The Greek Government, aiming at facilitating and encouraging further the resolution of companies, through the merger or division of companies by absorption, and giving rise to additional incentives for the participation of investors, in the corporate transformation process, provides a feasible solution, regulating the transformation of companies presenting negative equity.
More specifically, pursuant to Article 105 para. 1 of the Law 4849/2021, the transformation of companies is admissible even if one or all of the companies participating have or maintain, before or after the completion of the transformation, negative net assets (equity) provided that the transformation takes place in the context of the general restructuring of the companies participating in it. At the same time, written guarantees by the investor or investors, who may already be shareholders or members of any of the companies participating in the above transformation or shareholders or members of the above persons (shareholders or members), are provided for the restoration of the net assets of the acquiring company, within a period of twelve (12) months from the completion of the transformation. Additionally, the law stipulates that in case guarantees are not provided, the validity of transformation will not be affected.
In light of the above, it is not without due cause that the Law does not limit or specify in detail the type of guarantees that must be provided Therefore, companies under transformation may adopt multiple measures to ensure restoration of negative equity. In that view, the restoration of the negative equity through affecting the profits or the share capital of the acquiring company, under the explicit consent of the shareholders, appears to be a sufficient and legitimate guarantee.
To sum up, the ratification of Law 4601/2019 on corporate transformation and the completion of the legal framework with the adoption of Article 105 of Law 4849/2021, gave birth to new opportunities for enterprises and companies of all sizes to restructure and redefine themselves, to flourish economically and evolve. The next years will show the impact of those legal provisions in business practise and development.