GUATEMALA Law and Practice Contributed by: Ignacio Andrade Aycinena, Alejandro Solares Solares, Claudia Pontaza Rubio and Lester Meda Ruano, Lex Atlas
6.11 Irrevocable Commitments It is not common to obtain irrevocable commit - ments. Voting trusts are not commonly used for such purposes in Guatemala; they are allowed under Guatemalan law, but not commonly used due to the shareholding structure of the majority of target companies in Guatemala.
• if the controlled entity is the issuer if the con - trolling entity will or not be liable to respond for the obligations of the controlled entity, and if there is a warranty the terms of such war - ranty; and • if any other controlled entity will respond for its obligations. 7.3 Producing Financial Statements There is no legal requirement for bidders to produce financial statements in their disclosure documents. As of today, most of Guatemala’s medium to large companies are preparing their financial statements using the IFRS. The IFRS has been the method increasingly used by tax authorities for tax auditing mechanisms, although tax rules change and conversion into
7. Disclosure 7.1 Making a Bid Public
Considering that in Guatemala most target com - panies are private, a bid is usually made public to the rest of the shareholders after the sellers and the buyers have agreed on the terms and conditions of the transaction to exercise their right of first refusal and to the public after the deal has closed. 7.2 Type of Disclosure Required There are no specific disclosure requirements for non-public issuers of securities, for the issuance of shares in a business combination, other than the usual, which include the effective payment of the shares to be issued and the subsequent notice to the Mercantile Registry indicating the number of shares paid and issued and their nominative value. Controlling entities need to disclose the follow - ing information if the target has registered secu - rities in the Securities Registry. When control is acquired, information regarding the controlling entity needs to be recorded as part of the public offering registration stating the following infor - mation: • composition of its board management power of attorney holders, if resources from the issuance will be used solely in the issuer or employed to finance the controlling entity;
a tax rules form is also required. 7.4 Transaction Documents
Under Guatemala’s applicable rules and regula - tions, there is no obligation to disclose any of the transaction documents in full for private or public transactions.
8. Duties of Directors 8.1 Principal Directors’ Duties
Under Articles 171 and 172 of Guatemala’s Commerce Code, the administrator shall be held liable before the company, the sharehold - ers and creditors of the company, for any dam - age caused by them, wilfully or by negligence. If there were many administrators, they will all be held jointly liable, except when the administra - tors have expressly voted against the decision that caused the damage or upon approval of management’s report by shareholders if such a decision was reported to shareholders. Approval of management reports by shareholders equates
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