ECUADOR Law and Practice Contributed by: María Celeste Alvarado, Jorge Sicouret Zea, Ángel Gaibor and Octavio Rosselli, Coronel & Pérez
condition of the bidder’s obligations under the tender offer. If a tender offer is not necessary, the transaction can be subject to the condition of the bidder obtaining financing. 6.7 Types of Deal Security Measures If a tender offer is required, no security measures tending to impede, obstruct or encumber the right of the shareholders of the target company to accept competing offers can be included. If there are com - peting or concurrent offers, the bidder has the right to amend its initial tender offer so that it exceeds the terms and conditions of any subsequent offer. When a tender offer is not required, the bidder usually seeks match rights and non-solicitation provisions. Even though they are permitted, break-up fees are not commonly requested. 6.8 Additional Governance Rights The bidder can enter into shareholders’ agreements and/or negotiate the right to designate more mem - bers of the board of directors, veto rights or special majorities for certain decisions. Under Ecuadorean law, as long as the rights of the minority shareholders are not breached, shareholders can implement cor - porate governance arrangements to the satisfaction of the bidder. 6.9 Voting by Proxy Shareholders can vote by proxy provided that the authorised person is not a member of the manage - ment of the company or its controlling departments, nor one of the external auditors. 6.10 Squeeze-Out Mechanisms Ecuadorean law does not contemplate a squeeze-out mechanism as such. Under certain circumstances, the shareholder is entitled to withdraw but cannot be forced to sell its shares only because it did not accept the tender offer. 6.11 Irrevocable Commitments In transactions involving non-listed companies, the terms and conditions, including commitments to tender or vote by the principal shareholders, could be agreed by the parties, though this is not common practice. If the transaction involves a listed compa -
ny, the parties can also enter into pre-arrangement agreements provided that such agreements do not include provisions tending to impede, obstruct or encumber the right of the shareholders of the target company to accept competing offers. A copy of such pre-arrangement agreements shall be annexed to the offering circular.
7. Disclosure 7.1 Making a Bid Public
Once the bidder has decided to acquire the shares of the listed target company, it must simultaneously inform the target company, the Superintendence of Companies, Securities and Insurance, the Superin - tendence of Economic Competition and the stock exchanges of the terms and conditions of its tender offer. The bidder must also issue a notice of publication indicating that the authorisation to carry on the tender offer will be requested from the Superintendence of Companies, Securities and Insurance within ten busi - ness days following the approval or non-objection of the Superintendence of Economic Competition. The disclosed information may be subject to changes and cannot be considered definitive. 7.2 Type of Disclosure Required If the transaction is between unlisted companies and neither of the thresholds referred to in 4.2 Material Shareholding Disclosure Threshold are met, dis- closure of the issuance of shares is not required. If the target company is listed, it must comply with the disclosure requirement set forth in 7.1 Making a Bid Public , though no separate or specific disclosure for the issuance of shares is required. 7.3 Producing Financial Statements For the purposes of filing a request for approval of a tender offer, the bidder shall provide the Superintend - ence of Companies, Securities and Insurance with a copy of its financial statements for the last three years. Financial statements must comply with the Interna - tional Financial Reporting Standards (IFRS). 7.4 Transaction Documents The need to disclose the transaction documents in full depends on whether the transaction exceeds the
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