PARAGUAY Law and Practice Contributed by: Mauro Mascareño, Carlos Vargas and Rodrigo Gómez Sánchez, Mascareño Vargas – Asesores
sonal data is especially sensitive. Data privacy restrictions can limit the scope of due diligence for technology companies, particularly if the tar- get holds a significant amount of personal data.
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 over- looked.
10. Disclosure 10.1 Making a Bid Public
11. Duties of Directors 11.1 Principal Directors’ Duties
If the acquisition is considered a material event according to the regulations of the Paraguayan Stock Exchange, the company is required to dis- close the 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 busi- ness combination. The decision of where the buyer’s shares must be listed, either on the Para- guayan stock exchange or a recognised foreign exchange, is significant. However, it is impor- tant to note that Paraguayan regulation does not mandate listing. 10.3 Producing Financial Statements Local regulation does not oblige bidders to dis- close documents publicly. Publicly traded companies must provide finan- cial statements, following International Financial Reporting Standards (IFRS) standards in Para- guay. 10.4 Disclosure of Transaction Documents In Paraguay, parties must file copies of the pri- mary transaction documents, such as the acqui- sition agreement 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 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, considering the potential effects on employees, creditors and other stakeholders. Directors are required to ensure that the transac- tion is fair and reasonable for all parties involved. 11.2 Special or Ad Hoc Committees In Paraguay, it is uncommon for companies to form special or ad hoc committees during busi- ness combinations. However, when conflicts of interest arise, especially among directors, com- panies may establish committees to oversee negotiations and protect shareholder interests. 11.3 Board’s Role Typically, during the initial stage, the partners engage in negotiations. If shareholders approve, the board of directors may then become involved. In this scenario, the board may actively partici- pate in negotiations throughout an M&A trans- action. It is responsible for recommending or rejecting offers and may also defend the compa- ny against hostile bids if necessary. While share- holder litigation challenging the board’s deci- sions is uncommon in Paraguay, it can occur, especially if the board is perceived to be acting against the best interests of the shareholders.
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