GUATEMALA Law and Practice Contributed by: Ignacio Andrade Aycinena, Alejandro Solares Solares, Claudia Pontaza Rubio and Lester Meda Ruano, Lex Atlas
5.4 Standstills or Exclusivity In Guatemala, exclusivity is typical of M&A transac - tions. There are no regulations on this subject. 5.5 Definitive Agreements In Guatemala, it is permissible for tender offer terms and conditions to be documented in definitive agree - ments. Due to the nature of the local shareholding composition, most local entities are closely held and, other than a share securities exchange, tenders are rare. 6. Structuring 6.1 Length of Process for Acquisition/Sale The length of the process to acquire or sell a busi - ness will depend on several matters, and most of the time such matters depend on the parties involved in the M&A transaction – ie, on the nature of the target. If it is a financial institution, the process can take up to approximately 12 months as the approval of the authority is required before closing the deal. If the acquisition or sale of the business requires the transfer of real estate, then the transfer shall be regis - tered at the General Property Registry, which can take approximately 20 business days for owned entities, and one month for majority shares acquisitions which require public notice of shareholder meetings. During the pandemic, the Mercantile Registry of the Republic of Guatemala introduced the use of electron - ic signatures for Public Notaries, so when the Public Notaries register public documents with electronic signatures, their registration is more agile. It is pos - sible that similar changes will be made to the General In Guatemala there is no mandatory offer threshold; however, if an offer is made to more than 35 persons, the offer will be deemed as public and certain man - datory requirements will apply under the Law of the Securities and Merchandise Market. Offers between existing shareholders of local entities, even if made to more than 35 persons, have not been deemed a public offer. Property Registry in the near future. 6.2 Mandatory Offer Threshold
shareholding arising from increases in the share capi - tal of a Guatemalan entity. Other shareholders may have a right of first refusal on any sale of shares. If this is the case, disclosure and waiver are a requirement. The Commercial Code authorises board approval for the disposal and acqui - sition of shares by a new shareholder. In publicly traded shares or shares with a public offer - ing, registered intent to acquire is mandatory under Article 39 of the Securities Law before the negotiation can commence and is made public to the Securities Registrar, the exchange and the company. As a practi - cal matter, no company shares are currently registered and active in the Securities Registry of Guatemala. 5.2 Market Practice on Timing Since Guatemala does not have any practical legal disclosure requirements, market practice is to dis - close once the terms and conditions of the acquisition have been agreed upon between the parties and the public. Disclosure is not required. Please note that there is no offering requirement to purchase the rest of the shares under Guatemalan law. Local entities are not publicly traded and, therefore, it cannot be said that there is a particular market prac - tice that applies to them. 5.3 Scope of Due Diligence The scope of due diligence usually encompasses the corporate, asset titling, tax, labour, permitting, envi - ronmental, or regulatory and litigation matters of the target, its shareholders, and the ultimate beneficiaries. Limitations of due diligence may exist based on con - fidentiality provisions. On matters regarding govern - ment affairs and on military matters related to targets, it is possible that government information might not be available. The tax obligations of targets are confi - dential, and cannot be reviewed without the target’s approval; litigation files do have some limitations for due diligence purposes and also require the target’s approval.
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