PARAGUAY Law and Practice Contributed by: Mauro Mascareño, Carlos Vargas and Rodrigo Gómez Sánchez, Mascareño Vargas – Asesores
Overall, while specific M&A regulations may be lim- ited, these laws provide a supportive framework that could enhance activities in the technology sector. 9. Due Diligence/Data Privacy 9.1 Due Diligence Process No response has been provided in this jurisdiction. 9.2 Technology Company Due Diligence In Paraguay, data privacy legislation is scarce and limited mostly to credit scoring data. Further, public companies can provide necessary due diligence infor- mation to potential bidders. However, the board of directors must ensure that the information disclosed is not prejudicial to the company’s interests and does not provide undue advantage to any bidder. The same level of information must be provided to all bidders, and financial statements, corporate governance details and operational information must be shared. Due diligence often includes a review of technology infrastructure, intellectual property and data privacy policies, as well as compliance with local regulations. 9.3 Data Privacy Paraguay still lacks a comprehensive data privacy law; however, some general privacy principles are included in Law No 6534/20. Companies that handle sensitive or personal data must take appropriate measures to protect that information during the due diligence pro- cess. Disclosing personal data without the individuals’ consent can lead to legal challenges, particularly in sectors like fintech, where the handling of personal data is especially sensitive. Data privacy restrictions can limit the scope of due diligence for technology companies, particularly if the target holds a significant amount of personal data.
bid to the SIV and the stock exchange within three business days. 10.2 Prospectus Requirements A prospectus is typically required if shares are issued in a stock-for-stock takeover or business combina- tion. The decision of where the buyer’s shares must be listed, either on the Paraguayan stock exchange or a recognised foreign exchange, is significant. However, it is important to note that Paraguayan regulation does not mandate listing. 10.3 Producing Financial Statements Local regulation does not oblige bidders to disclose documents publicly. Publicly traded companies must provide financial statements, following International Financial Reporting Standards (IFRS) standards in Paraguay. 10.4 Disclosure of Transaction Documents In Paraguay, parties must file copies of the primary transaction documents, such as the acquisition agree- ment and any relevant shareholder agreements, with the securities regulator if the transaction involves a public company. Private transactions may not require such public filings. In any case, should the transaction trigger any of the antitrust tests, it is imperative that they are filed with CONACOM. This is a key aspect of regulatory compliance that cannot be overlooked. In Paraguay, the directors of a company involved in a business combination primarily owe their duties to the shareholders. However, they must also act in the best interests of the company as a whole, consider- ing the potential effects on employees, creditors and other stakeholders. Directors are required to ensure that the transaction is fair and reasonable for all par- ties involved. 11.2 Special or Ad Hoc Committees 11. Duties of Directors 11.1 Principal Directors’ Duties In Paraguay, it is uncommon for companies to form special or ad hoc committees during business com- binations. However, when conflicts of interest arise, especially among directors, companies may estab-
10. Disclosure 10.1 Making a Bid Public
If the acquisition is considered a material event according to the regulations of the Paraguayan Stock Exchange, the company is required to disclose the
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