COLOMBIA Law and Practice Contributed by: Jaime Trujillo and Natalia Ponce de León, Baker McKenzie
6.9 Voting by Proxy Shareholders can vote by proxy in Colombia. 6.10 Squeeze-Out Mechanisms In Colombia, there are no legal squeeze-out mecha - nisms for listed companies and thus minority share - holders cannot be compelled to sell their shares. On the other hand, minority shareholders holding at least 1% of a publicly listed company’s shares are entitled to request a public tender offer for them to sell their shares. This provision comes into play when an entity acquires more than 90% of the target com - pany’s shares through means other than a compre - hensive tender offer for all the shares of the target company. In such scenarios, the entity is obligated to launch the public tender offer within a period of three months from the time it exceeds the 90% ownership threshold. 6.11 Irrevocable Commitments Listed companies are usually acquired through irrev - ocable commitments from principal shareholders. In these agreements the prospective buyer’s obligation is to launch a public tender offer on the pre-agreed terms and conditions, and the other party’s (the selling shareholder’s) obligation is to accept the public tender offer, if it meets the pre-agreed terms. However, because applicable regulations expressly prohibit agreements that hinder the right of sharehold - ers to accept competing offers, these agreements can include break-up fees that would apply if the sellers accepted a better offer.
Regulatory Environment and Interim Periods While there have not been specific changes to the regulatory environment overall, the length of interim periods has increased. Extended regulatory approv - als and unforeseen delays are nowadays triggered by changes in the workforce of public entities resulting from changes in government and regulatory authori - ties that actively promote antitrust measures and exhibit less flexibility towards private investments. 6.8 Additional Governance Rights In Colombia, control of a company can be established through a majority shareholding of more than 50% (although certain limited decisions may require higher thresholds in accordance with the law) and through other governance or contractual mechanisms. Bid - ders seeking less than 100% ownership of a target can negotiate the additional rights outlined below. Vetoes and Supermajority Decisions Bidders can negotiate veto rights over specific stra - tegic decisions, such as major acquisitions, capital expenditures, or changes in corporate structure. Supermajority provisions (requiring approval by a higher percentage of shareholders) can also grant the bidder additional influence over critical decisions. In any case, certain decisions require higher voting thresholds per law, such as the decision to issue shares not subject to pre-emptive rights. Board and Officer Appointments Bidders can secure the right to nominate directors and officers to the target company’s management. Board representation allows the bidder to actively par - ticipate in corporate governance and strategic plan - ning. Voting Agreements Bidders can enter into voting agreements with other shareholders. These agreements may include commitments to vote in a certain way on specific matters, ensuring align - ment of interests.
7. Disclosure 7.1 Making a Bid Public
The bidder must file a formal request before the SFC with a draft of the notice of its intention to make the public tender offer, which must include: • the name and identification of the bidder; • the minimum and maximum number of shares that the bidder will accept (with at least a 20% margin between the two figures);
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