Corporate M&A 2026 Comparisons

During 2025, the M&A Market in Guatemala focused on large investments by domestic companies as well as groups outside of Guatemala. Laws were enacted in 2025 supporting the creation of new investments in transportation and infrastructure, although this did not result in an improvement in logistics in the country. Investments and acquisitions were made in the telecoms market via the two largest infrastructure operators. Additional investments were made in the electricity market in a hydropower operation through the installation of a new business process organisation and via improvements in the transmission network. The year ended with the largest acquisition of a US operation by a Guatemalan group and with the investment of a Honduran bank by Guatemala’s largest lender. The country called for new generation projects through long-term generation contracts in the latter part of 2025, with offers opened in February 2026. Based on Guatemalan Central Bank statistics, total inbound investment exceeded USD500 million. Multilateral and International Bank Loan Activity also picked up during 2025 through loans exceeding USD1.1 billion to two of the largest banks in Guatemala from the International Finance Corporation. A number of government initiatives also resulted in the new Infrastructure Investment Law. Economic activity in Guatemala increased by 4% in 2024, supported by money remittances from abroad, which have continued to increase.

Key Sectors

Guatemala’s two largest telecommunications operators announced key investments in infrastructure during 2025, leading to activities in the restructuring of the related market and to movements in the M&A segment.

In the energy sector, a new bidding process for generation and transportation expansion which had been postponed was announced, and the final bidding rounds took place in February and March of 2026.

International bank loan and multilateral loan activity picked up during the latter part of 2025.

Top trends in Guatemala in 2025 were as follows.

• In the industrials sector, Cargill and Nestle announced plans to invest and expand their joint activities.
• The call centre sector grew consistently at the same rates as 2024 per annum. In call centres and the business process outsourcing (BPO) sector, plans for increased capacity were developed, with 1000 fresh jobs created.
• Public-private partnerships in infrastructure are expected to begin activities in 2026.
• The PEG-5 bidding process, the largest electricity generation tender in Guatemala’s history, is expected to take place in 2026.
• A port renewal process was begun with planning steps through the US Corps of Engineering.
• The maquila sector remains stagnant. Garment manufacturers have not expanded their operations.

The most important outbound activity was as follows.

• Banco Industrial announced new investments in a Honduras Bank.
• Cerveceria Centroamericana announced that it was buying large food producer and distributor Harvest Hill for USD1.4 billion.

The industries that experienced the most significant M&A activity in the past 12 months in Guatemala are telecommunications, energy and the financial sector. The construction and housing sectors expanded their activity during 2024.

In regulated and licence-requiring entities, the primary legal means for acquiring a company in Guatemala is through the acquisition of shares or equity participation in the licensed entity, depending on whether it is a share-based company. The acquisition target holds the licence, which is only transferable in rare cases, except in the financial sector where banks and financial companies’ shares are transferable with approval from the authorities. In other instances, and regarding non-regulated entities, such as real estate, buying assets is a preferred acquisition method.

For M&A, a new regulator, the Competition Superintendency (Superintendencia de Competencia) has been sworn in, and internal regulations were issued in October 2025 on anticompetitive behaviour, with sanctions coming into force in December 2026. The Registry of the Securities Market is the regulator for securities issuers under Decree 34-96 of the Guatemalan Congress, and is entrusted with the registry of issuance of securities and public offerings of securities.

M&A by financial institutions, insurance companies and other entities controlled by a regulator is subject to prior approval of the Monetary Board and the Superintendency of Banks. In the case of deals involving privately owned companies, prior approval will be required from December 2026 onwards under the Competition Law for M&A transactions, which will result in combined assets of USD360 million in Guatemala or combined sales of USD460 million.

For telecommunications, the regulator is the Superintendency of Telecommunications, although regulations are not competition related but concerned with essential and limited resources. In the energy sector, the main regulator is the National Electric Energy Commission, which oversees authorisations for rendering distribution and energy transportation services and their assignment.

Mining and oil exploration and production activities licences are assignable with approval from the Ministry of Energy and Mines. Oil exploration contracts and licences are assignable the approval from the Ministry of Energy and Mines.

There are almost no restrictions on foreign investments in Guatemala, except for certain constitutionally mandated limitations. However, Guatemala’s legal provisions promote foreign investment.

The following restrictions or differentiations nevertheless remain in place for foreign investments:

• forestry preservation concessions by the National Forestry Institute;
• banking and insurance regulations for the establishment of foreign branches for foreign insurers and investment banking laws; such regulations allow for the establishment of Guatemalan branches of foreign banks and insurance entities;
• restrictions allowing adverse possession of real estate only for Guatemalan and Guatemalan-owned companies; and
• restrictions allowing for land grants only for Guatemalan and Guatemalan entities.

All other restrictions have been removed.

Restrictions regarding land ownership in Guatemala’s coastal areas and frontiers continue to exist in Guatemala’s Constitution.

Antitrust regulations will enter into force in Guatemala on 9 December 2026 and prohibit as absolute practices the following activities related to price fixing and collusive behaviour:

• price fixing;
• division of the market among offerors;
• limiting or fixing production limits;
• supply or distribution of products; and
• concerted efforts in a bidding process.

The following practices are prohibited when proven as relative practices, but may be justified and excepted:

• imposing a price or margin between a producer and distributor;
• imposing as a condition not acquiring, selling or commercialising other parties’ products or services;
• selling under variable average cost;
• measures taken by economic agents that increase costs for other economic agents;
• setting up discriminate prices or sales conditions for different types of buyers of goods or services;
• restricting access to essential goods or services needed for the manufacture of any products or to provide services;
• joint efforts by economic agents to pressurise other economic agents, to refuse the sale of products to another economic agent, or reprisal measures; and
• efforts by economic agents with a dominant position on a market to deny access to a professional or producers’ association, creating obstacles for other economic agents either already in or trying to access said market.

Three issued stand out regarding labour matters in M&A.

• The fact that a labour contract or relationship is deemed to exist even if disguised under a professional services relationship or any type of services agreement. For as long as there is a personal obligation to render services and some degree of subordination and obedience to the instructions of the other party, the relationship may be deemed as labour. Payments made under such contracts would be deemed as salary, and, based on such amounts, other fringe benefits such as severance pay, annual paid vacation, and Christmas and July bonuses do arise and remain contingent.
• Matters relating to the rights of employees granted under collective bargaining agreements which have not been renewed due to unions that are dormant or have ceased to exist.
• Matters relating to payments made to employees as “incentive bonuses”, which carry with them matters related to potential social security claims, claims regarding severance pay and other fringe benefits unpaid on these, which, according to International Labour Organization (ILO) Agreement 95, form part of an employee’s salary.

Labour rights (salary, benefits, bonuses, vacations, unionisation, striking, etc) are considered human rights, and are recognised in the Constitution of the Republic of Guatemala. Also, the country is part of the ILO and has ratified international agreements that protect workers’ rights.

Workers’ rights are minimum guarantees that enhance more favourable benefits and cannot be waived at a later stage.

Some of the most important labour laws in Guatemala are:

• the Labour Code, which includes the rights and obligations of employers and workers, as well as processes to resolve disputes in labour matters;
• the Organic Law of the Social Security Institute of Guatemala, which establishes the social security regime – Decree 295 (old age, disability and survival) – for workers and regulations issued by its board of directors;
• Governmental Agreement 221-94; the Regulation for the Negotiation, Homologation and Denunciation Procedure of the Collective Pacts of Working Conditions of Company or Certain Production Centre; and
• Convention 175 of the ILO, under which part-time work is applicable in Guatemala, but which has generated uncertainties over its application, and for which there are law initiatives that seek to regulate it more efficiently; part-time work in Guatemala is legal, and there is a regulation for such work in Government Agreement 89-2019.

In addition, a home office regulation has been issued (Government Decree 79-2020).

There are no provisions for a national security review for foreign investments in Guatemala, for either acquisitions or mergers.

An initiative for the regulation of this matter has been under discussion for more than three years in the Guatemalan Congress but there are still no laws enacted except for existing regulations on restricted military items, chlorates, nitrates, ammunition, explosives, etc. The same is true regarding firearms and the importation of nuclear residues.

Community Consultations and Mining

Mayaniquel initiated arbitration procedures against the Ministry of Energy and Mines in lieu of the projects operations suspension decreed by Ministry of the Environment.

There have been no regulations enacted in mining and energy to determine how the consultation mechanism of ILO Agreement 169 should be applied. The court has found insufficient consultation methods in these cases and the absence of clarity has affected investment in these areas. The government decided to undertake the consultation procedure and a state of emergency was declared in the zone.

Cases Presented Before the Ministry of the Economy

• Mayaniquel, a nickel Mining operator, made a request in October 2024 to submit a claim regarding its mining operations in Izabal against the Government of Guatemalato ICCID Arbitration, and arbitration provisions are pending.
• In Energía y Renovación Holding, S.A. v Guatemala, concerning Hydroelectric construction in the Department of Huehuetenango, the government of Guatemala, in a divided decision, was found to be violating the Panama Guatemala foreign investment protection treaty, with a penalty of USD65 million.
• In December of 2025 an arbitration ruling in favour of the government was issued in lieu of the suspension of a mining licence for La Puya Projects in San Pedro Ayampuc; the claim was for USD499 million.

Corruption

Criminal corruption cases and irregular election financing criminal cases have had an impact on how transactions are structured, providing for between-parties relief and warranties in situations in which the target or their principals or agents are targets of the investigation or criminal proceedings. Locally, corruption prosecution activities were reduced during 2025, and the government prosecutor discontinued prosecution in most major corruption cases. However, the authorities have started to focus on the prosecution and incarceration of those who, in the past, have been anti-corruption prosecutors or judges. 

Tax

A law enacted in November 2024 requiring companies to disclose their shareholders with their tax identification numbers and their stake in the company annually was declared unconstitutional in an April 2025 ruling. Currently, the Guatemalan Congress is considering a new law for the public disclosure and registration of company shareholders.

In a recent interpretation, the tax authorities, have presumed that any cash transaction between a company and its shareholders in which payments are made to the latter constitutes a dividend payment subject to withholding tax unless it can be proven with documentary evidence that the transaction was made for other economic purposes.

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 recently amended, no provisions regarding takeovers have been amended or enacted.

Provisions require that merger and takeover approval under competition law should be considered. An economic group will be considered an economic agent if two of its members are under joint administrative or shareholder control. The Securities Market Law states that such control exists if a majority of board members is shared, if the majority of shares of one entity are held by the other, or if the shares of both are commonly shared by a third party. Some anti-takeover contractual provisions do exist but have not yet been assessed in court.

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 announcing 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, such as the financial sector, stakebuilding has been used as a strategy for the foreign acquisition of local entities. Note that there is no regulatory difference between foreign and domestic acquirers in stakebuilding.

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 for venture capital companies, must have at least two shareholders or equity owners. Disclosure obligations for direct or indirect holders of more than 5% of the shares of banks, financial institutions 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 obligation to modify the public offer registration of the securities issuance of the target when securities have been issued by such entities under Securities Law Decree 34-96. Control means the majority of the shares of the controlled entity.

The only applicable legal filing obligations relating to share ownership are: (i) the requirement for any share-based company to file a notice at the Mercantile Registry whenever new shares are issued; and (ii) the mandatory offering of shares via media publications of edicts for existing shareholders 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 must submit the information regarding the meetings, with 15 days’ advance notice, at the company’s place of business. The administration of the company must place the annual accounts at the disposal of the shareholders; these must include all financial statements, the annual balances, management comments and an analysis report, remuneration received by management and the expected dividend distribution. The shareholders’ meeting must take place 90 days after the company’s fiscal year end.

The new Anti-Money Laundering Law under current consideration in the Guatemalan Congress would require a public filing of changes in share ownership.

The Commerce Code, adopted by Decree 2-70, stipulates mandatory and minimum reporting standards for all types of companies, meaning a company can introduce additional reporting requirements in their articles of incorporation as long as the minimum is respected. There are no other hurdles to stakebuilding in Guatemala. Information rights are minimum requirements under the law and cannot be waived in articles of incorporation.

There are no confidential statutory rules for reporting standards, but certain entities have introduced articles of incorporation with mandated confidentiality rules for company information.

In Guatemala, dealing in derivatives is allowed. Some derivative regulation exists under the Law of the Securities Market and its Amendments. The only regulated derivatives are conditional and term agreements under the current Securities Law of Guatemala, Decree 34-96 and its amendments, with very general provisions in the law and no contract-specific type of registration requirements, except if such derivatives are subject to a public offering.

Swaps agreements and other derivatives are unregulated and, usually, allowed under innominate agreements allowed under the Code of Commerce and the Securities Law.

Tax treatment of derivatives is not regulated and may cause, for Guatemalan tax purposes, non-deductibility of derivatives transactions.

Under the Law of the Securities Market, filing/reporting obligations depend on the nature of the derivatives offer. When offered to more than 35 persons, it will be deemed a public offer and certain requirements (such as registration at a Stock Exchange Registry and for the issuer to obtain a risk qualification) shall apply.

When offered to 35 people or less, it will be deemed private, and the offer should be made directly to each of them. Neither the law nor the regulations contain any derivative-specific registration requirements for public offerings of derivatives.

There are no competition laws mandating the registration of derivatives or filing obligations.

Derivative agreements remain unregulated as securities; no securities disclosure exists regarding such agreements and when existing they are usually dealt with in extra-market activities under the securities law.

There is no legal obligation for a shareholder to notify the purpose of the acquisition. The only legal requirement is to inform of the intention to issue shares of the company so that existing shareholders can exercise their pre-emptive right under Article 127 of the Commercial Code.

For issuers of shares that are registered securities for public offering purposes, a notice of intent to acquire shares is a requirement under Article 39 of the Securities Law with its general 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 payment and number of shares to be transacted.

The acquisition of controlling voting trusts is also subject to notices to be provided to the regulator and in any public notice of a shareholders’ meeting in which such rights will be exercised.

As a practical matter, no registered public offering of shares is currently in place in the Securities Registry of Guatemala.

Only if the target is a financial or insurance 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.

Share capital increases are subject to a pre-emptive right 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 mandatory 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 company shares are currently registered and active in the Securities Registry of Guatemala.

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 Guatemalan law. Local entities are not publicly traded and, therefore, it cannot be said that there is a particular market practice that applies to them.

The scope of due diligence usually encompasses the corporate, asset titling, tax, labour, permitting, environmental, or regulatory and litigation matters of the target, its shareholders, and the ultimate beneficiaries.

Limitations of due diligence may exist based on confidentiality provisions. On matters regarding government affairs and on military matters related to targets, it is possible that government information might not be available. The tax obligations of targets are confidential, and cannot be reviewed without the target’s approval; litigation files do have some limitations for due diligence purposes and also require the target’s approval.

In Guatemala, exclusivity is typical of M&A transactions. There are no regulations on this subject.

In Guatemala, it is permissible for tender offer terms and conditions to be documented in definitive agreements. Due to the nature of the local shareholding composition, most local entities are closely held and, other than a share securities exchange, tenders are rare.

The length of the process to acquire or sell a business will depend on several matters, and most of the time such matters depend on the parties involved in the M&A transaction – ie, on the nature of the target. If it is a financial institution, the process can take up to approximately 12 months as the approval of the authority is required before closing the deal.

If the acquisition or sale of the business requires the transfer of real estate, then the transfer shall be registered at the General Property Registry, which can take approximately 20 business days for owned entities, and one month for majority shares acquisitions which require public notice of shareholder meetings.

During the pandemic, the Mercantile Registry of the Republic of Guatemala introduced the use of electronic signatures for Public Notaries, so when the Public Notaries register public documents with electronic signatures, their registration is more agile. It is possible that similar changes will be made to the General Property Registry in the near future.

In Guatemala there is no mandatory offer threshold; however, if an offer is made to more than 35 persons, the offer will be deemed as public and certain mandatory requirements will apply under the Law of the Securities and Merchandise Market. Offers between existing shareholders of local entities, even if made to more than 35 persons, have not been deemed a public offer.

In Guatemala, cash is more commonly used as consideration, although consideration can also be part cash and part securities, and not just shares but also bonds. Common tools used to bridge value gaps between the parties include escrow accounts to determine certainty on final decisions in litigation matters.

Representations and warranties insurance can also be arranged with international insurers able to provide coverage if the agreement has a US law jurisdiction.

The common conditions for a takeover offer are:

• establishing the number of shares to be acquired;
• the price of acquisition;
• terms of payment of the price;
• all regulatory, and governmental approvals and/or permits required to complete the offer being granted on terms acceptable to the offeror;
• that no material adverse effect has occurred or will occur in a certain period;
• no material pending litigation against the target or any of its legal representatives, shareholders 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 inaccurate, incomplete, or misleading, amongst others.

The only restrictions imposed by law and enforced by regulators are the those related to the acquisition of a controlling interest in the shares of a publicly traded entity (see 4.1 Principal Stakebuilding Strategies) and those applicable to financial institutions – ie, acquiring more than 5% of the shares of any institution supervised and regulated by the Superintendency of Banks necessitates obtaining prior approval from the Monetary Board.

Stakebuilding due to of lack of regulation can result in counter stakebuilding measures which have no legal limits. Pills on management are not illegal, and voting trusts do not contain limitations.

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 complete the offer;
• no material adverse effect has occurred or will occur in a certain period;
• no material pending litigation against the target or any of its legal representatives, shareholders 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 inaccurate, incomplete, or misleading, amongst others.

In Guatemala, it is permissible for a business combination to be conditional on the bidder obtaining the financing.

There are no statutory restrictions on deal security measures, which can be negotiated. Non-solicitation agreements for employees may have some issues related to enforceability against the employees because of constitutionally mandated freedom of employment provisions and labour code provisions limiting restrictions on work. However, they are enforceable against third parties based on unfair competition, and upon registration of non-solicitation.

Non-disparagement agreements can be negotiated freely between parties, but damages provisions tend to be limited under the Continental Law system. Liquidated damages can be negotiated, but clauses are limited to the size of the transaction.

It has been requested in Guatemala that the target appoint independent directors and that certain board of directors’ meetings exclude management. Information rights before shareholder meetings and rights to appoint a director are common, 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 shareholders based on shareholding. Anti-dilution provisions usually take the form of payment of shares with a premium.

If acquisitions concern minority holdings or step-ups, Guatemalan law requires that boards of directors be elected by cumulative voting. Minority rights can be included in the articles of incorporation. This allows for the possibility of super-majorities in board and shareholders’ meetings when certain decisions are made as part of the articles of incorporation during an acquisition process. Classes of shares can also be established.

Shareholders voting by proxy is permissible under Article 1687 of Guatemala’s Civil Code. The commercial code allowed at-distance participation in meetings.

The law does not provide for squeeze-out mechanisms, short-form mergers or other mechanisms to buy out shareholders who have not tendered. Extensive litigation has applied when attempts to force squeeze-out mechanisms have been possible under foreign legislation during mergers with foreign entities. 

Share capital reductions are possible, albeit rare, with several open rules for selecting the shareholders subject to reduction. Modifications to include a specific group of shareholders as capital-reduction targets would require the approval of said shareholders. Amortisable shares through capital reduction are allowable under Guatemalan corporate law.

It is not common to obtain irrevocable commitments. Voting trusts are not generally used for such purposes. They are allowed under Guatemalan law, with a maximum duration of ten years, but are not commonly used due to the shareholding structure of the majority of target companies. Put obligations can be negotiated, and there is no legal provision prohibiting these. If shares are involved, put agreements must be registered in the share registry.

Considering that, in Guatemala, most target companies 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 then to the public after the deal has closed.

There are no specific disclosure requirements for non-public issuers of securities for the issuance of shares in a business combination other than information on 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 must disclose the following information if the target has registered securities in the Securities Registry. When control is acquired, information regarding the controlling entity must be recorded as part of the public offering registration stating the following information:

• composition of its board management’s power of attorney holders if resources from the issuance are to be used solely by the issuer or employed to finance the controlling entity;
• if the controlled entity is the issuer, if the controlling entity is or is not to be liable to respond with respect to the obligations of the controlled entity, and if there is a warranty, the terms of such warranty; and
• if any other controlled entity is to respond with respect to its obligations.

There is no legal requirement for bidders to produce financial statements in their disclosure documents. Most of Guatemala’s medium-to-large companies now prepare their financial statements in accordance with IFRS. The tax authorities increasingly use IFRS for tax auditing purposes, although tax rules change and conversion to a tax rules form is also required.

Under Guatemala’s applicable rules and regulations, there is no obligation to disclose any of the transaction documents in full for private or public transactions, unless the transaction involves modifications to the articles of incorporation. Extraordinary shareholders’ meetings must be recorded in the property registry.

Under Articles 171 and 172 of Guatemala’s Code of Commerce, the administrator will be held liable before the company, the shareholders and creditors of the company for any damage caused by them either wilfully or by negligence. If there were many administrators, they will all be held jointly liable, except when said administrators have expressly voted against the decision relating to the damage or upon approval of management’s report by the shareholders if the decision was reported to shareholders. Approval of management reports by the shareholders equates to the release of all matters expressly reported in the management report in question.

It is common for the board of directors to establish special committees in business combinations, and these committees are used to internally facilitate the transition from the acquiree to the acquirer regardless of whether some of the directors might have a conflict of interest.

Under the Code of Commerce of Guatemala, the administration of a company cannot be delegated; therefore, decisions of the committee must be ratified and adopted as decisions of the board in order to become mandatory.

In Guatemala, courts do not apply the business judgement rule. In criminal proceedings, courts have applied the standard that boards have a duty of due diligence, which is opposite to the business judgement rule.

Accounting, tax, legal and any other advice required and that might affect the combination can be given. However, acting upon advice does not waive board liability.

A board member must abstain from participating in any manner, including being in the room in which the matter is subject to approval and in participating in discussions and decisions, when and if the decision carries a conflict of interest for them. The acting director is subject to liability and damages, but the operation is not voided unless directly acting on behalf of two contracting parties. The situation contravenes the provisions of Article 1694 of the Civil Code, which establishes that a single agent cannot grant contracts representing at the same time the rights or interests of the two contracting parties.

These types of conflicts are usually solved through ADR procedures due to the arbitral and confidentiality clauses included in the transactional documents; hence, many of the conflicts are privately resolved between the parties. Contracts have been voided by conflict-of-interest rules, but damages litigation has been rare in courts in Guatemala for this type of cause.

Hostile tender offers are permitted but not that common in this jurisdiction; they occur concerning big targets, under Decree 34-96 of the Congress of the Republic, Law of Stock Market and Merchandise.

Boards in Guatemala do not hold the power to use defensive measures against acquisitions in general. Board compensation is approved by shareholders, and decisions regarding issuance and pricing of shares are generally left to the shareholders’ meeting. The board of directors may carry out capital calls within the authorised level of capital of the company. A shareholder has, in a manner that boards do not have at their disposal, measures that allow them to adopt disruptive or defensive measures. Again, tenders are not usual in Guatemala. If defensive measures exist under the articles of incorporation or in the entity’s Corporate Governance Manuals, the board may use them, if allowed.

There is no specific subject regulation. There are only general considerations on good faith in business. A typical defensive measure for shareholders is a voting trust which provides control for as long as the tender offeror does not hold the majority of shares.

The directors hold the same liability and duties when enacting defensive measures as when exercising their duties. Directors are not mandated to transmit sales proposals to shareholders.

Directors cannot “just say no”. They are subject to the decision of the supreme authority of the company, the shareholders’ meeting or the equity partners’ meeting, and the director is obliged to comply with the resolution taken by this authority. Directors do not have the authority to decide upon offers to purchase shares. Directors have authority, except where limited by statute, to accept or not the sales of assets.

Litigation is not common in connection with M&A deals when the acquisition is for the totality of the shares or assets of the target. Minority rights litigation is more typical when minority shareholders’ rights are not protected in the deal. Arbitration is the most common manner in which M&A disputes are resolved locally and internationally.

Because the deal is not made public until finalised, litigation comes after acquisition in most cases in which it arises. Typically, litigation is brought due to causes related to the price or the condition of the target and its contingencies, which are found after acquisition.

Litigation has been threatened in broken deals within the region, in cases in which deals have been made subject to US jurisdiction. Arbitration has been conducted on issues such as electricity and regulated matters.

Shareholder activism is indeed a force against the infringement of minority rights, but is not a huge force due to shareholding structure which, for certain entities (such as utilities) tends to act as a dividend provision scheme, in some cases with employee share participation, the main threat being when dividends are not distributed.

Social activism does exist in Guatemala, particularly in the mining, hydroelectric and telecommunications industries. The ILO 169 Convention is central to Guatemala’s social activism. 

Shareholder activism does not seek any of the above-stated results. Social activism seeks major divestitures and even the shutdown of operating businesses, which causes flights of capital. Social activism was affected during the pandemic, due to factors such as limited hours and transportation, and the informal economy was not supported by the loans granted by the government. On the other hand, cybernetic activism arose.

Activists do seek to interfere with the completion of announced transactions, especially the M&A transactions in the mining, hydroelectric and telecommunications industries.