COLOMBIA Law and Practice Contributed by: Jaime Trujillo and Natalia Ponce de León, Baker McKenzie
Listed Companies The due diligence scope for a listed company will pri - marily encompass public information, unless control - ling shareholders persuade (or otherwise prevail over) the management to disclose all necessary information for the bidder to conduct a regular due diligence pro - cess, mirroring the scope typically undertaken for a private entity. 5.4 Standstills or Exclusivity Standstill agreements are not common practice because hostile takeovers rarely occur, and because the decision to sell shares of public companies rests solely with the shareholders, not with the target. This structure inherently reduces the likelihood of hostile tender offers, thereby making standstill agreements or hostile tender offers less relevant. On the other hand, exclusivity provisions are common practice in Colombia. Typically, exclusivity terms are included in term sheets, binding offers, preliminary transaction documents and in the share purchase agreements themselves, rather than in separate and independent agreements. The duration of the exclu - sivity varies case by case. 5.5 Definitive Agreements Written undertakings with the selling shareholders are the market practice. However, because, as a general rule, the acquisi - tion of shares in a listed company must take place through the BVC and pursuant to a public tender offer if exceeding the thresholds set forth in 4.2 Material Shareholding Disclosure Threshold , the agreement defining exchange terms cannot actually transfer share ownership. Instead, it is limited to: (i) the bid - der’s commitment to offer to buy and/or launch a public tender offer on the pre-agreed terms; and (ii) the shareholder’s commitment to accept such offer or public tender offer (as applicable) on the pre-agreed terms. This does not, however, prevent the parties from including customary stipulations, such as represen - tations and warranties from the sellers regarding the shares and the target, the relevant indemnification
company, changes in the management bodies and amendments to the company’s by-laws, as well as any intention to de-list the company.
5. Negotiation Phase 5.1 Requirement to Disclose a Deal Private Companies
There is no specific legal requirement to disclose a deal for privately held companies. The specifics of how the parties choose to reveal the transaction to the public, such as through a press release clause, are regulated in the transaction documents. Listed Companies A listed company is required to disclose a deal when - ever it learns that binding agreements have been reached. Note, however, that targets themselves do not necessarily play a role in an acquisition, as the decision to sell the shares of a company lies solely with the shareholders, and not with the board of direc - Market practice regarding the timing of disclosure often aligns with legal requirements. On many occa - sions, the parties involved in a business combination that must be closed by a specific date work back - wards on the calendar to ensure timely compliance with all applicable disclosure obligations. 5.3 Scope of Due Diligence tors or any other body of the target. 5.2 Market Practice on Timing The scope of legal due diligence can vary significant - ly depending on whether the company is private or public, the specific type of transaction and the target Typically, the due diligence scope for a private entity involves a review of key contractual obligations (top clients and suppliers), compliance with regulations and permits, corporate structure, consumer protection claims, environmental licenses, real estate matters, outstanding litigation and administrative proceedings, labour and pension issues, intellectual property, taxes and financing obligations. company business. Private Companies
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