GUATEMALA Law and Practice Contributed by: Ignacio Andrade Aycinena, Alejandro Solares Solares, Claudia Pontaza Rubio and Lester Meda Ruano, Lex Atlas
6.3 Consideration In Guatemala, cash is more commonly used as con - sideration, although consideration can also be part cash and part securities, and not just shares but also bonds. Common tools used to bridge value gaps between the parties include escrow accounts to deter - mine certainty on final decisions in litigation matters. Representations and warranties insurance can also be arranged with international insurers able to provide coverage if the agreement has a US law jurisdiction. 6.4 Common Conditions for a Takeover Offer The common conditions for a takeover offer are: • establishing the number of shares to be acquired; • the price of acquisition; • terms of payment of the price; • all regulatory, and governmental approvals and/ or permits required to complete the offer being granted on terms acceptable to the offeror; • that no material adverse effect has occurred or will occur in a certain period; • no material pending litigation against the target or any of its legal representatives, shareholders or ultimate beneficiaries has occurred or is expected to occur; and • that no public information or information disclosed by the target to the offeror is inaccurate, incom - plete, or misleading, amongst others. The only restrictions imposed by law and enforced by regulators are the those related to the acquisition of a controlling interest in the shares of a publicly traded entity (see 4.1 Principal Stakebuilding Strate- gies ) and those applicable to financial institutions – ie, acquiring more than 5% of the shares of any institu - tion supervised and regulated by the Superintendency of Banks necessitates obtaining prior approval from the Monetary Board. Stakebuilding due to of lack of regulation can result in counter stakebuilding measures which have no legal limits. Pills on management are not illegal, and voting trusts do not contain limitations.
6.5 Minimum Acceptance Conditions The minimum acceptance conditions for tender offers in Guatemala are as follows: • agree on the percentage of shares to be acquired; • obtain all regulatory and/or governmental approv - als and/or permits required to complete the offer; • no material adverse effect has occurred or will occur in a certain period; • no material pending litigation against the target or any of its legal representatives, shareholders or ultimate beneficiaries has occurred or is expected to occur; and • that no public information or information disclosed by the target to the offeror is inaccurate, incom - plete, or misleading, amongst others. 6.6 Requirement to Obtain Financing In Guatemala, it is permissible for a business combi - nation to be conditional on the bidder obtaining the financing. 6.7 Types of Deal Security Measures There are no statutory restrictions on deal secu - rity measures, which can be negotiated. Non-solic - itation agreements for employees may have some issues related to enforceability against the employ - ees because of constitutionally mandated freedom of employment provisions and labour code provi - sions limiting restrictions on work. However, they are enforceable against third parties based on unfair competition, and upon registration of non-solicitation. Non-disparagement agreements can be negotiated freely between parties, but damages provisions tend to be limited under the Continental Law system. Liq - uidated damages can be negotiated, but clauses are It has been requested in Guatemala that the target appoint independent directors and that certain board of directors’ meetings exclude management. Infor - mation rights before shareholder meetings and rights to appoint a director are common, and anti-dilution provisions may also be applicable when acquisition percentages are low, although elections by cumula - tive voting allow directors to be elected by minority limited to the size of the transaction. 6.8 Additional Governance Rights
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