ARGENTINA Law and Practice Contributed by: Agustin Ferrari and Astrid Nottebohm, Naveira, Truffat, Martínez, Ferrari & Mallo Abogados
9.3 Common Defensive Measures Although defensive measures are uncommon due to the scarcity of hostile bids in Argentina, the directors of a target company would typically aim to challenge the offer price, delaying regula - tory approval and creating the opportunity for private negotiations with the bidder – provided that, as previously explained, they are careful to avoid selling or pledging the assets of the com - pany to affect the bid and issuing shares with post-bid shareholder approval. 9.4 Directors’ Duties Directors owe a duty of loyalty to the company and its shareholders and, as mentioned, must act with “the due care of a good businessman” . In addition to civil liability (for which damages constitute the available remedy), criminal liability can apply where directors’ actions fall under the category of criminal offences. Civil liability is pre - sumed once the damage arising from the direc - tors’ decision is evidenced, unless the director proves otherwise. However, for criminal liability, a director’s responsibility must be proven by a prosecutor in a criminal trial. 9.5 Directors’ Ability to “Just Say No” Directors should not “just say no” , and it must be considered that they will be liable for any dam - ages arising from their actions. 10. Litigation 10.1 Frequency of Litigation Litigation is not common in M&A deals in Argen - tina.
10.2 Stage of Deal Though very rare, if litigation occurs with respect to M&A deals, it tends to occur post-closing, upon a breach of contract by one of the parties involved in the transaction. 10.3 “Broken-Deal” Disputes Failed transactions are uncommon, and legal disputes arising from them are even rarer. When deals do fall through, parties typically resolve issues through negotiation rather than litigation, as the costs and complexities of formal disputes often outweigh the benefits. Shareholder activism is not an important force in Argentina. As previously explained, securities markets operate with less liquidity, which reduc - es the appetite of activists who may struggle to sell the shares they accumulate. Also, there is a lack of activists operating in the region, and therefore in Argentina, since Latin America is diverse and complex, with markets varying in size and legal frameworks, which means poten - tial activists have to acquire specialised knowl - 11. Activism 11.1 Shareholder Activism A lack of activism in Argentina implies activists are seldom seen encouraging companies to enter into M&A transactions, spin-offs or major divestitures. 11.3 Interference With Completion It is rare for activists to attempt to interfere with the completion of announced transactions in Argentina. Given the scarcity of public M&A, shareholder activism is not a significant threat, and much of regulatory control takes place ex edge of a target’s market. 11.2 Aims of Activists
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