Definitive global law guides offering comparative analysis from top-ranked lawyers
CHAMBERS GLOBAL PRACTICE GUIDES
Corporate M&A 2025
Definitive global law guides offering comparative analysis from top-ranked lawyers
Volume 1: Andorra – Japan See Volume 2: Kenya–Zimbabwe Contributing Editor Frank Aquila Sullivan & Cromwell LLP
Global Practice Guides
Corporate M&A Volume 1: Andorra – Japan
Contributing Editor Frank Aquila Sullivan & Cromwell LLP
2025
Chambers Global Practice Guides For more than 20 years, Chambers Global Guides have ranked lawyers and law firms across the world. Chambers now offer clients a new series of Global Practice Guides, which contain practical guidance on doing legal business in key jurisdictions. We use our knowledge of the world’s best lawyers to select leading law firms in each jurisdiction to write the ‘Law & Practice’ sections. In addition, the ‘Trends & Developments’ sections analyse trends and developments in local legal markets. Disclaimer: The information in this guide is provided for general reference only, not as specific legal advice. Views expressed by the authors are not necessarily the views of the law firms in which they practise. For specific legal advice, a lawyer should be consulted. Content Management Director Claire Oxborrow Content Manager Jonathan Mendelowitz Senior Content Reviewers Sally McGonigal, Ethne Withers, Deborah Sinclair and Stephen Dinkeldein Content Reviewers Vivienne Button, Lawrence Garrett, Sean Marshall, Marianne Page, Heather Palomino and Adrian Ciechacki Content Coordination Manager Nancy Laidler Senior Content Coordinators Carla Cagnina and Delicia Tasinda Content Coordinator Hannah Leinmüller Head of Production Jasper John Production Coordinator Genevieve Sibayan
Published by Chambers and Partners 165 Fleet Street London EC4A 2AE Tel +44 20 7606 8844 Fax +44 20 7831 5662 Web www.chambers.com
Copyright © 2025 Chambers and Partners
Contents
INTRODUCTION Contributed by Frank Aquila, Sullivan & Cromwell LLP p.6
BARBADOS Law and Practice p.199 Contributed by Fraser Law Trends and Developments p.216 Contributed by Fraser Law BELGIUM Law and Practice p.222 Contributed by Van Bael & Bellis
ANDORRA Law and Practice p.12 Contributed by Cases & Lacambra ANTIGUA Law and Practice p.24 Contributed by CDB Legal Services
BERMUDA Law and Practice p.246 Contributed by Walkers
ARGENTINA Law and Practice p.32 Contributed by Naveira, Truffat, Martínez, Ferrari & Mallo Abogados
BOSNIA & HERZEGOVINA Law and Practice p.268 Contributed by Marić & Co Trends and Developments p.279 Contributed by Marić & Co
ARMENIA Law and Practice p.56 Contributed by HAP Trends and Developments p.79 Contributed by HAP AUSTRALIA Law and Practice p.84 Contributed by MinterEllison Trends and Developments p.113 Contributed by MinterEllison
BRAZIL Law and Practice p.287 Contributed by Franco Leutewiler Henriques Advogados Trends and Developments p.302 Contributed by Machado Meyer BRITISH VIRGIN ISLANDS Law and Practice p.308 Contributed by Walkers BULGARIA Law and Practice p.324 Contributed by Boyanov & Co. Trends and Developments p.342 Contributed by Boyanov & Co. CAMEROON Law and Practice p.350 Contributed by Amadagana & Partners
AUSTRIA Law and Practice p.123
Contributed by CERHA HEMPEL Trends and Developments p.146 Contributed by Fellner Wratzfeld & Partner BAHRAIN Law and Practice p.153 Contributed by ASAR – Al Ruwayeh & Partners Trends and Developments p.168 Contributed by Hassan Radhi & Associates
BANGLADESH Law and Practice p.177 Contributed by Doulah & Doulah
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CANADA Law and Practice p.367 Contributed by SkyLaw Trends and Developments p.392 Contributed by SkyLaw CAYMAN ISLANDS Law and Practice p.400 Contributed by Maples Group Trends and Developments p.417 Contributed by Walkers
CZECH REPUBLIC Law and Practice p.567 Contributed by BADOKH
DENMARK Law and Practice p.587 Contributed by Bruun & Hjejle Trends and Developments p.609 Contributed by Bruun & Hjejle ECUADOR Law and Practice p.615 Contributed by Coronel & Pérez Trends and Developments p.627 Contributed by Coronel & Pérez
CHILE Law and Practice p.423
Contributed by Eyzaguirre & Cía Trends and Developments p.444 Contributed by UH&C Abogados
EGYPT Law and Practice p.635 Contributed by Soliman, Hashish & Partners Trends and Developments p.655 Contributed by Soliman, Hashish & Partners ETHIOPIA Law and Practice p.662 Contributed by Mehrteab & Getu Advocates LLP Trends and Developments p.678 Contributed by Mehrteab & Getu Advocates LLP
CHINA Law and Practice p.453 Contributed by Commerce & Finance Law Offices Trends and Developments p.472 Contributed by Commerce & Finance Law Offices
COLOMBIA Law and Practice p.479
Contributed by Baker McKenzie Trends and Developments p.501 Contributed by Baker McKenzie COSTA RICA Law and Practice p.505 Contributed by Zurcher, Odio & Raven CROATIA Law and Practice p.520 Contributed by Babic & Partners
FRANCE Law and Practice p.685 Contributed by Jeantet Trends and Developments p.712 Contributed by Jeantet
GERMANY Law and Practice p.718 Contributed by SZA Schilling, Zutt & Anschütz Trends and Developments p.740 Contributed by Sullivan & Cromwell LLP
CYPRUS Law and Practice p.538 Contributed by Scordis, Papapetrou & Co LLC Trends and Developments p.558 Contributed by Ioannides Demetriou LLC
GREECE Law and Practice p.748
Contributed by Zepos & Yannopoulos Trends and Developments p.769 Contributed by Zepos & Yannopoulos
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GUATEMALA Law and Practice p.776 Contributed by Lex Atlas
IRELAND Law and Practice p.894
Contributed by Addleshaw Goddard Trends and Developments p.914 Contributed by Addleshaw Goddard ISRAEL Law and Practice p.921 Contributed by Arnon, Tadmor-Levy
GUINEA Law and Practice p.792 Contributed by YAC & Partners Trends and Developments p.817 Contributed by YAC & Partners
INDIA Law and Practice p.825 Contributed by JSA Advocates & Solicitors Trends and Developments p.846 Contributed by JSA Advocates & Solicitors
ITALY Law and Practice p.941 Contributed by Cleary Gottlieb Steen & Hamilton LLP
Trends and Developments p.963 Contributed by La Scala S.t.a.p.a.
INDONESIA Law and Practice p.853 Contributed by TnP Law Firm Trends and Developments p.872 Contributed by KARNA
JAMAICA Law and Practice p.970 Contributed by Myers, Fletcher & Gordon JAPAN Law and Practice p.984 Contributed by Mori Hamada Trends and Developments p.1009 Contributed by southgate
IRAQ Law and Practice p.878 Contributed by MENA Associates in association with AMERELLER Trends and Developments p.891 Contributed by MENA Associates in association with AMERELLER
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INTRODUCTION Contributed by: Frank Aquila, Sullivan & Cromwell LLP Sullivan & Cromwell LLP (S&C) provides the highest quality legal advice and representation to clients around the world. S&C’s record of success and unparalleled client service has set it apart for more than 140 years and made the firm a model for the modern practice of law. To - day, it is a leader in each of its core practice ar - eas and in each of its geographic markets. S&C advises a diverse range of clients on corporate transactions, litigation and estate planning mat -
ters. It comprises more than 900 lawyers, who conduct a seamless, global practice through a network of 13 offices, located in Asia, Australia, Europe and the United States. S&C is a peren - nial leader in M&A, having advised on some of the world’s largest and most noteworthy cross- border and domestic M&A transactions. S&C has acted in over USD5 trillion in M&A transac - tions over the past ten years. the way today” in 2021. Frank has been called upon by global corporate leaders to advise on M&A, corporate governance, ESG, activism and crisis management, among other matters. He is S&C’s senior M&A partner and has served on the firm’s management committee, as global head of the M&A practice and as co-managing partner of S&C’s general practice group.
Contributing Editor
Frank Aquila has been described by The Financial Times as “one of the most influential and high-profile M&A and corporate lawyers in the U.S.”. He was profiled by The
Wall Street Journal as one of the top deal makers of 2018 and 2019 and by Insider as one of the world’s top “M&A lawyers leading
Sullivan & Cromwell LLP 125 Broad Street New York, NY 10004-2498 United States
Tel: +1 212 558 4048 Fax: +1 212 291 9004 Email: aquilaf@sullcrom.com Web: sullcrom.com
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INTRODUCTION Contributed by: Frank Aquila, Sullivan & Cromwell LLP
Corporate M&A: An Introduction After a decade-low year of deal making in 2023, M&A activity experienced a modest bounce- back in 2024, nearly rebounding to pre-pandem - ic levels of activity based on deal value. Despite these gradual increases, 2024 was nevertheless characterised by uncertainty in the market in the shadow of the 2024 US presidential election, strict governmental regulations and enforce - ment, and broad regulatory changes. As we look forward to 2025, there is optimism that M&A activity will continue to pick up steam. Factors supporting a resurgence for M&A include relaxed antitrust regulation, improved market conditions, pent-up private equity demand and unprecedented levels of dry powder for private equity to deploy. However, there are a number of countervailing factors that may prove to sup - press this atmosphere, including unpredictable cross-border regulatory enforcement, uncertain - ty amidst trade wars and the imposition of new tariffs, and geopolitical tensions. Preliminary data for M&A in January 2025 shows a significantly slower start than many had hoped or anticipated, with USD211.5 billion in announced deals, a 7% decrease compared to one year prior, and a 28% decrease compared to the previous month, December 2024. Based on total M&A deal volume, 2025 has had the fewest deals and the slowest start to a year since 2015. However, there is still hope that this slow start will not be the norm, and that momentum will continue to build throughout the year. M&A activity trends in 2024 Approximately USD3.2 trillion in deals were announced in 2024, representing a 10% increase from 2023, although an 11% decrease from 2022 and a 46% decrease from 2021, as measured by the value of announced deals. Despite the
year-over-year increase in deal value, the total volume of M&A deals reached an eight-year low, with 50,200 deals announced in 2024, reflecting a 14% decrease compared to 2023. This discrepancy can largely be attributed to the number of mega-deals in 2024, with 96 deals over USD5 billion buoying the global M&A mar - ket and accounting for USD1.1 trillion in total deal value. This represented an increase of 17% in mega-deals compared to 2023 levels, marking the strongest full year period for mega-deals, by value, since 2022. By contrast, the value of worldwide M&A below USD500 million totalled USD794.8 billion during 2024, which was a 4% decrease by value and a 17% decrease by number of deals, compared to 2023 levels. Among the M&A activity in 2024, most transac - tions were centralised within the top five indus - tries: • technology; • energy and power; • financials; • industrials; and • materials. In contrast to 2023, however, technology sup - planted energy and power as the industry with the highest transaction value. Deal making in the technology sector totalled USD499 billion during 2024, an increase of 32% compared to 2023 levels and accounting for 16% of overall M&A deal value. Technology also led the way in terms of total deals, with more than 10,000 deals announced. Energy and power, the 2023 leading industry, accounted for 15% of 2024 deal value activity, down 7% compared to 2023, and was only responsible for 3,400 deals.
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INTRODUCTION Contributed by: Frank Aquila, Sullivan & Cromwell LLP
M&A trends in the USA, Europe and Asia M&A activity for US targets totalled USD1.4 trillion in 2024, an increase of 5% compared to 2023 and the best year for US M&A in three years. US deal making accounted for 45% of overall worldwide M&A during 2024. Outside the USA, M&A activity in both Europe and Asia also grew. European target M&A accounted for USD700.2 billion in 2024, an increase of 22% compared to 2023 levels and a two-year high. Asia Pacific deal making totalled USD767.7 billion during 2024, an 8% increase year over year. Notably, however, Japanese tar - get M&A accounted for 20% of all Asia Pacific deal making, after experiencing a 50% increase in total deal value in 2024 compared to 2023. Factors in favour of M&A in 2025 Eased regulatory pressure 2024 was a tumultuous year, characterised by unprecedented regulatory scrutiny in the Unit - ed States, under the direction of Federal Trade Commission (FTC) Chair Lina Khan and Depart - ment of Justice (DOJ) Assistant Attorney Gen - eral Jonathan Kanter, both of whom seemed to pose a war on mergers. Anecdotally, these regulatory developments seemed to chill M&A activity by disincentivising transactions or forc - ing parties to suffer through prolonged negotia - tions over regulatory risk allocation, procedural provisions and interim operating covenants. Two notable examples of blocked transactions under their watch are The Kroger Company’s USD24.6 billion proposed acquisition of Albertsons Com - panies, Inc. which was terminated in December 2024, and JetBlue’s proposed USD3.8 billion acquisition of its low-cost rival, Spirit Airlines, Inc. which was terminated in March 2024. With the departure of both Khan and Kanter, there is optimism that the Trump administration
will end the Biden-era interventionist approach and look more favourably upon M&A activity. Although the Trump administration is neverthe - less expected to continue to focus on enforce - ment against purported monopolies within the tech industry, new FTC Chair Andrew Ferguson and President Trump’s nominee to lead the DOJ Antitrust Division, Gail Slater, are expected to take a more lenient, although populist, approach to antitrust enforcement. Many had hoped that the new administration would rescind, or at least revise, the controver - sial Final Merger Guidelines that were introduced in 2023, but that now appears to be unlikely. These Final Merger Guidelines, which reflected the first update to the Guidelines in over a dec - ade, articulated a policy more adverse to merg - ers than any policies in place at the DOJ and FTC since 1982. Transacting parties are hopeful that the regulatory landscape within the US will become more pro-merger, with more straight - forward and predictable antitrust analysis and fewer blocked transactions. Merger regulations were also curtailed in Europe in 2024. In the European Union, the European Court of Justice greatly limited the European Commission’s ability to review – and thereby investigate, condition or block – mergers within the European Union. The prevailing practice, which is no longer permitted, had previously allowed the European Commission to assert jurisdiction over transactions that did not other - wise fall within its purview but that were deemed to potentially affect competition and trade, if a review of the transaction was recommended by European Union member states that also did not have jurisdiction to review. This decision by the European Court of Justice has greatly limited the degree of regulatory intervention that the European Commission can exercise, thereby
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INTRODUCTION Contributed by: Frank Aquila, Sullivan & Cromwell LLP
providing significantly more clarity and certainty to transacting parties. Although the European Commission may attempt to broaden its regula - tory powers in the future in light of this decision, in the immediate term there is a greater sense of predictability in European M&A. This, in turn, will likely lead to more M&A transactions altogether. Private equity exit pressure grows M&A activity backed by private equity (PE) funds finally picked up in 2024 after a particularly weak 2023. The overall value of PE-backed M&A reached USD705.9 billion in 2024, an increase of 24% compared to 2023 and ranking as the third largest annual period for PE-backed M&A since records began in 1980. Nevertheless, many believe that 2025 is positioned to be an even better year, with favourable conditions sug - gesting robust growth opportunities. Over the past three years, below-average lev - els of PE exits have resulted in rising average holding periods for PE portfolio companies. For example, nearly half of the 29,400 PE portfo - lio companies worldwide have been held since 2020, with the average holding period for spon - sors being five years in 2023–2024 compared to 4.2 years in 2021–2022. Not surprisingly, many limited partners are growing impatient as they await a return on their investments. PE funds are also now holding onto record high levels of dry powder, estimated to be roughly USD2 trillion. With a surplus of capital, PE funds are expected to be less selective and take advantage of a wide variety of market opportuni - ties, spanning from mega-deal acquisitions and PE-backed IPOs to minority stake transactions. With pent-up demand and unprecedented levels of dry powder to be deployed, PE investments
and exits can be expected to drive a significant amount of M&A in 2025. Headwinds for M&A in 2025 Favourable trends including those described above are expected to support M&A activity throughout 2025, although M&A will likely con - tinue to face certain headwinds this year that may act to counteract some of the positive momentum that is anticipated. Specifically, as has already been seen through the first months of 2025, minor growing pains are to be expected in the United States as the economy and the rest of the world react to the transition of power to the Trump administration. In particular, market participants may refrain from engaging in M&A activity, both in the United States and globally, for the foreseeable future until volatility settles and they get a better picture of what 2025 has in store. Additional headwinds for M&A in 2025 include: • unpredictable regulatory enforcement; • trade wars; • the imposition of new tariffs; and Globally, the potential for trade wars and the implementation of additional tariffs have led to a great deal of uncertainty in the markets. It is expected that these trends and variability will cause M&A activity to slow down, at least in the near term, as market participants attempt to understand what the impact will be upon businesses that may otherwise be the targets of M&A transactions. To the extent that further tariffs are implemented, retaliation from foreign governments would not be unexpected, thereby causing additional obstacles to the consumma - tion of transactions and further impeding deal making from taking place. These protectionist • geopolitical tensions. Trade wars and tariffs
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INTRODUCTION Contributed by: Frank Aquila, Sullivan & Cromwell LLP
practices also make transaction valuation sig - nificantly trickier due to the variability depending on the day, introducing additional closing risk for parties to allocate in the deal negotiation stage. Ultimately, tariffs may not entirely dampen M&A activity in the long term. Instead, the imposi - tion of additional tariffs may actually spur some cross-border M&A activity among entities that are aiming to diversify their portfolios to reduce the immediate, negative impact of tariffs, or perhaps avoid tariffs altogether by entering new markets. In addition, some smaller entities may opt to be the target of M&A activity in light of the lat - est economic landscape, as they may be better off being acquired compared to the unexpect - ed, increased costs associated with remaining independent. Nevertheless, given the potential impact upon global M&A, it is worth keeping an eye on the trade developments coming out of the United States and any subsequent reprisals from around the world. Foreign investment regulation Restrictions on inbound investment into the US are anticipated from the Committee on Foreign Investment in the US (CFIUS), which has the discretion to recommend that President Trump block (or place conditions on) a deal for pur - poses of national security. The CFIUS approval process allows for wide discretion by the com - mittee, so long as there is a connection to the country’s national security. As such, in addi - tion to blocking deals that may actually cause a national security risk, there is the belief that President Trump may attempt to use CFIUS as a political weapon, using the prospects of block - ing a deal to extract political concessions from foreign governments.
Enforcement activity by CFIUS has the potential to be quite impactful – in 2024, CFIUS issued its largest enforcement action ever, which was a USD60 million penalty against T-Mobile due to national security concerns connected to data breaches in connection with T-Mobile’s merger with Sprint. As such, the prospects of the politi - cisation of CFIUS could be disastrous to M&A activity, especially when considered in tandem with ongoing trade wars. In light of the fact that CFIUS may potentially be used as a means to negotiate deals with other nations, transacting parties may avoid transacting altogether to the extent they are located in a country that is sub - ject to new Trump tariffs. Furthermore, on January 2nd, the new “reverse CFIUS” rules issued by the Department of Treas - ury went into effect, imposing significant restric - tions on US outbound investment in certain Chinese companies (and potentially companies from other “countries of concern” in the future) that are engaged in technologies related to semi - conductors, microelectronics, quantum technol - ogies and artificial intelligence. While not impact - ing all outbound investment, these new rules are sure to drive up compliance and diligence costs, and to generally dampen the level of US investment in China. Furthermore, it is expected that the EU may consider similar restrictions in the future that mirror the US’s “reverse CFIUS” guidelines, which is sure to have a similar impact and reduce outbound investment from the EU, if implemented. Geopolitics Lastly, geopolitical risks are always, and continue to be, a headwind to M&A activity, by introduc - ing the potential for undesired uncertainty and disruption into transactions. Ongoing tensions with foreign nations create additional transaction risk and vacillation to financial markets, generally
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INTRODUCTION Contributed by: Frank Aquila, Sullivan & Cromwell LLP
acting as a deterrent to global M&A transactions. Not only do geopolitical conflicts create the risk of sanctions and deal uncertainty (thereby driv - ing up transaction costs, including more robust diligence), but they are often accompanied by associated economic issues that discourage deal activity, such as widespread inflation and supply chain issues. Looking forward to 2025, continuing conflict and instability are likely in the Middle East and Ukraine, which may very well suppress certain M&A activity. To the extent any additional politi - cal tensions develop, such as those in connec - tion with the tariffs or regulatory enforcement discussed above, diminished M&A may be one unintended consequence. Concluding remarks Despite a number of years of lacklustre M&A activity, 2024 moved the needle in the correct direction with modest growth, and the market
seems well positioned to rebound altogether in 2025. With broad political shifts, both in the US and across the globe, M&A activity seemed primed to thrive, with favourable conditions including relaxed antitrust regulation, improved market conditions, pent-up PE demand and the expectation of continued interest rate cuts in the US by the Federal Reserve in the coming year. Nevertheless, these favourable factors may be undercut by some countervailing challenges, most notably unpredictable foreign investment regulation, trade wars and the imposition of new tariffs, and geopolitical tensions. On balance, the factors in favour of M&A in 2025 appear to outweigh the headwinds for an expect - ed active year for M&A spanning PE, strategic, domestic and cross-border deals. Although the year has had a slow start for deal making, it is still far too early to consider 2025 a failure – only time will tell whether optimistic expectations align with the reality for M&A activity.
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ANDORRA Law and Practice Contributed by: Marc Ambrós and David Cuesta Cases & Lacambra
France
Andorra
Andorra La Vella
Spain
Contents 1. Trends p.15
1.1 M&A Market p.15 1.2 Key Trends p.15 1.3 Key Industries p.15 2. Overview of Regulatory Field p.15 2.1 Acquiring a Company p.15 2.2 Primary Regulators p.16 2.3 Restrictions on Foreign Investments p.16 2.4 Antitrust Regulations p.16
2.5 Labour Law Regulations p.17 2.6 National Security Review p.17 3. Recent Legal Developments p.17 3.1 Significant Court Decisions or Legal Developments p.17 3.2 Significant Changes to Takeover Law p.17 4. Stakebuilding p.17 4.1 Principal Stakebuilding Strategies p.17 4.2 Material Shareholding Disclosure Threshold p.18
4.3 Hurdles to Stakebuilding p.18 4.4 Dealings in Derivatives p.18 4.5 Filing/Reporting Obligations p.18 4.6 Transparency p.18 5. Negotiation Phase p.18 5.1 Requirement to Disclose a Deal p.18
5.2 Market Practice on Timing p.19 5.3 Scope of Due Diligence p.19 5.4 Standstills or Exclusivity p.19 5.5 Definitive Agreements p.19 6. Structuring p.19 6.1 Length of Process for Acquisition/Sale p.19 6.2 Mandatory Offer Threshold p.19 6.3 Consideration p.19 6.4 Common Conditions for a Takeover Offer p.19 6.5 Minimum Acceptance Conditions p.20
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ANDORRA CONTENTS
6.6 Requirement to Obtain Financing p.20 6.7 Types of Deal Security Measures p.20 6.8 Additional Governance Rights p.20 6.9 Voting by Proxy p.20 6.10 Squeeze-Out Mechanisms p.20 6.11 Irrevocable Commitments p.20 7. Disclosure p.20 7.1 Making a Bid Public p.20 7.2 Type of Disclosure Required p.20 7.3 Producing Financial Statements p.20 7.4 Transaction Documents p.21 8. Duties of Directors p.21 8.1 Principal Directors’ Duties p.21 8.2 Special or Ad Hoc Committees p.21 8.3 Business Judgement Rule p.21 8.4 Independent Outside Advice p.21 8.5 Conflicts of Interest p.21 9. Defensive Measures p.21 9.1 Hostile Tender Offers p.21 9.2 Directors’ Use of Defensive Measures p.21 9.3 Common Defensive Measures p.22 9.4 Directors’ Duties p.22 9.5 Directors’ Ability to “Just Say No” p.22 10. Litigation p.22 10.1 Frequency of Litigation p.22 10.2 Stage of Deal p.22 10.3 “Broken-Deal” Disputes p.22 11. Activism p.22 11.1 Shareholder Activism p.22 11.2 Aims of Activists p.23 11.3 Interference With Completion p.23
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ANDORRA Law and Practice Contributed by: Marc Ambrós and David Cuesta, Cases & Lacambra
Cases & Lacambra is a client-focused inter - national law firm with a cornerstone financial services practice. With a presence in Europe and America, the firm has a tested track record in complex transactions involving the financial sector, special situations, financial markets regulations, cross-border disputes and trans - actions with relevant tax aspects. Its financial
services group is composed of three partners, two counsel, one senior associate and five as - sociates, and most of the members of the team have deep knowledge of banking and finance regulations and capital markets transactions. The firm’s practice also extends to capital mar - kets, derivatives and structured finance mat - ters.
Authors
Marc Ambrós leads the corporate and foreign
David Cuesta is a senior associate of the corporate and foreign investment practice of Cases & Lacambra in the Principality of Andorra. He has a deep understanding of
investment practice of Cases & Lacambra in the Principality of Andorra. He has a great deal of experience in corporate and
commercial matters. Marc has advised in mergers, acquisitions, joint ventures, private equity, corporate restructuring and refinancing, representing both Andorran and foreign clients in international transactions with an Andorran leg. He advises throughout the entire process, from both buy-side and sell-side perspectives, using different legal structures. He also advises companies about project and corporate finance issues. Marc is the author of multiple articles in specialised publications about the legal environment in the Principality of Andorra.
corporate law and has solid professional experience in advising on commercial law matters. David has advised business groups from different sectors on corporate and contractual matters, specialising in the structuring of investments working across different jurisdictions. He has extensive experience in M&A and sale and purchase of businesses and real estate assets at local and international level. David’s experience in advising clients from diverse sectors and jurisdictions ensures that he provides tailored solutions to meet their unique needs.
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ANDORRA Law and Practice Contributed by: Marc Ambrós and David Cuesta, Cases & Lacambra
Cases & Lacambra Manuel Cerqueda i Escaler, 3-5 AD 700 Escaldes Engordany Andorra Tel: +376 728 001 Email: andorra@caseslacambra.com Web: www.caseslacambra.com
1. Trends 1.1 M&A Market
1.3 Key Industries The key industries driving M&A activity in Andor - ra in the past 12 months were tourism and hos - pitality, logistics and infrastructure. Although this is not always a matter of pure M&A transactions, during the last 12 months, there has been a con - siderable increase in real estate transactions in the jurisdiction with predominance of foreign investments aimed at new developments. 2. Overview of Regulatory Field 2.1 Acquiring a Company It should be noted that there is no stock market in Andorra. Therefore, in M&A transactions, the primary technique for acquiring a company is to enter into a share purchase agreement (SPA) between the buyer and the shareholders of the Andorran target company. The SPA sets out the main terms and conditions regarding the trans - action. The transfer of the shares needs to be notarised and it is registered in the Andorran Companies’ Register. Mergers are less frequent but may also be used as a means to acquire a company.
The existing traditional ownership of compa - nies in Andorra that are headed to restructuring operations due to generational change and the recent movements and transactions will certainly contribute to speeding up the local M&A market in the forthcoming months. In addition, negotiations on an association agreement between Andorra and the European Union finalised at the end of 2023. With ratifica - tion by Andorran citizens expected by means of a referendum in the last quarter of 2025, this agreement will provide a robust framework for economic diversification in Andorra and relevant opportunities for foreign investors to develop their activity in Andorra. 1.2 Key Trends Maintaining the trend of the last two years, the Andorran M&A market has been led by acquisi - tions and majority-stake investments by foreign international group companies in local entities, with a view to developing their businesses in Andorra, and with the benefit of already-exist - ing target assets and commercial structures in place.
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ANDORRA Law and Practice Contributed by: Marc Ambrós and David Cuesta, Cases & Lacambra
2.2 Primary Regulators The primary regulators for M&A activity in Andor - ra are: • Autoritat Financera Andorrana (Andorran Financial Authority or AFA) for M&A related to financial and insurance institutions; • Ministeri de Presidència, Economia i Empresa (Presidency, Economy and Companies Min - ister) in charge of supervising merger control; and • Registre d’Inversions Estrangeres (Foreign Investment Register or FIR) in charge of authorising and screening foreign investments in Andorra. 2.3 Restrictions on Foreign Investments The foreign investment regime in Andorra quali - fies as direct investment and includes invest - ments made in Andorran companies by: • non-resident natural persons; • resident natural persons with less than three years of continuous residency in Andorra, since obtaining the residency authorisation when investing in real estate; • legal persons of foreign nationality; • Andorran legal persons with direct or indirect foreign equity participation equal to or greater than 50% of their share capital or voting rights. In case of investments in real estate, the foreign investment regime applies when the foreign participation in the equity of the Andorran legal person is higher than 5%; and • any Andorran legal person when at least 50% of the voting rights of its board of directors are held directly or indirectly by a natural or legal person included in any of the four above-mentioned categories or when they are financed by any of the latter.
Specifically, the term “direct investments” cov - ers: • the incorporation of an Andorran company; • the total or partial acquisition of the shares of an Andorran company; or • the acquisition of any other rights that entitle the foreign company or natural person to par - ticipate in the share capital of the Andorran company or to acquire voting rights. If as a result of the acquisition, the acquirer holds, directly or indirectly, a stake in the Andor - ran company higher than 10% of its share capi - tal or voting rights, the foreign investment regime requires the acquirer to obtain prior authorisation from the government of Andorra issued through the relevant ministry. Otherwise, where the stake in the Andorran company held by the foreign company or natu - ral person is equal to or less than 10%, it is suf - ficient merely to notify the Foreign Investment Register after the transaction. 2.4 Antitrust Regulations There are no antitrust regulations applicable to business combinations in Andorra. Nevertheless, Andorran regulations do foresee the control of economic concentrations. Eco - nomic concentrations are deemed to arise where there is stable change of control of the whole or part of one or more companies due to: • the merger of two or more previously inde - pendent companies; • the acquisition by a company of control of all or part of one or more companies; or • the creation of a joint venture and, in general, the acquisition of joint control over one or more companies, where these undertakings
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ANDORRA Law and Practice Contributed by: Marc Ambrós and David Cuesta, Cases & Lacambra
3. Recent Legal Developments 3.1 Significant Court Decisions or Legal Developments There have been no significant court decisions or legal developments in Andorra related to M&A properly. However, there have been recent, important legal developments in respect of incorporation requirements and financing ben - efits applicable to start-up companies to attract the creation, development and establishment of technological companies in Andorra. In parallel, the Andorran government has also developed a legal framework to create compa - nies with the purpose of issuance, management, deposit or trading of any type of digital assets, such as programmable sovereign digital money (DDSP), cryptocurrencies, stablecoins or stable tokens. These companies must be registered before the Andorran Financial Authority (AFA). 3.2 Significant Changes to Takeover Law It should be noted that Andorra does not have a specific law controlling takeovers. However, the companies’ legislation and the merger and spin- off regimes are currently under review to identify gaps with European Union regulations, so sig - nificant changes in such matters could occur in the coming 12 months. 4. Stakebuilding 4.1 Principal Stakebuilding Strategies As explained in 3.2 Significant Changes to Takeover Law , as there is no specific law con - trolling takeovers, there are no legal impedi - ments to building a stake in the target prior to launching an offer.
perform on a lasting basis the functions of an autonomous economic entity. Andorran regulations also foresee that certain economic concentrations are subject to notifi - cation to the Andorran government. Such eco - nomic concentrations are those where: • all the companies involved in the concentra - tion achieve, according to publicly available information, a share equal to or greater than 50% in any relevant market in Andorra; and • at least two of the participating companies individually achieve an annual turnover in Andorra of more than EUR2.5 million. 2.5 Labour Law Regulations If a bidder acquires a target company in Andorra with employees, to the extent that as a result of the takeover there is no change in the condi - tions of the workers as their employer has not changed, the acquirers should not be concerned about any specific labour law regulations. Notwithstanding the above, if, following the acquisition, the acquirer wishes to implement restructuring measures that include the dis - missal of a certain number of employees, and if such dismissals exceed certain thresholds in a certain period of time, this is considered a col - lective dismissal and a specific procedure has to be followed. 2.6 National Security Review The ministry competent in matters related to foreign investment can deny authorisation for foreign investments if it considers that such investment could hinder, even occasionally, the exercise of public authority, sovereignty and national security, public order and economic order, the environment, public health or the gen - eral interests of Andorra.
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ANDORRA Law and Practice Contributed by: Marc Ambrós and David Cuesta, Cases & Lacambra
However, building a stake in the target prior to launching an offer is not customary in Andorra due to the relatively small size of the companies, the concentration of the share capital among a small number of shareholders, and the family character of companies in Andorra. 4.2 Material Shareholding Disclosure Threshold There are no material shareholding disclosure thresholds or filing obligations in Andorra regard - ing takeovers. However, a change in the share capital distribu - tion of an operating entity in the Andorran finan - cial system requires the previous authorisation of the AFA, if a shareholder: • reaches a qualified shareholding; • increases its qualified shareholding so it holds a share capital percentage or voting rights equal to or greater than 20%, 30% or 50%; or • by virtue of such acquisition, controls the entity. Additionally, a legal obligation that applies to all companies in Andorra is the obligation to dis - close information about each natural person who ultimately holds or controls, directly or indi - rectly, at least 25% of the capital or voting rights (a beneficial owner) to the Andorran Companies’ Register ( Registre de Societats Mercantils ). This information is accessible to any person or organisation that can prove a legitimate interest. 4.3 Hurdles to Stakebuilding The regulatory reporting threshold is compulsory and cannot be modified by companies. How - ever, non-regulated companies can freely adopt internal reporting thresholds in their by-laws, but this kind of rule is not used since there is
no stock market in Andorra and the size of the companies is quite small. Nevertheless, Andorran companies usually increase thresholds related to the majorities needed for the approval of certain agreements Dealing in derivatives is allowed in Andorra. However, since there is no stock market in the jurisdiction, this type of dealing is not commonly used as a strategy to acquire a company. 4.5 Filing/Reporting Obligations See 4.2 Material Shareholding Disclosure Threshold . 4.6 Transparency As there is no stock market in Andorra, all com - panies are private and there is no requirement to make known the purpose of an acquisition. The only sector where it is compulsory to request authorisation and, therefore, to disclose an acquisition to the AFA, is the financial sector. 5. Negotiation Phase 5.1 Requirement to Disclose a Deal See 4.6 Transparency . as reflected in their by-laws. 4.4 Dealings in Derivatives Under Andorran regulations, there is no obliga - tion for a target company to disclose a deal. However, in the financial sector, the decision to acquire or sell a qualified stake in a finan - cial entity must be disclosed to the AFA by the potential acquirer, the seller and by the financial entity as soon as it becomes aware of that deci -
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ANDORRA Law and Practice Contributed by: Marc Ambrós and David Cuesta, Cases & Lacambra
5.5 Definitive Agreements It is permissible for tender offer terms and condi - tions to be documented in a definitive agreement. The tender offer usually contains the main terms and conditions of the transaction, and therefore it is documented in the definitive agreement, along with other terms and conditions that may arise from the due diligence process. 6. Structuring 6.1 Length of Process for Acquisition/ Sale The duration of the process for acquiring/selling a business in Andorra depends on several fac - tors, such as the scope of the due diligence pro - cess or the need to obtain financing. The dura - tion of the process also depends on the timing of the authorisation by the government of Andorra for foreign investments and/or the AFA, as the case may be. Based on the above, the process for acquiring/ selling a business in Andorra generally takes from four to 12 months. 6.2 Mandatory Offer Threshold Andorra does not have a mandatory offer thresh - old. 6.3 Consideration Cash is more commonly used as consideration in Andorra. In deals with high-valuation uncer - tainty, it is usual to fix an initial price upon sign - ing and to adjust such fixed price upon closing using the completion accounts mechanism. 6.4 Common Conditions for a Takeover Offer As Andorran companies are all private, the offer conditions are usually negotiated directly
sion. Therefore, when negotiations commence, this must be disclosed to the financial authority. Notwithstanding the initial disclosure of the acquisition of a qualified stake in a financial entity, it is also subject to prior authorisation by the AFA. On the other hand, in mergers, the resolutions adopted by the shareholders’ meetings of the companies involved need to be published in two newspapers so that creditors of the companies involved can oppose the merger, and the reso - lutions are only effective after one month has elapsed from the date of publication of the reso - lutions. The due diligence process is not specifically regulated in Andorra. However, it is common to conduct a due diligence process prior to the acquisition of an Andorran target company. The scope of due diligence usually covers all the legal aspects applicable to the target company such as corporate, tax, intellectual property, liti - gation, real estate, financing, permits, regulatory compliance, and personal data protection. The scope of due diligence may differ depending on the business, sector or assets owned by the tar - get company. 5.4 Standstills or Exclusivity Standstills are not usually demanded in Andorra. On the other hand, exclusivity is usually required, since most Andorran companies are family con - trolled. 5.2 Market Practice on Timing This is not applicable in Andorra. 5.3 Scope of Due Diligence
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ANDORRA Law and Practice Contributed by: Marc Ambrós and David Cuesta, Cases & Lacambra
between the parties involved in the transaction, before such terms and conditions are reflected in the SPA. The most common conditions included in trans - actions in Andorra are conditions related to gov - ernment approval in terms of foreign investment, communications to the Presidency, Economy and Companies’ Minister regarding merger con - trol, and the approval of other regulators such as the AFA for M&A deals involving operating entities of the Andorran financial system. 6.5 Minimum Acceptance Conditions The relevant control thresholds in Andorra are to own more than 50% of the share capital or voting rights of the Andorran target company in order to gain control of such company. However, due to the composition of share capital of Andorran companies, it is common for M&A transactions to aim for the acquisition of all the shares that constitute the share capital of the Andorran target company. 6.6 Requirement to Obtain Financing In Andorra, the closing of a transaction can be subject to the bidder obtaining financing. 6.7 Types of Deal Security Measures The usual types of deal security measures that bidders seek are exclusivity period during the negotiation of the deal, break-up fees, non-solic - itation provisions, non-compete provisions and confidentiality clauses. 6.8 Additional Governance Rights If a bidder does not seek 100% ownership of a target, the bidder can secure additional gov - ernance rights by entering into agreements with other shareholders. The usual additional govern - ance right that the bidder may seek is to have
the right to appoint members of the board of directors or of the management of the target company. 6.9 Voting by Proxy Shareholders generally have the right to desig - nate another person, whether or not that person is a shareholder of the company, as a proxy- holder to represent them at a shareholders’ meeting and vote on their behalf. The proxy must be granted in writing separately for each general meeting, unless a power of attorney with powers of representation has been previously granted. 6.10 Squeeze-Out Mechanisms Squeeze-out mechanisms, short-form mergers and other similar mechanisms are currently not specifically regulated by Andorran law. 6.11 Irrevocable Commitments A bidder may seek to obtain irrevocable com - mitments to tender or vote from the principal shareholders of the target company, as such commitments are accepted in Andorra. 7. Disclosure 7.1 Making a Bid Public See 5.1 Requirement to Disclose a Deal . 7.2 Type of Disclosure Required See 5.1 Requirement to Disclose a Deal . 7.3 Producing Financial Statements There is no obligation for bidders to produce financial statements in their disclosure docu - ments. In Andorra, financial statements need to be prepared in accordance with the International Financial Reporting Standards (IFRS).
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ANDORRA Law and Practice Contributed by: Marc Ambrós and David Cuesta, Cases & Lacambra
7.4 Transaction Documents See 5.1 Requirement to Disclose a Deal .
target company to supervise the fulfilment of the steps and conditions established for the interim
period between signing and closing. 8.3 Business Judgement Rule
8. Duties of Directors 8.1 Principal Directors’ Duties
Although Andorran law or case law does not expressly provide for a rule such as the business judgement rule, under Andorran legislation, the directors are required to act in accordance with their duty of diligence and loyalty. 8.4 Independent Outside Advice The independent outside advice that it is com - monly given to directors in a business combina - tion in Andorra is legal, tax, financial and stra - tegic advice. 8.5 Conflicts of Interest Conflicts of interest of directors are not expressly regulated under Andorran legislation. However, conflicts of interest can be considered a breach of the duty of loyalty and, therefore, an action influenced by a conflict of interest could be con - sidered a breach of the duty of loyalty and may be subject to judicial scrutiny. Andorran law does not distinguish between hostile and friendly takeovers, so they are not regulated in this jurisdiction. In any case, hostile tender offers are unusual in Andorra, as most companies are privately owned, mostly small or medium-sized, and managed by their majority shareholders. 9.2 Directors’ Use of Defensive Measures See 9.1 Hostile Tender Offers . 9. Defensive Measures 9.1 Hostile Tender Offers
The principal duties with which a director needs to comply are the duties of diligence and loyalty. Duty of Diligence According to the Companies Act, the duty of diligence forces a director to have appropriate involvement in the performance of the company, and to apply to such activity the time, effort and knowledge that can be expected from any busi - nessperson in a similar position. Additionally, the director is required to be ade - quately informed about the company’s perfor - mance, to participate actively in its manage - ment, and to investigate any irregularities in the management of the company. Duty of Loyalty According to the Companies Act, the duty of loy - alty forces a director to act with the honesty that can be expected of a representative who man - ages the resources of others and, in particular, to refrain from competing with the company, from taking advantage of the company’s business opportunities and from using the company’s assets for private purposes. 8.2 Special or Ad Hoc Committees Under Andorran legislation it is not compulsory, or common, to establish special or ad hoc com - mittees in business combinations. However, in complex transactions it is common to establish joint committees between repre - sentatives of the acquiring company and the
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ANDORRA Law and Practice Contributed by: Marc Ambrós and David Cuesta, Cases & Lacambra
Andorran law does not expressly define a list of defensive measures in the event of a hostile ten- der offer, as these are not expressly regulated. However, in practice, the management or the board of directors of the target entity would have to respond in an attempt to protect their position in the company by implementing certain meas - ures likely to prevent the hostile bidder from tak - ing control of the company. Such measures would usually require the prior approval of the shareholders’ general meeting and might entail an increase in share capital, the purchase of the target company’s own shares, or the search for an alternative bidder. 9.3 Common Defensive Measures See 9.2 Directors’ Use of Defensive Measures . 9.4 Directors’ Duties If the management or the board of directors obtain the prior approval of the shareholders’ general meeting to implement defensive meas - ures against a hostile tender offer, they have a permanent duty to act in a coherent manner with the social interest of the company, understood in Andorran law to be the interest of the legal entity, pursuing its purposes in the common interest of the stakeholders and with the aim of ensuring the prosperity and continuity of the company. 9.5 Directors’ Ability to “Just Say No” Even when they are also majority shareholders, directors cannot “just say no” , as they are bound to act in the best interests of the company by considering all factors that may be affected by the offer. For example, the unjustified refusal of a tender offer when the target company is in dire straits and is liable to benefit from such offer could
make the directors liable for the target compa - ny’s insolvency.
10. Litigation 10.1 Frequency of Litigation
M&A transactions in Andorra do not usually lead to lawsuits in the event of disputes between the parties. Such disputes are usually settled out of court in an informal and amicable manner and mainly concern the warranties granted by the parties. 10.2 Stage of Deal In the event of a dispute between the parties, it is most likely to occur in the post-closing phase of the transaction. 10.3 “Broken-Deal” Disputes As already noted, deal-breaking problems do not usually go to court and are settled amicably in Andorra. Shareholder activism is not a relevant force in Andorra, as most companies are small or medium-sized and they are generally controlled by only a few shareholders and/or are family- owned, with minority shareholders being mostly passive. Exceptionally, minority shareholders who have the power to block certain important decisions (eg, a merger/spin-off of the company) can use it to obtain better financial terms in the planned transaction or a higher dividend before leaving the company. 11. Activism 11.1 Shareholder Activism
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