ECUADOR Law and Practice Contributed by: María Celeste Alvarado, Jorge Sicouret Zea, Ángel Gaibor and Octavio Rosselli, Coronel & Pérez
4. Stakebuilding 4.1 Principal Stakebuilding Strategies Owing to the limited number of public listed compa - nies and the concentration of the controlling interests thereof in families or close-knit economic groups, hos - tile takeover tenders are unusual. Therefore, stake - building in advance cannot be considered customary. If a bidder were to implement a stakebuilding strategy, the law allows it to acquire the outstanding shares of a listed company up to the threshold set forth in 4.2 Material Shareholding Disclosure Threshold , without the need to file a tender offer. 4.2 Material Shareholding Disclosure Threshold If, within a 12-month period, the bidder intends to acquire – directly or indirectly – 35% or more of the outstanding shares of the target company, it should file for a tender offer for at least 50% of the outstand - ing shares. If these thresholds are not met, the bid - der can still voluntarily opt to file for a tender offer, in which case such offer shall be subject to the same requirements as the obligatory offer. Additional reporting and filing obligations might arise from antitrust regulations if the market share or the aggregate turnover in Ecuador exceeds the thresholds set forth in 2.4 Antitrust Regulations . 4.3 Hurdles to Stakebuilding It is not possible for a company to introduce different rules or to alter the reporting thresholds. The reporting and filing thresholds are determined by law and can - not be altered or superseded in by-laws. 4.4 Dealings in Derivatives Derivative agreements for the purpose of acquiring the outstanding shares of a target company are feasible in Ecuador. However, given that most target companies are not listed, dealing in derivatives is not a common practice. 4.5 Filing/Reporting Obligations If the outstanding shares of a target company for which a derivative transaction is agreed exceed the thresholds referred to in 4.2 Material Shareholding Disclosure Threshold , the derivative transaction must
fulfil the same reporting and filing requirements as a tender offer. Likewise, if any of the thresholds set forth in 2.4 Antitrust Regulations are met, it is necessary to make the relevant disclosure to, and request the corresponding approval from, the Superintendence of Economic Competition. 4.6 Transparency When a tender offer is intended or necessary, as out - lined in 4.2 Material Shareholding Disclosure Thresh- old , the bidder must issue an offering circular disclos - ing the purpose of the acquisition and explicitly set forth its intention regarding the future activity of the target company, its plans with respect to the use of company assets and contemplated amendments to the by-laws, to the governing bodies, as well as its intention with respect to securities issued by the target company. Regardless of the foregoing, if the transaction falls within the thresholds set forth in 4.2 Material Share- holding Disclosure Threshold , bidders will be required to disclose the purpose of the acquisition to the Superintendence of Economic Competition. In all other cases, such disclosure is not necessary. If a tender offer is required as mentioned in 4.2 Mate- rial Shareholding Disclosure Threshold , the intention of the bidder must be disclosed simultaneously with the filing of the tender offer approval request before the regulators. For the purposes of the Antitrust Law, the potential transaction must be disclosed to the Superintendence of Economic Competition as follows: • within eight days following the day on which the boards of directors of the shareholders of the target company and the acquirer authorise entering into the share purchase agreement when the target company is not listed, and if any of the thresholds set forth in 2.4 Antitrust Regulations are met; and • prior to the tender offer submission when the target company is listed. 5. Negotiation Phase 5.1 Requirement to Disclose a Deal
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