COLOMBIA Law and Practice Contributed by: Gabriela Mancero, Daniel Peña, Maria Fernanda González and Andrea Sánchez Gallardo, Peña Mancero Abogados
6.5 Common Conditions for a Takeover Offer/Tender Offer Colombian regulation establishes that takeover offers for public companies must be directed to unspecified persons and may not include additional conditions for acceptance other than those customary to the legal transaction intend- ed. In this regard, it is not permitted to require that those accepting the offer do so for the mini- mum or maximum quantity of securities. 6.6 Deal Documentation It is customary to enter into a transaction agree- ment in connection with a takeover offer or busi- ness combination involving a public company. The agreement formalises the terms, obliga- tions and protections for both parties, provid- ing a structured framework for the transaction including clauses related to the obligations of the target company, an exclusivity clause prohibit- ing it from seeking or encouraging other offers for a specified period as well as the obligation to inform the bidder if a competitor’s offer is received, and indemnifications and liabilities. Although limited compared to private company transactions, it is still customary for a public company in Colombia to provide basic repre- sentations and warranties, which are usually related to corporate authorisations, compliance, the absence of litigations and the accuracy of financial statements. 6.7 Minimum Acceptance Conditions When the consideration consists of voting capi- tal in a company whose shares are listed in the BVC, the recipients of the offer may only accept it for a number of securities that would result in their beneficial ownership position in the com- pany equating to less than 25% of the voting capital of that company or, if they hold a position
equal to or greater than 25%, for an amount less than 5%. Except for the foregoing, acceptances may not be subject to any condition, except that the securities be sold under the “all or nothing” method. The all or nothing method means that the acceptor is willing to proceed with the sale only if it is possible to allocate the full amount of securities covered by the acceptance. 6.8 Squeeze-Out Mechanisms Colombian legislation does not expressly enshrine a positive law provision that allows for the forced exclusion of a minority shareholder. Moreover, there are certain figures that could lead to the understanding that the implementa- tion of measures such as those provided for in common law systems violate the rights of minor- ity shareholders. However, certain limited mechanisms are avail- able including, among others, the following. • Merger without shareholder assignment:Law 1258 of 2008, which incorporated the simpli- fied joint stock company typology into the Colombian legal system, allows the share- holders of a company absorbed through a merger to receive, as the only consideration, cash instead of shares in the absorbing com- pany. In this way, the majority shareholder could consolidate 100% ownership of the capital of the acquiring company, while the minority shareholders would only receive cash as consideration for their exclusion from the share capital. To carry out the merger on these terms, the majority shareholder must have a majority that allows it to comply with the requirements of the company’s by-laws. • Global disposal of assets: The company sells all its assets and liabilities to a third
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