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The Private Equity & Venture Capital Fund Framework in Greece – The AKES Case

  • Tax Experts
  • Jun 6
  • 4 min read

September 26, 2024


As Greece continues to establish itself as a growing hub for innovation and investment, the introduction of more flexible financial frameworks for venture capital has become critical. The Closed-End Venture Capital Mutual Fund (A.K.E.S.) framework has become a vital tool in this regard, supporting the establishment of private equity and venture capital funds that promote investment in high-growth sectors such as technology, sustainability, and innovation.


What Is A.K.E.S.?


The A.K.E.S. (Closed-End Venture Capital Mutual Fund) is a unique financial vehicle designed to promote venture capital activities in Greece. Unlike a traditional legal entity, A.K.E.S. is a pool of assets that is jointly owned by its unitholders (which can be individuals or legal entities). The fund is primarily designed to invest in non-listed companies through equity participation or debt acquisition. The fund must be liquidated no later than 20 years from its establishment date, ensuring a clear exit strategy for investors.


Introduced by Law 2992/2002, the A.K.E.S. framework has seen significant growth and interest, particularly with the support of the Hellenic Development Bank of Investments (HDBI), a key player in facilitating venture capital investments in Greece.


Role of the Hellenic Development Bank of Investments (HDBI)


For more than 20 years, the HDBI has played a crucial role in the growth of A.K.E.S. funds. As a Fund of Funds, HDBI invests in venture capital and private equity funds targeting sectors like technology, sustainability, and innovation. The HDBI's involvement has led to the attraction of over €2.1 billion in capital, with more than €600 million committed to 26 investment vehicles over the past four years alone.


Minimum Requirements for Establishing an A.K.E.S.


When establishing an A.K.E.S., the following minimum requirements apply:


  • Minimum Assets: €3,000,000 at the date of establishment.

  • Minimum Unitholder Contribution: €150,000 per shareholder, with partial payments allowed (but the initial payment must not be less than €50,000).

  • Capital Commitment: Unitholders can increase their capital commitments through additional contributions or by adding new unitholders, as outlined in the establishment and management agreements.


The A.K.E.S. structure is particularly appealing to investors looking to engage in high-risk, high-reward sectors, with a streamlined process for fund establishment and management.


Investment Opportunities with A.K.E.S.


Under the A.K.E.S. framework, funds can invest in the following types of assets:


  1. Equity: Investments in share capital of non-listed companies registered in Greece.

  2. Convertible Bonds: Bonds that can be converted into shares of the issuing company.

  3. Profit-Linked Bonds: Bonds offering a share of the issuer’s profits or other benefits.

  4. Pre-Listing Equity Participation: Investments in companies that may eventually list on the stock exchange, with an obligation to divest within five years after the IPO.


These diverse investment opportunities make A.K.E.S. a flexible and dynamic structure for venture capital investors looking to engage with high-growth businesses in Greece.


Taxation of A.K.E.S. Investments


One of the most appealing aspects of the A.K.E.S. framework is its tax transparency. As a pass-through vehicle, A.K.E.S. itself is not subject to tax. Instead, unitholders are taxed on the income generated from their participation in the fund.


Key tax advantages include:


  • No Greek Taxes on the establishment or management agreements of the A.K.E.S.

  • No Taxation on Investor Contributions: Investors purchasing units in an A.K.E.S. are not considered Greek residents and are not required to establish a permanent presence in Greece.

  • Fiscal Transparency: The fund operates as a separate pool of assets, with any income from dividends, interest, or capital gains being automatically recognized and passed on to the unitholders for taxation in their jurisdiction.


This makes A.K.E.S. an attractive option for foreign investors looking to enter the Greek market without incurring excessive tax burdens.


Supervision and Reporting Obligations


Although A.K.E.S. funds do not require a license from the Hellenic Capital Market Commission (HCMC) to be established, they are subject to strict regulatory oversight to ensure transparency and proper functioning. The fund manager is required to provide semi-annual and annual reports, which must include detailed information on:


  • Investments: Acquisition costs, cash balances, receivables, and liabilities.

  • Financial Performance: Income by category, gains or losses from investments, and expenses.

  • Profits and Losses: Detailed accounts of profits distributed and retained earnings.

  • Unitholder Changes: Any changes in the identity of unitholders.


These reports must be filed with the HCMC, ensuring that the fund remains compliant with both local regulations and international best practices.


The A.K.E.S. framework continues to be a critical tool in supporting Greece’s vibrant venture capital ecosystem. By offering tax transparency, flexible investment structures, and streamlined reporting obligations, it provides investors with a powerful vehicle for entering Greece’s growing market. Additionally, the support of HDBI has made it easier than ever for venture capital funds to attract significant investment and drive economic growth in the country.


With continued support from both the government and private sector, A.K.E.S. is poised to play a crucial role in shaping the future of investment in Greece, particularly in emerging industries like technology and sustainability.

 
 
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