GUATEMALA Law and Practice Contributed by: Ignacio Andrade Aycinena, Alejandro Solares Solares, Claudia Pontaza Rubio and Lester Meda Ruano, Lex Atlas
3.2 Significant Changes to Takeover Law Guatemala does not have a takeover law or any official initiative to implement a takeover law, except in the financial and insurance sectors. A new securities issu - ance law is under discussion, with provisions regard - ing takeover legislation and notices for publicly traded entities. Even though the Commercial Code was recently amended, no provisions regarding takeovers have been amended or enacted. Provisions require that merger and takeover approval under competition law should be considered. An eco - nomic group will be considered an economic agent if two of its members are under joint administrative or shareholder control. The Securities Market Law states that such control exists if a majority of board members is shared, if the majority of shares of one entity are held by the other, or if the shares of both are commonly shared by a third party. Some anti-takeover contractual provisions do exist but have not yet been assessed in court. 4. Stakebuilding 4.1 Principal Stakebuilding Strategies It is not customary in Guatemala for a bidder to build a stake in the target before launching an offer, mainly because the acquisition strategies for a target usu - ally entail the purchase of shares of a company. The regulations for stakebuilding in the stock market only apply when announcing an increase in the sharehold - ing of a publicly traded company for the purchase of a majority stake of the shares of the company. In regulated industries, such as the financial sector, stakebuilding has been used as a strategy for the for - eign acquisition of local entities. Note that there is no regulatory difference between foreign and domestic acquirers in stakebuilding. 4.2 Material Shareholding Disclosure Threshold In Guatemala there are no applicable material share - holding disclosure thresholds. The only legal require - ment relating to share ownership is that any corpora -
tion or limited liability company, except for venture capital companies, must have at least two sharehold - ers or equity owners. Disclosure obligations for direct or indirect holders of more than 5% of the shares of banks, financial institutions and insurance companies are mandatory, together with the approval of regula - tors. The proposal to acquire control of a securities issu - ance entity in Guatemala triggers the obligation to modify the public offer registration of the securities issuance of the target when securities have been issued by such entities under Securities Law Decree 34-96. Control means the majority of the shares of the controlled entity. The only applicable legal filing obligations relating to share ownership are: (i) the requirement for any share-based company to file a notice at the Mercantile Registry whenever new shares are issued; and (ii) the mandatory offering of shares via media publications of edicts for existing shareholders to exercise their pre- emptive rights under the Code of Commerce for new share issuance within authorised capital of a target entity before a third-party offering. Before shareholder meetings take place, the board of directors or sole director must submit the information regarding the meetings, with 15 days’ advance notice, at the company’s place of business. The administra - tion of the company must place the annual accounts at the disposal of the shareholders; these must include all financial statements, the annual balances, manage - ment comments and an analysis report, remuneration received by management and the expected dividend distribution. The shareholders’ meeting must take place 90 days after the company’s fiscal year end. The new Anti-Money Laundering Law under current consideration in the Guatemalan Congress would require a public filing of changes in share ownership. 4.3 Hurdles to Stakebuilding The Commerce Code, adopted by Decree 2-70, stip - ulates mandatory and minimum reporting standards for all types of companies, meaning a company can introduce additional reporting requirements in their articles of incorporation as long as the minimum is
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