GUATEMALA Law and Practice Contributed by: Ignacio Andrade Aycinena, Alejandro Solares Solares, Claudia Pontaza Rubio and Lester Meda Ruano, Lex Atlas
4.2 Material Shareholding Disclosure Threshold In Guatemala there are no applicable material shareholding disclosure thresholds. The only legal requirement relating to share ownership is that any corporation or limited liability company, except venture companies, shall have at least two shareholders or equity owners. Disclosure obligations for direct or indirect holders of more than 5% of shares of banks, financial institu - tions and insurance companies are mandatory together with the approval of regulators. The proposal to acquire control of a securities issuance entity in Guatemala triggers the obliga - tion to modify the public offer registration of the securities issuance of the target when securi - ties have been issued by such entities under the Securities Law Decree 34-96. Control means a majority of the shares of the controlled entity. The only applicable legal filing obligations relat - ing to share ownership are the requirement for any share-based company to file a notice at the Mercantile Registry every time new shares are issued, and the mandatory offering of shares via media publications of edicts for existing share - holders to exercise their pre-emptive rights under the Code of Commerce for new share issuance within authorised capital of a target entity before a third-party offering. Before shareholder meetings take place, the Board of Directors or sole director have to place the information regarding such shareholder meetings, with 15 days’ advance notice, in the company’s place of business. The administration of the company must place at the disposal of the shareholders the annual accounts, including financial statements, yearly balance, manage - ment discussion and analysis report, remunera - tions received by management and the projec -
it is proven with documentary evidence that the transaction had other economic causes. 3.2 Significant Changes to Takeover Law Guatemala does not have a takeover law or any official initiative to implement a takeover law, except in the financial and insurance sectors. A new securities issuance law is under discussion, with provisions regarding takeover legislation and notices for publicly traded entities. Even though the Commercial Code was recent - ly amended, no provisions regarding takeovers have been amended or enacted. Provisions require merger and takeover approval under competition law should be considered. Some anti-takeover contractual provisions do exist but have not yet been assessed in court. 4. Stakebuilding 4.1 Principal Stakebuilding Strategies It is not customary in Guatemala for a bidder to build a stake in the target before launching an offer, mainly because the acquisition strategies for a target usually entail the purchase of shares of a company. The regulations for stakebuilding in the stock market only apply when announc - ing an increase in the shareholding of a publicly traded company for the purchase of a majority stake of the shares of the company. In regulated industries, stakebuilding has been used as a strategy for the foreign acquisition of local entities. Note that there is no regulatory dif - ference between foreign and domestic acquirers in stakebuilding.
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