Manolis Eglezos participates in the IR Global Guide – The Middle East & North Africa: A dynamic region for inward & outward investment

Foreword by Andrew Chilvers

The Middle East and North Africa (MENA) region is a hugely diverse cultural and geographical mix that stretches from Morocco in northwest Africa to Iran in Southwest Asia.

The region is home to a range of economies with vastly different levels of openness to international trade and investment. But with the help of international organisations such as the OECD and IMF, along with local and foreign investment, much of the region has started to make giant strides in economic development in recent years.

Despite the Covid-19 pandemic that resulted in negative growth of 3.8% for 2020, most analysts agree the region continues to offer ideal opportunities for businesses and investors going forward. Indeed, with the pandemic starting to ease, an estimated $4.1 trillion of projects are planned or underway in many countries across the region as they continue to diversify and expand their economies.

Moreover, to ease the stress on local companies while offering incentives to foreign investors, most MENA countries recently announced a series of fiscal stimulus packages including tax payment reductions and loan guarantees for businesses. These moves have been popular inside and outside the region for encouraging investment and many analysts predict growth increasing to as much as 3.1% for the region in 2021.

Nevertheless, this uptick in economic growth depends on several factors including the ongoing success of the Covid-19 vaccine rollout across the region and the stabilising of oil and gas prices. Furthermore, if geopolitical tensions continue to stabilise, many believe oil exports will recover to 1.8% for 2021 and this will be supported by the resumption of large-scale capital investment projects that were largely put on hold during 2020.

Starting a business in/out of MENA: How easy is it for entrepreneurs and businesses in/out of MENA to start a business in your jurisdiction? How can you help smooth the process for your clients and overcome common pitfalls?

Greece is an attractive country for setting up a business. Following a 10-year economic crisis and a successful handling of the pandemic, with the vaccination rollout progressing quickly, Greece is able to offer investors a number of benefits.

Speed in company formation: Greece is ranked by the World Bank Group’s Report “Ease of Doing Business” at the top 11 countries worldwide for the speed in incorporating companies. Moreover, only three steps (submission of application, licensing and establishment) and four to five days are required to set up a business in Greece. Apart from the usual types of companies (SA, Ltd, partnership), the recently introduced type of private capital companies (IKE), either single-or multi-personal, provides a flexible and efficient alternative even with little or no capital.

Apart from incorporation, we can assist clients in all other issues that may arise in the activity of a corporation, from BoD/ GA minutes (company secretary) to trademark registration at National, Community and/or International level, litigation, contracts negotiation and drafting, GDPR compliance and data protection, and in general any matter that may arise.

Our network of professionals comprises accountants, auditors, brokers and may provide full-coverage service to the client.

What are the key recent developments your clients should be aware of when investing in/out of the MENA region to your jurisdiction? What grants and incentives are available to overseas investors?

Recent developments show that since the 2010 financial crisis it is now a good time to invest in Greece. Here it’s worth focusing on the Greek maritime sector, which is a key player in the world’s shipping industry. A plethora of specialised staff cover all activities related to the industry and are capable of supporting any business ideas brought to the sector.

A typical Greek maritime group has the following structure: there is one ship owning company (usually offshore, although the Greek legal system provides for a special type of shipping company) for each vessel of the group; each ship owning company has a management agreement with the managing company of the group, which is usually an offshore company established in Greece under this specific privileged regime. The management company is the one that attends to everything related to the vessels’ operation, while the ship owning companies merely receive their hires. Investors wishing to enter the shipping industry have a variety of alternative ways to do so. We can illustrate a few, underscoring already that shipping is a volatile industry with high market fluctuations that should be taken into account prior to undertaking such an investment.

Purchase and bareboat charter. This is a recommended option to investors who are not familiar with shipping and don’t want to assume too much risk. They will incorporate a company to acquire a vessel, and then bareboat charter her to a third party. Bareboat charter is a form of chartering where the owner merely charters the vessel and the charterer is under the duty to man, equip and operate the ship. This is a recommended placement for investors who do not wish to involve themselves with shipping directly but wish to take advantage of the profits of the industry. The bareboat charterer will pay a hire to the owner and will in turn operate the vessel, aiming to profit from using the ship.

Purchase and delegate management. With this alternative, the investors shall, as above, incorporate a company to acquire a vessel and then will enter into a management agreement with a company established in Greece, as illustrated above, for the management of the vessel. This pattern requires that the owners maintain an overview of the situation, as they will have to cooperate with the managers for any of the vessel’s needs and issues that arise.

Purchase and manage. Here investors enter shipping fully. The management company is theirs; they employ staff, they take care through their management company of the vessels’ operation, and they arrange for chartering as well. A well-structured mechanism is created to serve the ownership and exploitation of the vessel. This alternative is addressed to investors who are familiar with the industry and keen to assume such responsibilities.

Yachting. An entrepreneur who wishes to acquire a pleasure yacht, can do it in Greece through a scheme that allows for the exploitation of the vessel when not used by the principal. This is done through a Greek Pleasure Yacht Maritime Company, which enjoys tax privileges.

With all this, our law firm can provide a full-scale service to the interested parties.

What are the latest trends shaping business growth and creating opportunities in MENA for clients in your jurisdiction? What markets offer the most stability and growth and where would you advise your clients to invest?

Clients who are interested in investing in the MENA region focus on free zones, which can be a gateway to the region and central/east Asia. Maritime activity such as supplies and repairs/maintenance, which can be provided onboard, are keen to use a free-zone vehicle to act through. Clients are also interested in scrapyards for a vessel’s demolition.

Cooperation between different jurisdictions is increasing cross-border synergies and helping to implement cooperation. Our law firm assists both Greek and MENA entrepreneurs and companies to take advantage of the opportunities offered in either in Greece or across the MENA region. Also, the IR Global network ensures that the proper professionals assist wherever the need of local assistance appears.

On the other hand, as far as Greece is concerned, it is now a great moment for investments in Greece for the following reasons:

• Increase by 68% of exports value of Greek products

• Adoption of measures in order to reduce bureaucracy, to digitize public sector services and increase transparency

• Significant decrease of labour costs

• Increase of Greek GDP.

• Opportunities in the Greek Real Estate Market

• Attractive residence visa programme for non-EU citizens based on two pillars: real estate purchase (for a minimum value of €250K, the lowest in Europe) or strategic investment (€100m minimum or creation of 150 work positions). The beneficiary and family enjoy renewable residence visa entitling unrestricted travel to Schengen countries, and have access to Greek public services.

• Residence visa programme for financially independent individuals (€2,000/month approximately), without entitling them working or exercising financial activity.

• Transfer of tax-residency to Greece in order to enjoy income tax exemption for 7 years and further tax benefits.

• Creation of Family Office, as a special purpose vehicle for family members to enjoy taxation benefits.