ECUADOR Law and Practice Contributed by: María Celeste Alvarado, Jorge Sicouret Zea, Ángel Gaibor and Octavio Rosselli, Coronel & Pérez
the thresholds referred to in 4.2 Material Share- holding Disclosure Threshold , the derivative transaction must fulfil the same reporting and filing requirements as a tender offer. Likewise, if any of the thresholds set forth in 2.4 Antitrust Regulations are met, it is necessary to make the relevant disclosure to, and request the cor - responding approval from, the Superintendence of Economic Competition. 4.6 Transparency When a tender offer is intended or necessary, as outlined in 4.2 Material Shareholding Disclosure Threshold , the bidder must issue an offering cir - cular disclosing the purpose of the acquisition and explicitly set forth its intention regarding the future activity of the target company, and its plans with respect to the use of company assets and contemplated amendments to the by-laws, to the governing bodies, as well as its intention with respect to securities issued by the target company. Regardless of the foregoing, if the transaction falls within the thresholds set forth in 4.2 Mate- rial Shareholding Disclosure Threshold , bidders will be required to disclose the purpose of the acquisition to the Superintendence of Economic Competition. In all other cases, such disclosure is not necessary. 5. Negotiation Phase 5.1 Requirement to Disclose a Deal If a tender offer is required as mentioned in 4.2 Material Shareholding Disclosure Threshold , the intention of the bidder must be disclosed simultaneously with the filing of the tender offer approval request before the regulators.
not be considered customary. If a bidder were to implement a stakebuilding strategy, the law allows it to acquire the outstanding shares of a listed company up to the threshold set forth in 4.2 Material Shareholding Disclosure Thresh- old , without the need to file a tender offer. 4.2 Material Shareholding Disclosure Threshold If, within a 12-month period, the bidder intends to acquire – directly or indirectly – 35% or more of the shares outstanding of the target company, it should file for a tender offer for at least 50% of the outstanding shares. If these thresholds are not met, the bidder still can voluntarily opt to file for a tender offer, in which case such offer shall be subject to the same requirements as the obligatory offer. Additional reporting and filing obligations might arise from antitrust regulations if the market share or the aggregate turnover in Ecuador exceeds the thresholds set forth in 2.4 Antitrust Regulations . 4.3 Hurdles to Stakebuilding It is not possible for a company to introduce dif - ferent rules or to alter the reporting thresholds. The reporting and filing thresholds are deter - mined by law and cannot be altered or super - seded in by-laws. 4.4 Dealings in Derivatives Derivative agreements for the purpose of acquir - ing the outstanding shares of a target company are feasible in Ecuador. However, given that most target companies are not listed, dealing in derivatives is not a common practice. 4.5 Filing/Reporting Obligations If the outstanding shares of a target company for which a derivative transaction is agreed exceeds
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