EL SALVADOR Law and Practice Contributed by: Héctor Torres, Annette Herrera, Daniel Leiva and Raquel Santos, Torres Legal
vote in favour of the transaction. However, they often include provisions allowing the shareholder to withdraw their commitment if a superior offer is made. This “out” clause provides flexibility for the shareholders such that they can act in their best financial interests. 6.13 Securities Regulator’s or Stock Exchange Process In El Salvador, the offer generally needs to be approved by the SSF before launching; this is to ensure compliance with securities regula- tions. The regulator does not typically approve the offer price itself but ensures that the terms are fair and compliant with legal requirements. The regulator or stock exchange may set a time- line for the tender offer, which outlines how long the offer will remain open. If a competing offer is announced, it can affect the timeline of the origi- nal tender offer. The initial bidder may have to respond by extending their offer or revising the terms to remain competitive. These processes are designed to protect shareholders and ensure transparency in the acquisition. Another factor to consider is whether the trans- action significantly impacts the market condi- tions; a review by the Superintendency of Com- petition ( Superintendencia de Competencia ) may be necessary to prevent monopolistic practices. 6.14 Timing of the Takeover Offer A takeover offer or tender offer cannot be com- pleted in El Salvador before the expiry of the offer period due to the lack of regulatory or anti- trust approvals. The extension terms typically depend on the agreement between the parties and may require a notification to shareholders.
Therefore, the parties involved sometimes seek approval, or a form of reference approval, before making the transaction.
7. Overview of Regulatory Requirements 7.1 Regulations Applicable to a Technology Company
The regulatory landscape in El Salvador depends on the specific technology sector one wants to enter. For instance, there is a new legal frame- work applicable to all entities operating in the digital assets market, regardless of whether the intention is to be a digital asset provider, issuer or certifier. Additionally, Bitcoin has its own dis- tinct regulations. First and foremost, a formal commercial entity must be established in El Salvador. This typical- ly involves setting up a company that complies with all legal and tax requirements. Subsequent- ly, the specific regulations governing the target industry must be navigated, encompassing vari- ous aspects of technology, finance and banking, as well as consumer and data protection. Key regulatory bodies involved in this process include the Superintendency of the Financial System, the Central Reserve Bank, and the National Commission of Digital Assets of El Salvador, among others. The entire process of obtaining the necessary permits and approvals usually takes around four to six weeks, assuming all requirements are met. For companies looking to operate on the stock exchange of El Salvador, there are also specific regulations that must be followed.
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