforcement typically requires an auction of the secured asset. This is the case for share pledges, floating charges, non-possessory pledges and mortgages. If, and to the extent applicable, this security is governed by the Greek financial collateral law, which transposed the financial collateral directive, enforcement on the underlying assets could be effected through appropriation, free disposal to third parties or collection, as the case may be. This is the case with listed shares and other securities, bank accounts as well as claims that fall within the provision of the financial collateral law. Banks benefit from specific Greek law provisions that render enforcement easier, such as the quick issuance of an enforceable title.
Under the Greek Code of Civil Procedure, any interested person may apply for an injunction or interim measures in case of emergency or in order to prevent immediate or imminent danger, which, if successful, may lead to suspension of the enforcement procedure, or even to the provisional settlement of the situation under dispute.
In addition, secured creditors’ claims have priority over assets securing their indebtedness over the claims of other unsecured creditors. However, under Greek law, certain other classes of creditors such as, indicatively, the state or employees or social security organisations, hold a general privilege in relation to specific claims that are ranked either prior to or in parallel with secured creditors. As the relevant provisions changed recently, the ranking of claims having a general privilege versus secured claims depends on the time of taking the security.
Guarantees and security
Guarantees
Outline how guarantees among companies in a group typically operate in a high-yield deal in your jurisdiction. Are there limitations on guarantees?
The New Company Law allows the granting of upstream corporate guarantees or other securities, and generally guarantees granted to related parties subject to certain conditions. These guarantees and other securities can be granted upon a specific approval by the board of directors, which must be made public. Within 10 days of publication, shareholders representing at least 1/20 of the share capital may cause the company to subject the granting of guarantee or security to the approval of the shareholders. The process described above does not apply to guarantees or collateral provided in favour of wholly-owned subsidiaries or subsidiaries where no related party of the parent has a shareholding. In the case of affiliates that are both wholly-owned subsidiaries of the same parent, approval by the board of directors accompanied by a written statement of the 100 per cent parent that it approves the provision of this guarantee or security will suffice. The above restrictions apply only when the issuer is a Greek entity.
The New Company Law also prohibits the granting of a guarantee or security that falls within the provisions regarding financial assistance without the observance of specific requirements of the law.
Greek law provides for a number of defences to a contracting party, including, indicatively, defences related to the validity of the transaction if that transaction is found to be in contradiction with the company’s corporate interest or commercial benefit, or if that contract is found to be the product of mistake, fraudulent or negligent misrepresentation or duress and undue influence.
In the case of notes issued by a foreign entity, stamp duty on the guarantee granted by the guarantor may be payable in Greece upon the performance of any rights under the guarantee in Greece, or upon enforcement in Greece of a judgment obtained in any jurisdiction outside or within Greece or upon payment in Greece by the guarantor of its obligations under the guarantee, either voluntarily or pursuant to a judgment obtained in any jurisdiction outside or within (in which case any owed stamp duty amounts that have not been paid upon execution of the guarantee documents shall be subject to surcharges and penalties).
Collateral package
What is the typical collateral package for high-yield debt securities in your jurisdiction?
The vast majority of high-yield debt offerings by affiliates of operating Greek corporates are structured as unsecured deals owing to stamp duty and registration fees considerations.
Limitations
Are there any limitations on security that can be granted to secure high-yield securities in your jurisdiction? Are there any limitations on types of assets that can be pledged as collateral? Are there any limitations on which entities can provide security?
Regarding general limitations, see questions 19 and 20. Further, security cannot be provided for certain types of assets, such as administrative licences and relevant rights, or for rights that are personal in nature and cannot be transferred, or for contractual claims whereby the underlying contract prohibits the transfer.
Collateral structure
Describe the typical collateral structure in your jurisdiction. For example, is it common to see crossing lien deals between high-yield debt securities and bank agreements?
Secured high-yield debt issuances usually benefit from collateral in the form of share pledges over the shares in the operating group entities (for non-listed entities), as well as liens over bank accounts, insurance claims and claims from intra-group receivables. Because of the stamp duty and registration costs considerations, security over assets of the group located in Greece, such as mortgages, mortgage prenotations, floating charges over business receivables or other eligible claims, non-possessory pledges over equipment, is not usually provided. Such security is typically provided in bank loans and corporate bonds that benefit from the exemptions of the Greek Bond Loan Law or the New Company Law. In the case of direct issuance of high-yield debt by Greek corporates, which is now possible under the New Company Law, these types of security may become available for such deals. In the case of Greek corporates with more complex debt structure, whereby both high-yield and bank loans have been issued, crossing lien and collateral proceeds’ sharing arrangements may be put in place, depending on the overall indebtedness, group structure and associated costs.
Legal expenses
Who typically bears the costs of legal expenses related to security interests?
We would expect legal fees to be covered by the issuer.
Security interests
How are security interests recorded? Is there a public register?
Certain registration formalities exist for the perfection of the real estate collateral, as well as in relation to collateral in the form of floating charge and non-possessory pledge. Unless a bond loan structure under the Greek Bond Loan Law or the New Company Law is in place, the cost of these registrations is significant. That said, perfection requirements exist for other types of collateral, such as the annotation of share certificates and the registration of the share pledge in the shareholders’ book, or service by court bailiff of the pledge agreement to the counterparty of the underlying pledged claim, but these are usually not onerous to observe.
How are security interests typically enforced in the high-yield context?
To the extent that security over Greek assets has been provided, enforcement typically requires an auction of the secured asset. This is the case for share pledges, floating charges, non-possessory pledges and mortgages. If, and to the extent applicable, this security is governed by the Greek financial collateral law, which transposed the financial collateral directive, enforcement on the underlying assets could be effected through appropriation, free disposal to third parties or collection, as the case may be. This is the case with listed shares and other securities, bank accounts as well as claims that fall within the provision of the financial collateral law. Banks benefit from specific Greek law provisions that render enforcement easier, such as the quick issuance of an enforceable title.
Under the Greek Code of Civil Procedure, any interested person may apply for an injunction or interim measures in case of emergency or in order to prevent immediate or imminent danger, which, if successful, may lead to suspension of the enforcement procedure, or even to the provisional settlement of the situation under dispute.
In addition, secured creditors’ claims have priority over assets securing their indebtedness over the claims of other unsecured creditors. However, under Greek law, certain other classes of creditors such as, indicatively, the state or employees or social security organisations, hold a general privilege in relation to specific claims that are ranked either prior to or in parallel with secured creditors. As the relevant provisions changed recently, the ranking of claims having a general privilege versus secured claims depends on the time of taking the security.
Guarantees
Outline how guarantees among companies in a group typically operate in a high-yield deal in your jurisdiction. Are there limitations on guarantees?
The New Company Law allows the granting of upstream corporate guarantees or other securities, and generally guarantees granted to related parties subject to certain conditions. These guarantees and other securities can be granted upon a specific approval by the board of directors, which must be made public. Within 10 days of publication, shareholders representing at least 1/20 of the share capital may cause the company to subject the granting of guarantee or security to the approval of the shareholders. The process described above does not apply to guarantees or collateral provided in favour of wholly-owned subsidiaries or subsidiaries where no related party of the parent has a shareholding. In the case of affiliates that are both wholly-owned subsidiaries of the same parent, approval by the board of directors accompanied by a written statement of the 100 per cent parent that it approves the provision of this guarantee or security will suffice. The above restrictions apply only when the issuer is a Greek entity.
The New Company Law also prohibits the granting of a guarantee or security that falls within the provisions regarding financial assistance without the observance of specific requirements of the law.
Greek law provides for a number of defences to a contracting party, including, indicatively, defences related to the validity of the transaction if that transaction is found to be in contradiction with the company’s corporate interest or commercial benefit, or if that contract is found to be the product of mistake, fraudulent or negligent misrepresentation or duress and undue influence.
In the case of notes issued by a foreign entity, stamp duty on the guarantee granted by the guarantor may be payable in Greece upon the performance of any rights under the guarantee in Greece, or upon enforcement in Greece of a judgment obtained in any jurisdiction outside or within Greece or upon payment in Greece by the guarantor of its obligations under the guarantee, either voluntarily or pursuant to a judgment obtained in any jurisdiction outside or within (in which case any owed stamp duty amounts that have not been paid upon execution of the guarantee documents shall be subject to surcharges and penalties).
Collateral package
What is the typical collateral package for high-yield debt securities in your jurisdiction?
The vast majority of high-yield debt offerings by affiliates of operating Greek corporates are structured as unsecured deals owing to stamp duty and registration fees considerations.
Limitations
Are there any limitations on security that can be granted to secure high-yield securities in your jurisdiction? Are there any limitations on types of assets that can be pledged as collateral? Are there any limitations on which entities can provide security?
Regarding general limitations, see questions 19 and 20. Further, security cannot be provided for certain types of assets, such as administrative licences and relevant rights, or for rights that are personal in nature and cannot be transferred, or for contractual claims whereby the underlying contract prohibits the transfer.
Collateral structure
Describe the typical collateral structure in your jurisdiction. For example, is it common to see crossing lien deals between high-yield debt securities and bank agreements?
Secured high-yield debt issuances usually benefit from collateral in the form of share pledges over the shares in the operating group entities (for non-listed entities), as well as liens over bank accounts, insurance claims and claims from intra-group receivables. Because of the stamp duty and registration costs considerations, security over assets of the group located in Greece, such as mortgages, mortgage prenotations, floating charges over business receivables or other eligible claims, non-possessory pledges over equipment, is not usually provided. Such security is typically provided in bank loans and corporate bonds that benefit from the exemptions of the Greek Bond Loan Law or the New Company Law. In the case of direct issuance of high-yield debt by Greek corporates, which is now possible under the New Company Law, these types of security may become available for such deals. In the case of Greek corporates with more complex debt structure, whereby both high-yield and bank loans have been issued, crossing lien and collateral proceeds’ sharing arrangements may be put in place, depending on the overall indebtedness, group structure and associated costs.
Legal expenses
Who typically bears the costs of legal expenses related to security interests?
We would expect legal fees to be covered by the issuer.
Security interests
How are security interests recorded? Is there a public register?
Certain registration formalities exist for the perfection of the real estate collateral, as well as in relation to collateral in the form of floating charge and non-possessory pledge. Unless a bond loan structure under the Greek Bond Loan Law or the New Company Law is in place, the cost of these registrations is significant. That said, perfection requirements exist for other types of collateral, such as the annotation of share certificates and the registration of the share pledge in the shareholders’ book, or service by court bailiff of the pledge agreement to the counterparty of the underlying pledged claim, but these are usually not onerous to observe.
How are security interests typically enforced in the high-yield context?
To the extent that security over Greek assets has been provided, enforcement typically requires an auction of the secured asset. This is the case for share pledges, floating charges, non-possessory pledges and mortgages. If, and to the extent applicable, this security is governed by the Greek financial collateral law, which transposed the financial collateral directive, enforcement on the underlying assets could be effected through appropriation, free disposal to third parties or collection, as the case may be. This is the case with listed shares and other securities, bank accounts as well as claims that fall within the provision of the financial collateral law. Banks benefit from specific Greek law provisions that render enforcement easier, such as the quick issuance of an enforceable title.
Under the Greek Code of Civil Procedure, any interested person may apply for an injunction or interim measures in case of emergency or in order to prevent immediate or imminent danger, which, if successful, may lead to suspension of the enforcement procedure, or even to the provisional settlement of the situation under dispute.
In addition, secured creditors’ claims have priority over assets securing their indebtedness over the claims of other unsecured creditors. However, under Greek law, certain other classes of creditors such as, indicatively, the state or employees or social security organisations, hold a general privilege in relation to specific claims that are ranked either prior to or in parallel with secured creditors. As the relevant provisions changed recently, the ranking of claims having a general privilege versus secured claims depends on the time of taking the security.
Guarantees and security
Guarantees
Outline how guarantees among companies in a group typically operate in a high-yield deal in your jurisdiction. Are there limitations on guarantees?
The New Company Law allows the granting of upstream corporate guarantees or other securities, and generally guarantees granted to related parties subject to certain conditions. These guarantees and other securities can be granted upon a specific approval by the board of directors, which must be made public. Within 10 days of publication, shareholders representing at least 1/20 of the share capital may cause the company to subject the granting of guarantee or security to the approval of the shareholders. The process described above does not apply to guarantees or collateral provided in favour of wholly-owned subsidiaries or subsidiaries where no related party of the parent has a shareholding. In the case of affiliates that are both wholly-owned subsidiaries of the same parent, approval by the board of directors accompanied by a written statement of the 100 per cent parent that it approves the provision of this guarantee or security will suffice. The above restrictions apply only when the issuer is a Greek entity.
The New Company Law also prohibits the granting of a guarantee or security that falls within the provisions regarding financial assistance without the observance of specific requirements of the law.
Greek law provides for a number of defences to a contracting party, including, indicatively, defences related to the validity of the transaction if that transaction is found to be in contradiction with the company’s corporate interest or commercial benefit, or if that contract is found to be the product of mistake, fraudulent or negligent misrepresentation or duress and undue influence.
In the case of notes issued by a foreign entity, stamp duty on the guarantee granted by the guarantor may be payable in Greece upon the performance of any rights under the guarantee in Greece, or upon enforcement in Greece of a judgment obtained in any jurisdiction outside or within Greece or upon payment in Greece by the guarantor of its obligations under the guarantee, either voluntarily or pursuant to a judgment obtained in any jurisdiction outside or within (in which case any owed stamp duty amounts that have not been paid upon execution of the guarantee documents shall be subject to surcharges and penalties).
Collateral package
What is the typical collateral package for high-yield debt securities in your jurisdiction?
The vast majority of high-yield debt offerings by affiliates of operating Greek corporates are structured as unsecured deals owing to stamp duty and registration fees considerations.
Limitations
Are there any limitations on security that can be granted to secure high-yield securities in your jurisdiction? Are there any limitations on types of assets that can be pledged as collateral? Are there any limitations on which entities can provide security?
Regarding general limitations, see questions 19 and 20. Further, security cannot be provided for certain types of assets, such as administrative licences and relevant rights, or for rights that are personal in nature and cannot be transferred, or for contractual claims whereby the underlying contract prohibits the transfer.
Collateral structure
Describe the typical collateral structure in your jurisdiction. For example, is it common to see crossing lien deals between high-yield debt securities and bank agreements?
Secured high-yield debt issuances usually benefit from collateral in the form of share pledges over the shares in the operating group entities (for non-listed entities), as well as liens over bank accounts, insurance claims and claims from intra-group receivables. Because of the stamp duty and registration costs considerations, security over assets of the group located in Greece, such as mortgages, mortgage prenotations, floating charges over business receivables or other eligible claims, non-possessory pledges over equipment, is not usually provided. Such security is typically provided in bank loans and corporate bonds that benefit from the exemptions of the Greek Bond Loan Law or the New Company Law. In the case of direct issuance of high-yield debt by Greek corporates, which is now possible under the New Company Law, these types of security may become available for such deals. In the case of Greek corporates with more complex debt structure, whereby both high-yield and bank loans have been issued, crossing lien and collateral proceeds’ sharing arrangements may be put in place, depending on the overall indebtedness, group structure and associated costs.
Legal expenses
Who typically bears the costs of legal expenses related to security interests?
We would expect legal fees to be covered by the issuer.
Security interests
How are security interests recorded? Is there a public register?
Certain registration formalities exist for the perfection of the real estate collateral, as well as in relation to collateral in the form of floating charge and non-possessory pledge. Unless a bond loan structure under the Greek Bond Loan Law or the New Company Law is in place, the cost of these registrations is significant. That said, perfection requirements exist for other types of collateral, such as the annotation of share certificates and the registration of the share pledge in the shareholders’ book, or service by court bailiff of the pledge agreement to the counterparty of the underlying pledged claim, but these are usually not onerous to observe.
How are security interests typically enforced in the high-yield context?
To the extent that security over Greek assets has been provided, enforcement typically requires an auction of the secured asset. This is the case for share pledges, floating charges, non-possessory pledges and mortgages. If, and to the extent applicable, this security is governed by the Greek financial collateral law, which transposed the financial collateral directive, enforcement on the underlying assets could be effected through appropriation, free disposal to third parties or collection, as the case may be. This is the case with listed shares and other securities, bank accounts as well as claims that fall within the provision of the financial collateral law. Banks benefit from specific Greek law provisions that render enforcement easier, such as the quick issuance of an enforceable title.
Under the Greek Code of Civil Procedure, any interested person may apply for an injunction or interim measures in case of emergency or in order to prevent immediate or imminent danger, which, if successful, may lead to suspension of the enforcement procedure, or even to the provisional settlement of the situation under dispute.
In addition, secured creditors’ claims have priority over assets securing their indebtedness over the claims of other unsecured creditors. However, under Greek law, certain other classes of creditors such as, indicatively, the state or employees or social security organisations, hold a general privilege in relation to specific claims that are ranked either prior to or in parallel with secured creditors. As the relevant provisions changed recently, the ranking of claims having a general privilege versus secured claims depends on the time of taking the security.