ECUADOR Law and Practice Contributed by: María Celeste Alvarado, Jorge Sicouret Zea, Ángel Gaibor and Octavio Rosselli, Coronel & Pérez
For the purposes of the Anti-Trust Law, the potential transaction must be disclosed to the Superintendence of Economic Competition as follows: • within eight days following the day on which the boards of directors of the shareholders of the target company and the acquirer author - ise entering into the share purchase agree - ment when the target company is not listed, and if any of the thresholds set forth in 2.4 Antitrust Regulations are met; and • prior to the tender offer submission when the target company is listed. 5.2 Market Practice on Timing Market practice on timing of disclosure usually follows legal requirements in connection there - with. 5.3 Scope of Due Diligence The scope of due diligence in a negotiated business combination usually includes corpo - rate, labour, financial and tax matters, litigation, material contracts, organisational documents, operating licences and governmental permits and property. 5.4 Standstills or Exclusivity Standstill agreements limiting the ability of the bidder to dispose of the shares of the target company are not usually demanded for non- listed companies and would not be applicable when the target company is listed. Exclusivity agreements, on the other hand, are quite com - mon and are usually demanded by the potential acquirer prior to the issuance of its binding offer. 5.5 Definitive Agreements If a tender offer is required, the terms and condi - tions will be contained in the tender offer itself without the need for a separate agreement. If a
tender offer is not required, it is common prac - tice to document the terms and conditions of the acquisition in written agreements. 6. Structuring 6.1 Length of Process for Acquisition/ Sale If the transaction refers to non-listed companies and the thresholds referred to in 2.4 Antitrust Regulations are not met, the process could last three to four months. If the transaction is subject to review or approval by the Superintendence of Economic Competition, such review or approv - al could take between five and nine additional months and the subsequent tender offer process around thirty business days. 6.2 Mandatory Offer Threshold The mandatory offer thresholds for listed compa - nies are indicated in 4.2 Material Shareholding Disclosure Threshold . If the bidder intends to acquire 35% or more of the outstanding shares, the tender offer must be made for at least 50% thereof. If the bidder intends to acquire 51% or more of the outstanding shares, the tender offer must be made for 100% thereof. 6.3 Consideration When a tender offer is required, the consideration must be in cash. If a tender offer is not required, the parties can agree on a consideration other than cash, but cash is typically used as consid - eration as well. In the event that there is a value gap to be addressed, the parties usually revert to earn-out agreements, escrow agreements or similar arrangements.
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