REMA – Argentina
WWW.GETTINGTHEDEALTHROUGH.COM
What is the typical structure of a business combination involving a publicly traded real-estate owning entity?
Corporations that operate in Argentina are regulated by Law 19,550 (the Commercial Companies Law (CCL)) and the National Civil and Commercial Code, which describe the different types of business combinations that companies can adopt within the Argentine jurisdiction, hence, their business structures. It is worth noting that the different types of legal entities are set out in Law 19,550, and for a company to be legally constituted in Argentina, the company must adopt one of these established legal types.
Which business structure is adopted depends on multiple factors,
such as:
• the form of corporate governance;
• constitution requirements;
• financing instruments;
• legal protection of assets;
• need for third-party equity capital; and
• constitution and operations costs.
In Argentina the typical business combination involving a publicly traded real-estate owning entity is the so-called corporation. One of the main reasons is that the process to transfer the shares issued by a corporation, as provided by the CCL, is simple in comparison with other business combinations. This process is regulated in Articles 214 and 215 of the law and the only formal requirement is the notification of
the transfer to the company’s shareholders.
There are not many publicly traded real-estate owning entities in Argentina, therefore a trend in this regard is not yet identifiable. Conditions up to the year 2018 suggest that the best structure of a business combination is participation as a shareholder in a company owning real estate or participation in a real-estate investment trust (REIT) that is investing in real estate in Argentina. (See question 35.)
Are there are any significant differences if the transaction involves a privately held real-estate owning entity?
There are no significant differences if the transaction involves a privately held real-estate owning entity.
Nonetheless, the new Capital Market Law (Law 26,831) and its corresponding administrative regulation by the National Securities and Exchange Commission (CNV)) have regulated the merger and acquisition (M&A) transactions regarding publicly traded entities. In this regard, the Capital Market Law establishes the acquirer’s obligation to make a tender offer, also called a takeover bid, in order to protect the
minority shareholders against changes in control in publicly held companies. Takeover bids allow the minority shareholders to participate in the “control premium” paid to the controlling shareholders. Another significant difference regarding publicly traded entities pursuant to Article 14, Section I, Chapter X of Title II of the General Resolution of the National Securities and Exchange Commission No. 622/13 is that an acquirer that is not a publicly traded entity must notify the Public Registry of Commerce about the transaction and obtain its approval to execute it. The seller must follow the same procedure with the CNV, if it is a publicly held company.
Seguir leyendo:
