ARGENTINA Law and Practice Contributed by: Agustin Ferrari, Hernán Alal and Astrid Nottebohm, Naveira, Truffat, Martínez, Ferrari & Mallo Abogados
10.3 “Broken-Deal” Disputes Failed transactions are uncommon, and legal disputes arising from them are even rarer. When deals do fall through, parties typically resolve issues through nego - tiation rather than litigation, as the costs and complex - ities of formal disputes often outweigh the benefits.
• proceeding with the sale, encumbrance, or lease of real estate or other company assets when such actions could frustrate or disrupt the public offer. 9.3 Common Defensive Measures Although defensive measures are uncommon due to the scarcity of hostile bids in Argentina, the directors of a target company would typically aim to challenge the offer price, delaying regulatory approval and cre - ating the opportunity for private negotiations with the bidder – provided that, as previously explained, they are careful to avoid selling or pledging the assets of the company to affect the bid and issuing shares with post-bid shareholder approval. 9.4 Directors’ Duties Directors owe a duty of loyalty to the company and its shareholders and, as mentioned, must act with “the due care of a good businessman”. In addition to civil liability (for which damages consti - tute the available remedy), criminal liability can apply where directors’ actions fall under the category of criminal offences. Civil liability is presumed once the damage arising from the directors’ decision is evi - denced, unless the director proves otherwise. However, for criminal liability, a director’s responsibil - ity must be proven by a prosecutor in a criminal trial. 9.5 Directors’ Ability to “Just Say No” Directors should not “just say no”, and it must be con - sidered that they will be liable for any damages arising from their actions. 10. Litigation 10.1 Frequency of Litigation Litigation is not common in M&A deals in Argentina. 10.2 Stage of Deal Though very rare, if litigation occurs with respect to M&A deals, it tends to occur post-closing, upon a breach of contract by one of the parties involved in the transaction.
11. Activism 11.1 Shareholder Activism
Shareholder activism is not an important force in Argentina. As previously explained, securities markets operate with less liquidity, which reduces the appetite of activists who may struggle to sell the shares they accumulate. Also, there is a lack of activists operating in the region, and therefore in Argentina, since Latin America is diverse and complex, with markets varying in size and legal frameworks, which means potential activists have to acquire specialised knowledge of a target’s market. 11.2 Aims of Activists A lack of activism in Argentina implies activists are sel - dom seen encouraging companies to enter into M&A transactions, spin-offs or major divestitures. 11.3 Interference With Completion It is rare for activists to attempt to interfere with the completion of announced transactions in Argentina. Given the scarcity of public M&A, shareholder activ - ism is not a significant threat, and much of regulatory control takes place ex post, meaning that transactions are undertaken subject to such approval. As a result, any interference with the completion of announced transactions, if it occurs, typically comes from the regulators.
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