ARGENTINA Law and Practice Contributed by: Agustin Ferrari, Hernán Alal and Astrid Nottebohm, Naveira, Truffat, Martínez, Ferrari & Mallo Abogados
price, which is open to challenge by shareholders regarding its fairness and reasonableness. 6.7 Types of Deal Security Measures Deal-protection and cost-coverage solutions used in M&A transactions to shield transactions from compet - ing third-party bidders are permitted in Argentina, and including the following: • confidentiality or non-disclosure agreements; • no-shop clauses; • non-solicitation clauses; • break-up fees (penalty payable by target company) or reverse break-up fees (penalty payable by buyer) – although their inclusion is not market-standard; • matching rights; and • MAC clauses. Among the recent changes to the regulatory environ - ment that may impact the length of interim periods in Argentina, we highlight Resolution 905, published on 18 May 2023 by Secretariat of Commerce, introducing a new Regulation for Merger Notification. A significant change is the implementation of a summary proce - dure (PROSUM) for mergers which are less likely to negatively affect competition. This procedure stream - lines the approval process, potentially reducing the interim period before closing. 6.8 Additional Governance Rights In such cases, it is convenient to obtain the right to veto certain corporate resolutions that would other - wise be passed by a simple majority of the governing body (Assembly), such as the approval of amend - ments to the bylaws, variation in capital stock, issu - ance of shares, change of purpose or the appointment of authorities. Furthermore, buyers may obtain the right to appoint a certain number of members of the management body or of the controlling body. When appointing its own board members, it is advis - able to establish mechanisms that allow certain rele - vant decisions not only to be adopted by majority vote but also to require the vote of the directors appointed by the acquiring party. For instance, the approval of annual financial statements, obtaining loans, execut -
ing certain contracts and/or granting of powers of attorney may require the signature of board members
of the acquiring party. 6.9 Voting by Proxy
Voting by proxy at shareholders’ meetings is author - ised both for private companies and companies authorised to operate under the public offering regime. Proxies may be general or special. In the case of board meetings, the position is consid - ered to be non-transferable (intuito personae) and the director may only authorise another director to vote on their behalf if the quorum is still reached without them. In other words, voting by proxy is authorised with the limitation that the proxy must be granted to another member of the board of directors who participates in a meeting with sufficient quorum. If the proxy is not a member of the board of directors, they should not be authorised to participate in the board meeting, oth - erwise the resolutions adopted at such meeting shall be null and void. 6.10 Squeeze-Out Mechanisms Argentina has squeeze-out mechanisms in place for tender offers, which are available when a shareholder has obtained 95% or more (referred to as quasi-total control) of the outstanding shares of the publicly-listed target company. In such case, the acquiring share - holder may either: • launch a simplified tender offer to acquire the residual shares (within a short period of time fol - lowing approval by the National Securities Com - mission (CNV)); or • implement a DUVA procedure by which the acquir - ing shareholder must unilaterally: a) file with the CNV a fair-market price valuation with a public disclosure of interest in an additional acquisition; ii) deposit the purchase price (assessed by the acquirer in its fairness valuation) in escrow; and iii) issue a unilateral public deed. Argentine law also grants sell-out rights to minority shareholders who can request that the majority share - holder buys their shares under similar conditions.
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