ANDORRA Law and Practice Contributed by: Marc Ambrós and David Cuesta, Cases & Lacambra
7.4 Transaction Documents See 5.1 Requirement to Disclose a Deal .
target company to supervise the fulfilment of the steps and conditions established for the interim
period between signing and closing. 8.3 Business Judgement Rule
8. Duties of Directors 8.1 Principal Directors’ Duties
Although Andorran law or case law does not expressly provide for a rule such as the business judgement rule, under Andorran legislation, the directors are required to act in accordance with their duty of diligence and loyalty. 8.4 Independent Outside Advice The independent outside advice that it is com - monly given to directors in a business combina - tion in Andorra is legal, tax, financial and stra - tegic advice. 8.5 Conflicts of Interest Conflicts of interest of directors are not expressly regulated under Andorran legislation. However, conflicts of interest can be considered a breach of the duty of loyalty and, therefore, an action influenced by a conflict of interest could be con - sidered a breach of the duty of loyalty and may be subject to judicial scrutiny. Andorran law does not distinguish between hostile and friendly takeovers, so they are not regulated in this jurisdiction. In any case, hostile tender offers are unusual in Andorra, as most companies are privately owned, mostly small or medium-sized, and managed by their majority shareholders. 9.2 Directors’ Use of Defensive Measures See 9.1 Hostile Tender Offers . 9. Defensive Measures 9.1 Hostile Tender Offers
The principal duties with which a director needs to comply are the duties of diligence and loyalty. Duty of Diligence According to the Companies Act, the duty of diligence forces a director to have appropriate involvement in the performance of the company, and to apply to such activity the time, effort and knowledge that can be expected from any busi - nessperson in a similar position. Additionally, the director is required to be ade - quately informed about the company’s perfor - mance, to participate actively in its manage - ment, and to investigate any irregularities in the management of the company. Duty of Loyalty According to the Companies Act, the duty of loy - alty forces a director to act with the honesty that can be expected of a representative who man - ages the resources of others and, in particular, to refrain from competing with the company, from taking advantage of the company’s business opportunities and from using the company’s assets for private purposes. 8.2 Special or Ad Hoc Committees Under Andorran legislation it is not compulsory, or common, to establish special or ad hoc com - mittees in business combinations. However, in complex transactions it is common to establish joint committees between repre - sentatives of the acquiring company and the
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