CMS Expert Guide to Public Takeovers in Peru

Yes, the Consolidated Text of the Securities Market Law and the Public Offering and Delisting Regulations regulate the acquisition of companies with listed securities. 

Those transactions that result in a natural person or legal entity acquiring or increasing a significant shareholding in a target company are regulated, to the extent that: 

• it is a transfer for valuable consideration;  
• the target company has at least one class of securities with voting rights or capable of granting voting rights registered in the Public Registry of the Securities Market (hereinafter, the “Registry”), which is the registry in charge of the Superintendency of the Securities Market (hereinafter, “SMV”) where the securities, issuance programs and investment funds are registered (this includes the shares of listed companies) in order to make available for the general public the information needed for an investor to make informed investment decisions; 
• the acquirer reaches or exceeds a shareholding of 25%, 50% or 60% in the share capital of the target company or acquires a number of shares or has the power to exercise the voting rights of shares, in such a proportion that in any of said cases it may: (i) appoint or remove the majority of the directors, or (ii) modify the bylaws of the Company. The political rights are related to those shares that confer, among others, voting rights to their holders in the Shareholders’ Meetings. In that order, they are capable to participate in the taking of decisions in the company’s management (removal and appointment of directors, modification of the bylaws, allocation of the company’s profits, among others); and, 
• is not included in any of the exceptions, which are summarized in Question N° 4 below. 

Yes, in order to complete a takeover offer, a Structuring Entity (companies that: (i) are registered in the Registry,  ii) Brokerage Agents; iii) some companies in the financial system; iv) Mutual Fund Management Companies for Securities Investments; v) Investment Fund Management Companies; vi) Titulization Companies; and, vii) Mortgage Servicing Companies. The relevant information regarding the transaction, the securities and the parties involved are indicated in the Informative Prospectus, which is a document elaborated by the Structuring Entity), a Broker-dealer, a Valuation Company, legal and/or financial advisors, among others, must be retained. 

Yes, the offeror must make a takeover offer whenever it acquires or increases a significant shareholding taking its shareholding to 25%, 50% or 60% as set out in Question 2 above.  

The following cases represent exceptions to the obligation to make a takeover offer:  

• the express written acceptance by all of the target company's voting shareholders in respect of the sale or exchange of all or part of the shares representing voting share capital; 
• the redistribution of shares among natural or legal persons that are part of the same economic group, provided that such redistribution does not alter the basis of decision-making or control; 
• the fulfilment of an underwriting commitment assumed by an intermediary agent in the securities market; 
• the acquisition made by a depositary for the subsequent issuance of depositary receipts or other similar securities; 
• the acquisition of depositary receipts or similar securities, unless the holder exercises the right to vote the underlying shares or requests the delivery of such shares; 
• the acquisition that is made in a primary offering or through the waiver of the pre-emptive subscription right in favor of the potential offeror to make a takeover offer; 
• the acquisition or capitalization of credits carried out within the framework of procedures regulated by the General Law of the Insolvency System (Law N° 27809) which regulates the procedures that shall be followed by the companies in an insolvency situation involving their creditors in order to restructure the company or, in the worst case, decide their dissolution and liquidation; 
• the exercise of a preferential right of subscription; 
• a trust agreement, provided that the exercise of voting rights is held by the settlor or originator, or by the trustee; 
• a Private Investment Promotion process in accordance with the relevant legislation. The Private Investment Promotion Process have the objective of contribute to the growth of the national economy, to the closing of gaps in infrastructure or public services, to the generation of productive employment and to the country's competitiveness through Public-Private Partnerships and Asset-Based Projects. Some of the most relevant regulations are Legislative Decree N° 662, Legislative Decree N° 674, Legislative Decree N° 757, Legislative Decree N° 1362, among others); 
• the transfer of shares or other securities issued by agricultural sugar companies, under the special legislation for such companies; 
• a pledge contract in which the exercise of the voting rights of a percentage equal to or higher than the significant shareholding percentages referred to in Question N° 2 above is assigned and the creditor is a company of the financial system, a bank or a foreign financial company considered as first class, which are the foreign financial companies listed by the Central Reserve Bank of Peru (hereinafter, “BCRP”) in the Circular N° 0009-2023-BCRP, including their branches and subsidiaries. It should be noted that this list is updated yearly by the BCRP so it may change by the time this document is reviewed;  
• an acquisition made for the issuance of [participation quotas or circulation units] of an Exchange Traded Fund (ETF) managed by a first level entity, provided that it is demonstrated to the SMV that, according to the structure of the issuance, it does not have as a function or purpose the acquisition of a significant shareholding percentage; 
• the acquisition of [participation quotas] of an Exchange Traded Fund (ETF), managed by a first level entity, unless the holder may exercise, directly or indirectly, the right to vote the underlying shares or request the delivery of the aforementioned underlying shares. 

The exceptions indicated above must be reported to the SMV and the Stock Exchange by the person acquiring or increasing its significant shareholding, the day after the acquisition or increase occurs, [for their respective dissemination in the manner provided for significant events]. Significant events refer to the situations that could have an effect on the decision of an investor in deciding whether to invest or not in a security and that, among others, the listed companies are obliged to inform to the SMV, including but not limited to the negotiations in progress about itself, the value and the offer made of it, as well as the right to disclose such events in a truthful sufficient and timely manner. 

In addition to the exemptions listed above, the SMV may exempt the acquirer from the obligation to make a takeover offer or from any of the requirements thereof, provided an appropriate request is made. 

Takeover offers may be made in any of the following ways: 

• prior offer: in cases where an offer is made prior to the acquisition or increase of a significant shareholding. This type of offer must be carried on as stated in Question Nº 2. 
• subsequent offer: in cases where an offer is made subsequent to the acquisition or increase in a significant shareholding. This type of offer must be carried on when the acquisition or significant increase: (i) was made indirectly, (ii) as a result of a public sale offering; iii) the significant shareholding is transferred from the holder to the acquirer in a single act; and, iv) when the significant interest is acquired through no more than four successive acts within a period of three years. 

On the other hand, the takeover bid procedure may be used voluntarily for the acquisition of voting shares, as well as any other securities registered in the Register. 

The assumption that by means of a takeover offer 100% of the voting securities of the target company is acquired is an exception assumption listed in paragraph (a) of Question N°4. above. 

The target company is required to disclose any type of ongoing negotiation as a material fact. Regardless of this, the target company shall be entitled to designate such material fact as reserved information, which implies that such negotiation shall be communicated only to the SMV without alerting the market. 

A Takeover offer is required to begin the day after it has been formally communicated to the target company, the SMV and the respective Stock Exchange. Such communication must be accompanied by the following documents:  

• Informative Prospectus in relation to the offer; 
• Documents evidencing the guarantee in relation to the Offer; 
• Administrative authorizations that may be required for the acquisition, which are granted by the relevant Peruvian Entities, as applicable, depending on the type of transaction and the sectors of the economy where the companies involved operate; 
• Notice to be published in the relevant stock exchange, in the official newspaper "El Peruano" and in another newspaper of major circulation; 
• When acting through representatives, documents evidencing the faculties and powers of the person or persons acting in such status, which shall be granted by the relevant corporate entity in accordance with the General Corporate Law and the company’s bylaws (such as the General Shareholders’ Meeting, the Board of Directors, the General Management, among others) 

The making of a takeover offer may be conditional on the fulfilment of a series of assumptions or conditions to be defined at the outset.  

However, in the case of a prior takeover offer (as it is described in Question N° 5 above), once the offer is formally communicated, it will be irrevocable and must be in force for the term indicated by the offeror, which may not be less than 20 days. The term of the offer may be extended by the offeror, provided that no competing offers have been submitted.  

In cases where a subsequent takeover offer (as it is described in Question N° 5 above) is to be made, the term of such offer shall not be less than 20 nor more than 40 working days, and the consideration offered shall be at least the same as under the transaction or transactions that preceded it. 

Yes, the financing obtained by the offeror for the purpose of carrying out the takeover offer for the target company must be duly disclosed in the offer prospectus, including a summary of the terms and conditions of the financing and any guarantees. 

Only in the case of a subsequent offer, in which case the price may not be lower than the price determined by the corresponding valuation company. 

No, the offer must be qualitatively and quantitatively equal for all holders of the securities for which the offer is made. 

The target company must disclose to the offeror all the information necessary for it to prepare the prospectus. The SMV may request any other relevant information from any of the parties or third parties. 

The offeror may take protective measures against the non-fulfilment of the obligations of every entity involved in the takeover: i) the omitting of information or providing inaccurate, false or misleading information required; ii) failure to comply with the obligations applicable to each participant in the takeover bid; iii) among other infractions stated in the Resolution SMV Nº 035-2018-SMV-01. 

The board of directors of the target company is responsible for preparing a report on the advantages and disadvantages of accepting the takeover offer, which will be submitted to the SMV and the relevant Stock Exchange for disclosure to the market. Notwithstanding the foregoing, the decision to accept or reject the takeover offer is up to the target company shareholders. 

No, unless the offeror comes within one of the circumstances in which a mandatory offer is required as summarized in Question N° 4 above. 

Once an obligation to make a takeover offer has arisen, then during the term of the offer and until the publication of its result, the direct and indirect acquisition of the securities subject to the offer by the offeror or any competing offerors, or persons related to such persons, outside the offer, is prohibited.  

This prohibition also applies to natural or legal persons, whether acting individually or jointly, in concert with the offeror or with the other persons mentioned above. 

Yes, the information regarding the ownership of the securities in respect of which the takeover offer is made must be correctly described in the offer prospectus. Likewise, the SMV shall be empowered to request any other information it deems necessary in the context of the offer. 

The minimum legal deadlines applicable to a takeover offer are as follows: 

D - 1: The target company, the SMV and the Stock Exchange where the securities are listed are notified of the offer;  

D: Commencement of effectiveness of the offer and availability of the documents listed in question 19. below; 

D + 5: last day for the SMV to review the information submitted. Its comments may be corrected up to 3 days after the documents are received. 

D + 7: last day for the board of directors or general manager of the target company to present the report indicating the advantages and disadvantages of the offer;  

D + 10: last day for the presentation of competing offers and any changes to the initial offer. 

D + 16: last day to request an extension of the offer term; 

D + 20: first day for the offer period to end. The offeror may extend the offer by up to the same term as that of the initial offer by at least 20 days.  

D + 21: Once the term of the offer has elapsed, the director of the Stock Exchange shall announce the results of the offer and award the corresponding operations within the following day. 

The following documents will be required:      

• Informative Prospectus in relation to the offer; 
• Documents evidencing the guarantee of the offer; 
• Administrative authorizations that may be required for the offer; 
• Notice to be published in the relevant stock exchange, in the official newspaper "El Peruano" and in another newspaper of major circulation; 
• When acting through representatives, documents evidencing the authority and powers of the person or persons acting in such capacity. 

Yes, the same provisions will apply to the competing offers as those relating to the initial offer. 

Takeover offers are irrevocable, however, the offeror may improve its offer, whether or not a competing offer has been submitted. Any such improvement can, however, only be made for the same maximum period as applies for the presentation of competing offers. 

There is no legal provision requiring minority shareholders to sell their shares. 

In the circumstance that a takeover offer is not successful because the minimum acceptance condition was not achieved, all other acceptances of such offer will be void, unless the offeror decides to acquire them voluntarily. 

In order to delist a security from the Stock Exchange and the Public Registry of the Stock Market, the procedure indicated in the Regulation for the Registration and Exclusion of Securities from the Public Registry of the Stock Market and the Stock Exchange must be followed, which establishes that such delisting will be applicable in any of the following cases:  

• In case the registration of the securities originated at the will of the issuer, they may be excluded upon the issuer's request; and, 
• At the request of the issuer with the support of two-thirds (2/3) of the holders of the relevant securities, when the registration has originated at the request of shareholders representing at least 25% of the share capital; or, at the time, it had been requested by holders of investment shares representing 25% of the issuer's investment shares.