GUATEMALA Law and Practice Contributed by: Ignacio Andrade Aycinena, Alejandro Solares Solares, Claudia Pontaza Rubio and Lester Meda Ruano, Lex Atlas
10.3 “Broken-Deal” Disputes Litigation has been threatened in broken deals within the region, in cases in which deals have been made subject to US jurisdiction. Arbitration has been con - ducted on issues such as electricity and regulated matters.
not usual in Guatemala. If defensive measures exist under the articles of incorporation or in the entity’s Corporate Governance Manuals, the board may use them, if allowed. 9.3 Common Defensive Measures There is no specific subject regulation. There are only general considerations on good faith in business. A typical defensive measure for shareholders is a voting trust which provides control for as long as the tender offeror does not hold the majority of shares. 9.4 Directors’ Duties The directors hold the same liability and duties when enacting defensive measures as when exercising their duties. Directors are not mandated to transmit sales proposals to shareholders. 9.5 Directors’ Ability to “Just Say No” Directors cannot “just say no”. They are subject to the decision of the supreme authority of the company, the shareholders’ meeting or the equity partners’ meeting, and the director is obliged to comply with the resolu - tion taken by this authority. Directors do not have the authority to decide upon offers to purchase shares. Directors have authority, except where limited by stat - ute, to accept or not the sales of assets. Litigation is not common in connection with M&A deals when the acquisition is for the totality of the shares or assets of the target. Minority rights litiga - tion is more typical when minority shareholders’ rights are not protected in the deal. Arbitration is the most common manner in which M&A disputes are resolved locally and internationally. 10.2 Stage of Deal Because the deal is not made public until finalised, liti - gation comes after acquisition in most cases in which it arises. Typically, litigation is brought due to causes related to the price or the condition of the target and its contingencies, which are found after acquisition. 10. Litigation 10.1 Frequency of Litigation
11. Activism 11.1 Shareholder Activism
Shareholder activism is indeed a force against the infringement of minority rights, but is not a huge force due to shareholding structure which, for certain enti - ties (such as utilities) tends to act as a dividend pro - vision scheme, in some cases with employee share participation, the main threat being when dividends are not distributed. Social activism does exist in Guatemala, particularly in the mining, hydroelectric and telecommunications industries. The ILO 169 Convention is central to Gua - Shareholder activism does not seek any of the above- stated results. Social activism seeks major divesti - tures and even the shutdown of operating businesses, which causes flights of capital. Social activism was affected during the pandemic, due to factors such as limited hours and transportation, and the informal economy was not supported by the loans granted by the government. On the other hand, cybernetic activ - ism arose. 11.3 Interference With Completion Activists do seek to interfere with the completion of announced transactions, especially the M&A transac - tions in the mining, hydroelectric and telecommunica - tions industries. temala’s social activism. 11.2 Aims of Activists
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