Published 2000

The Board of Directors of the Athens Stock Exchange, the Capital Market Committee and the Ministry of National Economy have recently announced measures aimed at increasing information available to market participants and improving investor protection in general. These are divided in three broad fields, internal stock exchange guidelines, increased disclosure requirements and new rules for public takeovers.

• New measures of the ASE to promote transparency

In its effort to meet requirements for upgrading ASE to the category of mature markets, the Board of Directors of the ASE is in the process of adopting various new measures, which have as follows :

• Listed companies will be obliged to provide auditors’ reports on the use of funds obtained through share capital increases. Furthermore, they should include in their books detailed information on sales according to each sector of their economic activity and provide to the ASE and the media clear and regular statements regarding developments of their economic indicators.
• The minimum value of block trades will be raised from 100 million GRD to 200 million GRD. The aim of the increase is to provide additional depth to the market, by diverting liquidity to the electronic trading system, even though it might create some problems to investors who regularly made use of this option for trades in the 100 to 200 million GRD area. The price divergence limit for block trades is also amended, as follows : 5% limit allowed for blocks valued between 400 and 800 million GRD and 10% limit for blocks valued more than 800 million GRD.
• The minimum dispersion of an issuer’s share capital required for listing on the ASE Parallel Market is to be increased to 25% (from the current 15%).
• Closing prices will be determined according to the weighted average of transactions carried out in the last 30 minutes of each day’s trading, or, if none, in the last 60 minutes of trading.
• Finally, listed companies facing financial or other difficulties will be placed under supervision and will be obliged to provide additional information together with their financial statements. This category will also include firms that do not meet their obligations with reference to the provision of information on a number of cases, such as divergence in the allocation of funds derived from a share capital increase as compared to stated objectives, significant changes (positive or negative) in economic indicators, and important factors accounting for unusual changes in the share price or transaction volume. The shares of the above mentioned companies will be subject to a different trading system than the normal, namely auctions performed at regular intervals.
• Finally, companies whose stocks are rarely traded as a result of particularly low dispersion, will be required to take suitable measures to increase dispersion.

New disclosure obligations

Disclosure obligations of major shareholders provided for in article 5 of P.D. 51/1992 are to be increased following a draft law, which has been introduced by the Minister of National Economy and Finance. According to this draft law every shareholder owning at least 10% of a listed company’s voting rights should inform the company as well as the Athens Stock Exchange (ASE) of every change in total voting rights held, which is equal to or higher than 3% of the total number of the company’s voting rights. Furthermore, all members of a company’s Board of Directors, as well as its Managing Director and General Manager who are also shareholders of the company, should proceed to the above mentioned notification, irrespective of their proportion in the company’s voting rights. Finally, all stock broker companies must inform the Capital Market Committee of any trading in shares which are under supervision, as well as on any trading in specific shares designated by the Capital Market Committee, in case such trading exceeds 5% of the total daily volume of transactions with respect to those specific shares. Said notification should be made on the day following the transaction at the latest and comprise the particulars of the investor and the volume of transaction.

Draft Takeover Rules

The Capital Market Committee has just published a draft decision concerning takeover bids for the purchase or exchange of securities. The purpose of the draft is to protect the orderly functioning of the market, as well as the interests of the investors, in view of the principles of transparency and equal treatment of target company shareholders. It applies to offers for shares of companies listed on the Athens Stock Exchange, regardless of whether they are incorporated under Greek or foreign law, but on condition that their securities are traded mainly on the Athens Stock Exchange at the time of publication of the offer. The decision – once adopted – will take the place of rules promulgated by the Board of Directors of the Athens Stock Exchange in 1992, which in the course of the first hostile takeover in Greece this past summer proved to be inadequate. The main provisions of the draft have as follows.

1. Natural persons or legal entities intending to make a public bid must notify in writing the Competent Authority and the Board of Directors of the target company and the following day must announce the bid to the public. The bidder publishes an offer document containing crucial information, so that addressees are in a position to reach a properly informed decision on the bid. This document must – prior to publication – obtain the approval of the Competent Authority. In addition, the bidder has to appoint an Advisor (either a credit institution or an investment firm), who must review the offer document and advise with regard to the methods and procedure that are being followed, the reliability of the bid and the consideration offered. The acceptance period cannot be shorter than twenty days or longer than forty days from the date of approval of the offer document by the Competent Authority. Said term can be extended by the Competent Authority.

2. Within ten days following the publication of the offer document the Board of Directors of the target company must present its opinion on the bid. The opinion must evaluate whether the consideration offered and other terms of the bid adequately address the interests of shareholders, as well as those of employees and the general public. Furthermore, once the target company has become aware of the bidder’s intent to launch a bid and until the result is made public, the Board of Directors is not allowed to proceed to:

• a share capital increase or issuance of bonds convertible to shares;

• administrative acts which would substantially affect the assets or liabilities of the target company.

Measures aiming to cause the failure of the offer (“defensive measures”) are therefore disallowed, unless they have express shareholder approval.

3. The offer may be revoked by the bidder in case of submission of competitive bids. Competitive bids can be submitted up to five days prior to the lapse of the acceptance period. In such case, if the initial bidder does not revoke its bid, the period of acceptance is extended until the expiration of the competitive bid. The revocation of the original bidder must be announced within five days following the approval of the offer document of the competitive bid by the Competent Authority. The bid may also be revoked in case of unforeseen changes in circumstances.

4. Until the fifth day prior to the expiration of the term of acceptance the bidder may improve one or more conditions of the bid; the improved bid is submitted for approval to the Competent Authority. The bidder is obligated to refrain from any misleading advertisement about the intended transaction. As regards transactions on shares of the target, they are prohibited to the bidder and to substantial shareholders and members of the Board of the target. All transactions of persons holding more that 0,5% of the share capital of the target must be announced to the Competent Authority. Finally, all these restrictions apply also to shares of the bidder in case of an exchange offer (or the shares of any other company whose stock is offered for shares of the target).

5. The result of the bid is published within 48 hours after the expiration of the term of acceptance. By far the most important provision of the new law, however, is the introduction of the mandatory offer, previously totally unknown to Greek law and practice. Under the relevant provision, if a person – with connected parties – acquires more than 1/3 or 40% (the actual number has not been determined yet) of a company’s voting stock, then it must make a public offer for the 2/3 (or 70%) of the total share capital of such company. In the case of such mandatory offer, the bidder is not allowed to set a minimum number of shares as condition of the offer. Some exceptions are also provided to the obligation of making an offer, but nevertheless this measure will undoubtedly promote minority protection, while at the same time making some transfers of control more expensive.

In broad terms, the proposed CMC decision has taken into consideration the draft of the 13 th Directive on Company law, which is in the process of being approved. Greece will therefore be in compliance with the new Directive once the latter becomes EU law.