ARGENTINA Law and Practice Contributed by: Agustin Ferrari and Astrid Nottebohm, Naveira, Truffat, Martínez, Ferrari & Mallo Abogados
8.5 Conflicts of Interest In Argentina, shareholder involvement in the company’s affairs is common. In practice, the roles of shareholders and directors are often blurred, along with their respective interests. It is not uncommon to see board members who also hold shares in the company or, conversely, “nominee directors” individuals who occupy a board position merely to comply with regulatory requirements. In the case of nominee directors, board deci - sions are typically made following shareholder instructions rather than based on an independ - ent analysis of opportunity, merit, or conveni - ence. Due to these dynamics and potential conflicts of interest, it is common to see liability claims against the board in cases of insolvency or shareholder disputes. It is important to highlight that, under General Corporate Law, directors are personally, jointly, and unlimitedly liable to the company, its share - holders, and third parties for mismanagement, violations of the law, the company’s bylaws or regulations, and for any damages caused by fraud, abuse of authority, or gross negligence. However, the burden of proof lies with the party alleging the damage, making evidence-gather - ing a critical stage in these proceedings.
of shareholders, thus preventing activism and making hostile bids ineffective and uncommon. 9.2 Directors’ Use of Defensive Measures Even though there are no explicit rules on defen - sive strategies against hostile bids, directors might use certain defensive measures, provided that they owe a duty of loyalty to the company and its shareholders and must act with “the due care of a good businessman” . Therefore, they should seek what is best for the company instead of their personal benefit. It should be considered that civil liability may apply when damage arises because of the directors’ actions. CNV rules provide that, if a hostile takeover attempt is made, the board must: i) assess whether the offer price is fair and advise share - holders on whether to accept or reject it; ii) remain neutral and continue regular business operations without deviation; and iii) share any relevant company information that could influ - ence shareholder decisions. CNV rules expressly establish that when a public tender offer has been launched, the board must refrain from: • approving the issuance of shares, bonds of any kind, and other securities or negotiable instruments that grant the right to subscribe or acquire them, except when executing prior specific agreements authorised by the share - holders’ meeting; • directly or indirectly carrying out transactions involving the securities affected by the offer with the intention of disrupting it; and • proceeding with the sale, encumbrance, or lease of real estate or other company assets when such actions could frustrate or disrupt the public offer.
9. Defensive Measures 9.1 Hostile Tender Offers
Hostile bids are permitted under local law. How - ever, public companies in Argentina typically have a small percentage of their capital publicly traded, with the majority held by a limited group
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