COLOMBIA Law and Practice Contributed by: Jaime Trujillo, Andres Crump and Natalia Ponce de León, Baker McKenzie
owner holds 5% or more of the voting shares of a listed entity; and • the obligation to launch a public tender offer in the situations described in 4.2 Material Shareholding Disclosure Threshold . 4.4 Dealings in Derivatives Dealings in derivatives are permitted in Colom - bia, provided that certain rules are followed. 4.5 Filing/Reporting Obligations The filing and reporting obligations for deriva - tives dealings, under securities and competition law, are the same as those applicable to the acquisition of shares in publicly listed compa - nies as described throughout this chapter. 4.6 Transparency When launching a public tender offer, bidders must disclose the purpose of the acquisition and their intention with respect to the control of the company, and explicitly outline their plans regarding the future activities of the target com - pany. Such disclosure must include, where appropri - ate, plans for the future use of the assets of the listed company, changes in the management bodies and amendments to the company’s by- laws, as well as any intention to de-list the com - pany. 5. Negotiation Phase 5.1 Requirement to Disclose a Deal Private Companies There is no specific legal requirement to disclose a deal for privately held companies. The specif - ics of how the parties choose to reveal the trans - action to the public, such as through a press
release clause, are regulated in the transaction documents. Listed Companies A listed company is required to disclose a deal whenever it learns that binding agreements have been reached. Note, however, that targets themselves do not necessarily play a role in an acquisition, as the decision to sell the shares of a company lies solely with the shareholders, and not with the board of directors or any other body of the target. 5.2 Market Practice on Timing Market practice regarding the timing of dis - closure often aligns with legal requirements. On many occasions, the parties involved in a business combination that must be closed by a specific date work backwards on the calendar to ensure timely compliance with all applicable disclosure obligations. 5.3 Scope of Due Diligence The scope of legal due diligence can vary sig - nificantly depending on whether the company is private or public, the specific type of transaction and the target company business. Private Companies Typically, the due diligence scope for a private entity involves a review of key contractual obli - gations (top clients and suppliers), compliance with regulations and permits, corporate struc - ture, consumer protection claims, environmental licenses, real estate matters, outstanding litiga - tion and administrative proceedings, labour and pension issues, intellectual property, taxes and financing obligations. Listed Companies The due diligence scope for a listed company will primarily encompass public information, unless
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