ANDORRA Law and Practice Contributed by: Marc Ambrós and David Cuesta, Cases & Lacambra
However, building a stake in the target prior to launching an offer is not customary in Andorra due to the relatively small size of the companies, the concentration of the share capital among a small number of shareholders, and the family character of companies in Andorra. 4.2 Material Shareholding Disclosure Threshold There are no material shareholding disclosure thresholds or filing obligations in Andorra regard - ing takeovers. However, a change in the share capital distribu - tion of an operating entity in the Andorran finan - cial system requires the previous authorisation of the AFA, if a shareholder: • reaches a qualified shareholding; • increases its qualified shareholding so it holds a share capital percentage or voting rights equal to or greater than 20%, 30% or 50%; or • by virtue of such acquisition, controls the entity. Additionally, a legal obligation that applies to all companies in Andorra is the obligation to dis - close information about each natural person who ultimately holds or controls, directly or indi - rectly, at least 25% of the capital or voting rights (a beneficial owner) to the Andorran Companies’ Register ( Registre de Societats Mercantils ). This information is accessible to any person or organisation that can prove a legitimate interest. 4.3 Hurdles to Stakebuilding The regulatory reporting threshold is compulsory and cannot be modified by companies. How - ever, non-regulated companies can freely adopt internal reporting thresholds in their by-laws, but this kind of rule is not used since there is
no stock market in Andorra and the size of the companies is quite small. Nevertheless, Andorran companies usually increase thresholds related to the majorities needed for the approval of certain agreements Dealing in derivatives is allowed in Andorra. However, since there is no stock market in the jurisdiction, this type of dealing is not commonly used as a strategy to acquire a company. 4.5 Filing/Reporting Obligations See 4.2 Material Shareholding Disclosure Threshold . 4.6 Transparency As there is no stock market in Andorra, all com - panies are private and there is no requirement to make known the purpose of an acquisition. The only sector where it is compulsory to request authorisation and, therefore, to disclose an acquisition to the AFA, is the financial sector. 5. Negotiation Phase 5.1 Requirement to Disclose a Deal See 4.6 Transparency . as reflected in their by-laws. 4.4 Dealings in Derivatives Under Andorran regulations, there is no obliga - tion for a target company to disclose a deal. However, in the financial sector, the decision to acquire or sell a qualified stake in a finan - cial entity must be disclosed to the AFA by the potential acquirer, the seller and by the financial entity as soon as it becomes aware of that deci -
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