COLOMBIA Law and Practice Contributed by: Jaime Trujillo, Andres Crump and Natalia Ponce de León, Baker McKenzie
controlling shareholders persuade (or otherwise prevail over) the management to disclose all necessary information for the bidder to conduct a regular due diligence process, mirroring the scope typically undertaken for a private entity. 5.4 Standstills or Exclusivity Standstill agreements are not common prac - tice because hostile takeovers rarely occur, and because the decision to sell shares of public companies rests solely with the shareholders, not with the target. This structure inherently reduces the likelihood of hostile tender offers, thereby making standstill agreements or hostile tender offers less relevant. On the other hand, exclusivity provisions are common practice in Colombia. Typically, exclu - sivity terms are included in term sheets, binding offers, preliminary transaction documents and in the share purchase agreements themselves, rather than in separate and independent agree - ments. The duration of the exclusivity varies case by case. 5.5 Definitive Agreements Written undertakings with the selling sharehold - ers are the market practice. However, because, as a general rule, the acqui - sition of shares in a listed company must take place through the BVC and pursuant to a pub - lic tender offer if exceeding the thresholds set forth in 4.2 Material Shareholding Disclosure Threshold , the agreement defining exchange terms cannot actually transfer share ownership. Instead, it is limited to: (i) the bidder’s commit - ment to offer to buy and/or launch a public ten - der offer on the pre-agreed terms; and (ii) the shareholder’s commitment to accept such offer or public tender offer (as applicable) on the pre- agreed terms.
This does not, however, prevent the parties from including customary stipulations, such as representations and warranties from the sellers regarding the shares and the target, the relevant indemnification obligations as well as break-up fees as deal protection. 6. Structuring 6.1 Length of Process for Acquisition/ Sale Private Companies The duration of an M&A transaction is influenced by various factors such as the length of a due diligence process, third-party consents, regula - tory approvals, sophistication of the parties, and whether the transaction is handled as an auction process or by means of bilateral negotiations. Overall, there is not a specific timeframe to com - plete a transaction. However, should express antitrust clearance be necessary (as opposed to a fast-track filing or no filing), the time required for completion can be extended by an additional five to eight months. Transactions are generally taking longer to com - plete due to heightened regulatory scrutiny and/ or bureaucracy. Listed Companies Once regulatory authorisations (such as antitrust clearance) are granted, the timeline to apply for authorisation to launch a public tender offer, launch it and settle it usually ranges from one to three months.
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