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Privatisation of Greek assets

Christina Papanikolopoulou

On July 1 2011 the Greek Parliament passed Law 3986/2011 on Emergency Measures for the Implementation of the Medium-term Fiscal Strategy Framework for the years 2012-2015 (Medium-term Plan). One of the measures introduced by the Law was the establishment of a fund that will undertake the development and exploitation of private law assets owned by the Hellenic Republic and/or state-owned corporations. This fund was set up in the context of the Greek government's efforts to step up privatisations, which it has committed to complete under the emergency lending plan established by the ECB, the Eurozone and the IMF.

Assets, the ownership of which will be transferred to the fund, are included in the Medium-term plan, and are: shares; intangible rights, rights of property, management, use, operation and/or maintenance; and real estate assets. Assets transferred to the fund, may not be transferred out of it, unless due to privatisation. The Interministerial Committee may transfer to the fund additional assets falling under any of the categories listed above.

The Fund is entitled to dispose of the assets under its management in any suitable way and in particular by: sale; transfer or property or similar rights or other in rem rights; lease; assignment of the use, operation or management; contribution of the assets in a société anonyme and sale of its shares; and securitisation of business or other receivables. Disposal of the assets will be decided on the basis of the Medium-term Plan and pursuant to a business plan approved by the fund's board of directors.

The process will commence by a decision from the Interministerial Restructuring and Privatisation Committee (that was set up under Law 3049/2002) on Privatisations of State-owned Companies to transfer assets to the fund, followed by decisions of the fund's board of directors (for the development and exploitation of such assets), with the assistance of the Special Secretariat for Privatisations and Restructurings. Therefore the seller, lessor or assignor of the assets will be the fund.

The proceeds from disposal of the assets will be applied exclusively towards repayment of sovereign debt.

Law 3986 introduces special provisions for the facilitation of expropriation procedures, as well as for the termination of lease or similar agreements applying to any of the fund's assets under privatisation.

The board of directors of the fund has been appointed. However, the decision from the Minister of Finance that was required to be issued one month after publication of Law 3986 confirming the commencement of operations of the fund, has not yet been published.

Law 3986 includes grandfathering provisions for existing mandates to advisers for the privatisation of HR assets, as well as for pending tenders for the engagement of such advisers.

It is worth noting that although the "development and exploitation" of Hellenic Republic assets is not expressly characterised as a privatisation under Law 3986, in practical terms it is a form of privatisation; if this approach is upheld, the transactions effected under Law 3983 would be expected to benefit from various Greek laws that have been introduced for the facilitation of privatisations (eg, the sale of publicly-traded securities by the fund would not trigger a mandatory take-over bid by the buyer of the securities).

Christina Papanikolopoulou

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