By virtue of a bill which has been introduced in Parliament awaiting endorsement changes are effected in the legislation regulating venture capital companies, mutual guarantee companies, factoring and leasing.

Venture capital

Until now venture capital companies used to finance the development of existing enterprises with a consideration of minority participation in their share capital or bonds convertible into shares upon the expiry of the agreed period of time (Article 1, paragraphs 1,2 of L.1775/1988). Under the proposed legislation a venture capital company is permitted to invest 20% of its own funds as a maximum in one only enterprise, thereby reducing the risk and eliminating cases of favouritism vis-a-vis connected companies. Moreover, the shareholders of venture capital companies are not permitted to own more than 30% of the share capital of the company in question, excluding cases where the shareholder is a credit institution. Finally, in the determination of the net profits realised by venture capital companies a rebate of 3% is granted on the amounts of discounted claims, as a partial offset of the risk inherent in the activity undertaken.

Mutual guarantee companies

Such companies will take the form of companies limited by shares (SAs) and their main purpose is to guarantee high risk financing channelled towards small and medium size enterprises. Mutual guarantee companies shall be supervised by the Bank of Greece and they are intended to play the role of a ''locomotive'' in the investment activity of the SMEs. It is noteworthy that banks have hitherto shied away from undertaking such a role in view of the high risk involved in such a venture.


As regards factoring tax incentives in the form of rebates are introduced in order to attract newcomers and thereby proliferate enterprises engaged in factoring. The object of such enterprises is amplified in order to embrace also claims of prospective foreign clients as well as claims of foreign sellers against their clients, who are based in Greece.


Incentives are granted to leasing companies also in the form of tax rebates for the expansion of the institution of leasing to real estate. The minimum share capital of leasing companies is fixed at half of the share capital required for credit institutions (i.e. 2 billion drs./5million ECU), whereas the term of real estate leasing contracts cannot be lower from ten years.

Athanassios Vamvoukos, Bahas, Gramatidis & Associates, Athens, Greece

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