ECUADOR Law and Practice Contributed by: María Celeste Alvarado, Jorge Sicouret Zea, Ángel Gaibor and Octavio Rosselli, Coronel & Pérez
thresholds referred to in 2.4 Antitrust Regulations or involves listed companies. In such cases, the final draft of the transaction documents must be submitted in full to the Superintendence of Economic Competi - tion in order to obtain the corresponding authorisa - tion.
are family-owned contributes to the lack of judicial scrutiny regarding conflicts of interest.
9. Defensive Measures 9.1 Hostile Tender Offers Hostile tender offers are permitted in Ecuador, but due to the market size, they are not common. 9.2 Directors’ Use of Defensive Measures Directors of listed companies are not allowed to implement defensive measures. From the moment at which the governing bodies are aware of a potential tender offer until the results thereof are published, directors must refrain from executing, or agreeing to execute, any act that is not in the ordinary course of business and that would in any way affect the tender offer process or favour one bidder over the other, such as issuing stocks or securities and entering into option Defensive measures subsequent to the governing bodies becoming aware of a potential tender offer are not allowed. 9.4 Directors’ Duties Defensive measures subsequent to the governing bodies becoming aware of a potential tender offer are not allowed. 9.5 Directors’ Ability to “Just Say No” Directors cannot take any action that prevents the ten - der offer from being fulfilled and/or an M&A from being implemented; they must act with absolute neutrality for the benefit of the company only. or transfer agreements over assets. 9.3 Common Defensive Measures
8. Duties of Directors 8.1 Principal Directors’ Duties
The primary duties of directors are loyalty, due dili - gence, confidentiality, avoidance of conflicts of inter - est and non-competition. In the context of an M&A transaction the duties of directors are owed to the company and its shareholders. 8.2 Special or Ad Hoc Committees The establishment by the board of directors of special or ad hoc committees and/or the deferral of certain matters to such committees must be contemplated in the company’s by-laws. Such committees are usually implemented to address complex matters that require time-consuming in-depth analysis, such as those per - taining to M&A, though nothing prevents the board of directors from delegating to the ad hoc committee making decisions on the ordinary course of business or in matters in which a director has a conflict of inter - est. 8.3 Business Judgement Rule In suits alleging a board of director’s violation of their duty of care, the court will uphold the board’s deci - sions provided that they have been made with suf - ficient, objective and reasonable information, and fol - lowing an adequate procedure, unless there is hard evidence to the contrary. 8.4 Independent Outside Advice In M&A transactions, independent outside legal, accounting, tax, asset valuation, environmental and expert appraisal services are commonly required by the board of directors. 8.5 Conflicts of Interest In the Ecuadorean private sector, there have been very few cases where directors have been subject to judicial scrutiny. The fact that most large companies
10. Litigation 10.1 Frequency of Litigation
Most M&A transactions have arbitration clauses that typically specify that the arbitration procedure shall be confidential. Thus, it is not possible to determine how common litigation is in connection with disputes among the parties. However, there have been lawsuits against the Superintendence of Economic Competi -
440 CHAMBERS.COM
Powered by FlippingBook