ANDORRA Law and Practice Contributed by: Marc Ambrós and David Cuesta, Cases & Lacambra
approval in terms of foreign investment, communica - tions to the Presidency, Economy and Companies’ Minister regarding merger control, and the approval of other regulators such as the AFA for M&A deals involv - ing operating entities of the Andorran financial system. 6.5 Minimum Acceptance Conditions The relevant control thresholds in Andorra are to own more than 50% of the share capital or voting rights of the Andorran target company in order to gain control of such company. However, due to the composition of share capital of Andorran companies, it is common for M&A transac - tions to aim for the acquisition of all the shares that constitute the share capital of the Andorran target company. 6.6 Requirement to Obtain Financing In Andorra, the closing of a transaction can be subject to the bidder obtaining financing. 6.7 Types of Deal Security Measures The usual types of deal security measures that bid - ders seek are: • exclusivity period during the negotiation of the deal; • break-up fees; If a bidder does not seek 100% ownership of a target, the bidder can secure additional governance rights by entering into agreements with other shareholders. The usual additional governance right that the bidder may seek is to have the right to appoint members of the board of directors or of the management of the target company. 6.9 Voting by Proxy Shareholders generally have the right to designate another person, whether or not that person is a share - holder of the company, as a proxy-holder to represent them at a shareholders’ meeting and vote on their behalf. • non-solicitation provisions; • non-compete provisions; and • confidentiality clauses. 6.8 Additional Governance Rights
The proxy must be granted in writing separately for each general meeting, unless a power of attorney with powers of representation has been previously granted. 6.10 Squeeze-Out Mechanisms Squeeze-out mechanisms, short-form mergers and other similar mechanisms are currently not specifically regulated by Andorran law. 6.11 Irrevocable Commitments A bidder may seek to obtain irrevocable commitments to tender or vote from the principal shareholders of the target company, as such commitments are accepted in Andorra.
7. Disclosure 7.1 Making a Bid Public See 5.1 Requirement to Disclose a Deal . 7.2 Type of Disclosure Required See 5.1 Requirement to Disclose a Deal . 7.3 Producing Financial Statements
There is no obligation for bidders to produce financial statements in their disclosure documents. In Andorra, financial statements need to be prepared in accord - ance with the International Financial Reporting Stand - ards (IFRS). 7.4 Transaction Documents See 5.1 Requirement to Disclose a Deal . 8. Duties of Directors 8.1 Principal Directors’ Duties The principal duties with which a director needs to comply are the duties of diligence and loyalty. Duty of Diligence According to the Companies Act, the duty of diligence forces a director to have appropriate involvement in the performance of the company, and to apply to such activity the time, effort and knowledge that can be expected from any businessperson in a similar posi - tion.
17 CHAMBERS.COM
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