EL SALVADOR Law and Practice Contributed by: Héctor Torres, Annette Herrera, Daniel Leiva and Raquel Santos, Torres Legal
with the applicable accounting standards, which are typically based on international financial report- ing standards (IFRS) or generally accepted account- ing principles (GAAP), as required by the regulatory authorities. 10.4 Disclosure of Transaction Documents If a transaction is going to be reviewed by the Super- intendency of Competence, the parties involved in a takeover offer or business combination are typically required to file copies of the transaction documents, thus ensuring regulatory oversight and transparency in the transaction process. The specific documents that need to be filed may include the offer document, prospectus and any agreements related to the trans- action. Also, there are certain thresholds that are reviewed by the Superintendence, which typically sets a monetary threshold based on the combined turnover of the parties involved. If the transaction exceeds this threshold, notification and review may be required. Market Share The Superintendence may also consider the shares of the merging entities in relevant markets. If the merger could significantly affect competition (eg, by creating or strengthening a dominant position), it may trigger a review. Mandatory Notification Certain types of M&A may require mandatory noti- fication to the Superintendence, particularly if they meet specified thresholds. This allows the authority to assess potential anti-competitive effects. Exemptions Some transactions might be exempt from review, depending on their size, nature or specific regulations.
tions to – others such as employees and creditors, especially in the context of long-term sustainability and corporate governance. 11.2 Special or Ad Hoc Committees Whether special or ad hoc committees are established in business combinations depends on the type, scope and size of the transaction. Nevertheless, there is usu- ally significant involvement from the owners, who are typically part of the board of directors. Committees are typically tasked with overseeing the transaction, ensuring that the interests of all shareholders are rep- resented and that the process is fair and transparent in a more informal process. 11.3 Board’s Role The board is expected to be actively involved in nego- tiations and can defend the company’s interests dur- ing a business combination. It is relatively uncommon for an M&A transaction to end in litigation; however, this can happen. The buyer should consider how involved the board of directors was in the transaction. This ensures that everyone is informed and in agree- ment at the time of executing the agreement, minimis- ing the possibility of any opposition. This approach helps avoid any judicial proceedings, which would only delay the process. 11.4 Independent Outside Advice Directors commonly seek independent outside advice in connection with a takeover or business combina- tion. This typically includes legal advice and financial advice, with financial advisers often providing fairness opinions to assess whether the terms of the transac- tion are fair from a financial perspective. This prac- tice helps protect the directors by demonstrating that they acted with due diligence in fulfilling their fiduciary duties.
11. Duties of Directors 11.1 Principal Directors’ Duties
In El Salvador, directors have a fiduciary duty to act in the best interests of the company and its share- holders during a business combination. This includes exercising care, loyalty and good faith. While directors primarily owe their duties to shareholders, they must also consider the interests of – and their legal obliga-
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