GUATEMALA Law and Practice Contributed by: Ignacio Andrade Aycinena, Alejandro Solares Solares, Claudia Pontaza Rubio and Lester Meda Ruano, Lex Atlas
the acquisition of a controlling interest in the shares of a publicly traded entity (see 4.1 Prin- cipal Stakebuilding Strategies ) and those appli - cable to financial institutions – ie, acquiring more than 5% of the shares of any institution super - vised and regulated by the Superintendency of Banks necessitates obtaining prior approval from the Monetary Board. 6.5 Minimum Acceptance Conditions The minimum acceptance conditions for tender offers in Guatemala are as follows: • agree on the percentage of shares to be acquired; • obtain all regulatory and/or governmental approvals and/or permits required to com - plete the offer; • no material adverse effect has occurred or will occur in a certain period; • no material pending litigation against the tar - get or any of its legal representatives, share - holders or ultimate beneficiaries has occurred or is expected to occur; and • that no public information or information disclosed by the target to the offeror is inac - curate, incomplete, or misleading, amongst others. 6.6 Requirement to Obtain Financing In Guatemala, it is permissible for a business combination to be conditional on the bidder obtaining the financing. 6.7 Types of Deal Security Measures There are no statutory restrictions on deal secu - rity measures, which can be negotiated. Non- solicitation agreements for employees may have some issues related to enforceability against the employees because of constitutionally man - dated freedom of employment provisions and labour code provisions limiting restrictions on
work. However, it is enforceable against third parties based on unfair competition, and upon registration of non-solicitation. 6.8 Additional Governance Rights In Guatemala, it has been requested for the tar - get to appoint independent directors and for certain board of directors’ meetings to exclude management. Information rights before share - holder meetings and rights to appoint a direc - tor are usual, and anti-dilution provisions may also be applicable when acquisition percentages are low, although elections by cumulative voting allow directors to be elected by minority share - holders based on shareholding. 6.9 Voting by Proxy Shareholders voting by proxy is permissible under Article 1687 of Guatemala’s Civil Code. The commercial code allowed at-distance par - ticipation in meetings and COVID-19 regulations allowed for virtual meetings only if the public deed allows it. If the constitution public deed does not allow the virtual meeting, it is neces - sary to modify the constitution public deed to hold them. 6.10 Squeeze-Out Mechanisms There are no squeeze-out mechanisms contem - plated under the law, short-form mergers or other mechanisms to buy shareholders which have not tendered. Extensive litigation has existed when attempts to force squeeze-out mechanisms are available under foreign legislation when mergers with foreign entities are attempted. Share capital reductions are available. Rules to select shareholders subject to reduction are ample and open; however, this is rarely seen in practice.
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