GUATEMALA Law and Practice Contributed by: Ignacio Andrade Aycinena, Alejandro Solares Solares, Claudia Pontaza Rubio and Lester Meda Ruano, Lex Atlas
conditions, to the company, the registry and the exchange in which the shares are traded, with such requirements as the exchange and registry requests in addition to the price, terms of pay - ment and number of shares to be transacted. The acquisition of controlling voting trusts is also subject to notices to be provided to the regula - tor and in any public notice of a shareholders’ meeting in which such rights will be exercised. As a practical matter, no registered public offer - ing of shares is currently in place in the Securi - ties Registry of Guatemala. Only if the target is a financial institution is it required to disclose a deal, preferably (but not mandatorily) when a negotiation starts, to the Superintendency of Banks for its approval before obtaining the Monetary Board’s approval. If the target is a private company and only some of its equity holders or shareholders are negotiating, there is no requirement to disclose a deal unless the company will increase its share capital to complete the deal. 5. Negotiation Phase 5.1 Requirement to Disclose a Deal Share capital increases are subject to a right of first refusal by shareholders, which must be waived or not exercised before a third party can participate in any shareholding arising from increases in the share capital of a Guatemalan entity. Other shareholders may have a right of first refusal on any sale of shares. If this is the case, disclosure and waiver are a requirement. The Commercial Code authorises board approval
for the disposal and acquisition of shares by a new shareholder. In publicly traded shares or shares with a public offering, registered intent to acquire is manda - tory under Article 39 of the Securities Law before the negotiation can commence and is made public to the Securities Registrar, the exchange and the company. As a practical matter, no com - pany shares are currently registered and active in the Securities Registry of Guatemala. 5.2 Market Practice on Timing Since Guatemala does not have any practical legal disclosure requirements, market practice is to disclose once the terms and conditions of the acquisition have been agreed upon between the parties and the public. Disclosure is not required. Please note that there is no offering requirement to purchase the rest of the shares under Guate - malan law. Local entities are not publicly traded and, therefore, it cannot be said that there is a particular market practice that applies to them. 5.3 Scope of Due Diligence The scope of the due diligence usually encom - passes the corporate, asset titling, tax, labour, permitting, environmental, or regulatory and litigation matters of the target, its shareholders, and the ultimate beneficiaries. In the energy sector, force majeure situations became an issue given certain provisions regard - ing consumer protections that were enacted. 5.4 Standstills or Exclusivity In Guatemala, exclusivity is typical of M&A trans - actions. There are no regulations on this subject.
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