ANDORRA Law and Practice Contributed by: Marc Ambrós and David Cuesta, Cases & Lacambra
1. Trends 1.1 M&A Market
regarding the transaction. The transfer of the shares needs to be notarised and it is registered in the Andor - ran Companies’ Register. Mergers are less frequent but may also be used as a method to acquire a com - pany. 2.2 Primary Regulators The primary regulators for M&A activity in Andorra are: • Autoritat Financera Andorrana (Andorran Financial Authority or AFA) for M&A related to financial and insurance institutions; • Ministeri de Presidència, Economia i Empresa (Presidency, Economy and Companies Minister) in charge of supervising merger control; and • Registre d’Inversions Estrangeres (Foreign Invest - ment Register or FIR) in charge of authorising and screening foreign investments in Andorra. 2.3 Restrictions on Foreign Investments The foreign investment regime in Andorra qualifies as direct investment and includes investments made in Andorran companies or real estate by: • non-resident natural persons; • resident natural persons with less than three years of continuous residency in Andorra, since obtaining the residency authorisation when investing in real estate; • legal persons of foreign nationality; • Andorran legal persons with direct or indirect foreign equity participation equal to or greater than 50% of their share capital or voting rights and more than 50% of their assets are composed of real estate; and • any Andorran legal person when at least 50% of the voting rights of the board of directors are held directly or indirectly by a natural or legal person included in any of the four above-mentioned cat - egories or when they are financed by any of the latter. Specifically, the term “direct investments” covers: • the incorporation of an Andorran company; • the total or partial acquisition of the shares of an Andorran company; or
The existing traditional ownership of companies in Andorra that are headed to restructuring operations due to generational change and the recent movements and transactions will certainly contribute to speeding up the local M&A market in the forthcoming months. In addition, negotiations on an association agreement between Andorra and the European Union finalised at the end of 2023. With a provisional entry into force expected during the coming months, and the ratifi - cation by Andorran citizens expected by means of a referendum, this agreement will provide a robust framework for economic diversification in Andorra and relevant opportunities for foreign investors to develop their activity in Andorra. 1.2 Key Trends Maintaining the trend of the last two years, the Andor - ran M&A market has been led by acquisitions and majority-stake investments by foreign international group companies in local entities, with a view to devel - oping their businesses in Andorra, and with the ben - efit of already-existing target assets and commercial The key industries driving M&A activity in Andorra in the past 12 months were tourism and hospitality, logistics and infrastructure. Although this is not always a matter of pure M&A transactions, during the last 12 months, there has been a considerable increase in real estate transactions in the jurisdiction with predomi - nance of foreign investments aimed at new develop - ments. structures in place. 1.3 Key Industries
2. Overview of Regulatory Field 2.1 Acquiring a Company
It should be noted that there is no stock market in Andorra. Therefore, in M&A transactions, the primary technique for acquiring a company is to enter into a share purchase agreement (SPA) between the buyer and the shareholders of the Andorran target compa - ny. The SPA sets out the main terms and conditions
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