CHILE Law and Practice Contributed by: Ignacio Errazquin, Adolfo Romero and Florencia Anguita, CMS Carey & Allende
Although contingent value mechanisms (eg, earn- outs) are uncommon in public M&A, they may appear in negotiated private transactions. This is especially the case in the renewable energy and infrastructure segments, where valuation depends on project pipe- lines or regulatory tariffs approved by the CNE. 4.5 Common Conditions for a Takeover Offer/ Tender Offer Chilean law requires certainty and equal treatment for shareholders in public tender offers. OPAs must generally be unconditional, except for a limited set of objective and verifiable conditions. Permitted conditions include: • a minimum acceptance threshold (often 50% plus one share or two-thirds of the voting shares) (see 4.7 Minimum Acceptance Conditions for further details); • merger control clearance from the FNE; • sectoral authorisations or notifications from the CNE, the CEN, or the SEC, where control of regu- lated assets or concessions is affected; and • material adverse change provisions, but only where the triggering events are precisely defined and objectively measurable. The CMF restricts the use of discretionary or sub- jective conditions, as they would undermine market certainty or allow the bidder to withdraw unilaterally. Each condition must be explicitly disclosed in the OPA prospectus ( prospecto informativo ) filed with the CMF and published through the stock exchange system. 4.6 Deal Documentation It is standard to execute a transaction agreement or support agreement between the bidder and the con- trolling shareholder or significant shareholders, set- ting out the board’s recommendation, exclusivity, and information-sharing provisions. These are enforceable under the Civil Code and the Corporations Law, sub- ject to directors’ fiduciary duties. Board members must individually issue a reasoned opinion to shareholders and the CMF regarding the advisability of the offer to the shareholders. Repre- sentations and warranties are rarely included in public
deals; disclosure occurs through the OPA prospectus filed with the CMF. 4.7 Minimum Acceptance Conditions As mentioned in 4.5 Common Conditions for a Take- over Offer/Tender Offer , typical minimum acceptance thresholds in OPAs range from 50% plus one of the voting shares – to achieve simple control – to two- thirds of the voting shares, which is required for spe- cial-majority corporate actions such as amendments to by-laws or statutory mergers under Articles 67 and 69 of the Corporations Law. The specific threshold chosen depends on the bid- der’s post-closing objectives. Examples of such objectives include obtaining sufficient control to con- solidate financials, amend governance provisions, or initiate a subsequent delisting or merger. 4.8 Squeeze-Out Mechanisms Chilean law does not grant automatic squeeze-out rights allowing a controlling shareholder to compulso- rily buy out minority shareholders after a tender offer. However, under Article 71 bis of the Corporations Law, if a shareholder reaches 95% or more of the voting shares of a publicly listed company, the remaining minority shareholders gain a statutory appraisal right ( derecho a retiro ) and require the controlling share- holder to purchase their shares. 4.9 Requirement to Have Certain Funds/ Financing to Launch a Takeover Offer At the same time as launching a tender offer, the bid- der must disclose the manner in which the offer will be financed and include evidence sufficient to conclude that the bidder has the funds available to settle the offer. This ensures “certain funds” equivalent to the total consideration. Conditional or financing-depend- ent offers are not permitted. 4.10 Types of Deal Protection Measures Permitted deal protection mechanisms in Chilean public M&A transactions are limited by the principles of transparency and fairness, as well as by directors’ fiduciary duties as set out in the Corporations Law. There is no specific statutory regime governing deal protection mechanisms in public M&A. Instead, the scope of permissible protections is determined by
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