Corporate M&A 2022 Comparisons

The government has promoted initiatives to generate significant economic development. The Leasing Law and the Insolvency Law approvals are the most visible results of the economic policies undertaken. It seeks to provide facilities to merchants and activate economic sectors for goods exchange. Economic activity recovered in 2021; this improved the general economic outlook for the country. Commodities prices rebound improved the perspective for the agriculture sector, which was subject to debt restructuring over the past year.

Logistical issues remain a major key issue, which is seen as a by product of pandemic restrictions. During 2021, the government eased restrictions in economic activity, which resulted in a positive outcome for the economy. Money remittances into Guatemala remained strong and a key financer and balancer of foreign monetary balances.

Major acquisitions took place in the telecommunications sector and the banking and regulated sectors also saw activity. The energy sector remains without major movement. International acquisitions of worldwide operations had some impact in the local market, regarding local branches and subsidiaries of acquired companies in the pharmaceutical and data sectors. Some software acquisition activity has also been seen.

Despite COVID-19, M&A activity remained strong in the region. The top trends in Guatemala in the latter part of 2021 were financial services, telecommunications, and real estate.

Regional acquisitions by Guatemalan entities and intra-regional merger activities were also important during 2021:

• Millicom International Cellular purchased an additional 45% stake in Tigo Guatemala;
• Cabletica bought Telefonica's operations in Costa Rica;
• Telefonica completes the sale of subsidiaries in the region;
• Grupo Werthein bought Vrio and acquired Sky Brasil, DirecTV Latam and DirecTV GO;
• Banco G&T Continental divested its Banking operations in El Salvador and announced subordinated debt investments by IFC; and
• Cenpro bought Salvadorean and Costa Rican Operations from CEMEX.

The industries that experienced significant M&A activity in the past 12 months in Guatemala are tourism and travel related, restaurants, real estate and insurance.

Gradually, the economy has been reactivated, with the indicators displaying 6.5% growth. The control system against COVID-19 has limited the assistance and mobilisation of people in the country, and vaccination is a progressing very slowly.

In regulated and license 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 or not. The acquisition target holds the license, which only in rare cases is transferable, 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, asset acquisition is a preferred method of acquisition.

In Guatemala, the M&A of financial institutions, insurance companies and other entities controlled by such regulator is subject to the prior approval of the Monetary Board and the Superintendency of Banks. In case there is an M&A transaction of privately owned companies, no prior approval is required from any authority.

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

Mining and oil exploration and production activities licenses are assignable with approval from Ministry of Energy and Mines.

The Registry of the Securities Market is the regulator for securities issuers under Decree 34-96 of Guatemalan Congress, and it is entrusted with the registry of issuance of securities and public offerings of securities.

Guatemala has not yet enacted a competition law and there is no competition authority. A competition authority is expected within the framework of a new competition law mandated by Guatemala's Trade Association Treaty with the European Union and the most recent treaty with Great Britain.

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

The following restrictions or differentiations do remain 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 the Investment Banking Laws – the 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 Guatemalans and Guatemalan entities.

All other restrictions have been removed.

Restrictions regarding ownership in areas of Guatemala's coast and frontiers continues to exist in Guatemala's Constitution.

Guatemala has not approved any antitrust legislation; however, there are certain disperse antitrust provisions amongst which is Article 130 of Guatemala's Constitution, which prohibits the existence of monopolies and privileges, and indicates that the government shall protect the market economy and impede the associations that tend to limit the market liberty or to negatively impact the consumers.

Article 360 of the Commerce Code, Decree 2-70, indicates that all companies are obliged to do business with anyone that requests their products or services, complying with the principles of equality in treatment amongst the different consumer categories. Thus, a technical ban on price discrimination activities is deemed to exist. Remedies are unclear but an affected party may sue for damages. Little or no judicial activity to that effect exists.

Furthermore, the Criminal Code, indicates in Article 340, that anyone that acts or commits any detrimental acts for the national economy by taking over the production of one or more industries, or of the same commercial or agricultural activity, or takes advantages of such activities through any privilege or using any other means, will be sanctioned with a prison sentence of six months to five years and a fine from GTQ500 to GTQ1,000. Only two cases have been seen regarding complaints filed before the authorities over the last ten years, and there are no specific results from the authority’s investigations.

Three issues 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 a services agreement. For as long as there is a personal obligation to render services and some degree of subordination and obedience of 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 as severance pay, annual paid vacation, Christmas and July bonus, and severance payment do arise and remain contingent.
• Issues related to rights of employees granted under collective bargaining agreements, which have not been renewed due to unions that are dormant or have ceased to exist.
• Issues related to payments made to employees as “incentive bonus,” which carry issues related to potential social security claims, claims regarding severance pay and other fringe benefits unpaid on these, which, by nature of ILO Agreement 95, are part of the employee's salary.

Labour rights (salary, benefits, bonuses, vacations, unionisation, striking, etc) are considered Human Rights, they are recognised in the Constitution of the Republic of Guatemala. Also, the country is part of the International Labor Organization (ILO) and has ratified international agreements that protect workers' rights.

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

Some of the most important labour laws in Guatemala are:

• the Labor 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 establishes the social security regime – Decree 295 (old age, disability and survival), in Guatemala for workers and regulations issued by its board of directors;
• the Governmental Agreement 221-94; Regulation for the Negotiation, Homologation and Denunciation Procedure of the Collective Pacts of Working Conditions of Company or Certain Production Centre; and
• under Convention 175 of the International Labor Organization (ILO), part-time work is applicable in Guatemala. However, it has generated certain inconveniences about what is the best way to apply it, and there are law initiatives that seek to regulate it more efficiently. Nevertheless, part-time work in Guatemala is legal.

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

In the Guatemalan Congress, a specific initiative for the regulation of the topic has been discussed for more than three years, but there are still no laws enacted in this regard with the exception of existing regulations on restricted military items, chlorates, nitrates, ammunitions explosives and similar. The same is true with firearms and the import of nuclear residues and similar.

Recent Developments

One recent development was in the case of Compañía Guatemalteca de Niquel, Sociedad Anónima (Extracción Minera Fénix), where the Constitutional Court decided that the government (through the Ministry of Energy) was responsible for paying for the consultation. However, it was also decided that the mining operation should remain closed until the consultation procedure could take place.

There have been no regulations enacted for the purpose of determining how the consultation mechanism should be applied. The court has found insufficient consultation methods in these cases. Absence of clarity has affected investment in these areas.

The government decided to undertake the consultation procedure. A state of emergency was declared in the zone. 

The court decided that the Regulations of Part time employment were legal and thus partial employment has been made possible by regulations enacted by the Ministry of Work. 

The Constitutional Court declared the unconstitutionality of prosecutions of illegal Campaign finance against contributors basted on the ambiguity of the felony description contained in the law, by stating that constitutional requirements of fixing the contents of the felony by law were not complied by Guatemalan Congress in the cases of contributors it further stated that the prosecutions based on the felony that substituted the previous law regarding illegal campaign finance could not be applied retroactively to judge alleged crimes committed prior to the existence of the new law.

Cases Presented before the Ministry of the Economy

Notices of Intent to present Investment Arbitrations have been filed before the Ministry of the Economy in the following cases:

• the La Puya Mining Project, which has had its mining licence suspended for the last three and half years;
• Trelec, an Electricity Grid Contractor with a long-term provision of Grid agreement with the National Electric Commission, which has been prevented to finalize its construction activities in the interior of the Country; and
• Distribuidora de Oriente and Occidente shareholders, who were slapped with a fine regarding a tax complaint and criminal actions, which they were forced to pay, based on a criminal complaint by the tax authorities have filed for an investment treaty arbitration claim – this is significant since its presence in Guatemala came from M&A activity.

Corruption

Criminal corruption cases and irregular election financing criminal cases have had an impact in the manner in which transactions are structured providing for intra parties relief and warranties in such situations in which the target or their principals or agents are targets of investigation or criminal proceedings.

Tax

Changes in the tax authority’s interpretation of the tax law, in which reverse merger activities have been subject to scrutiny from the authorities, has been significant during the last years in view of treatment given to goodwill and its non-recognition as deductible and the authorities aggressive pursuit of reverse mergers.

Guatemala does not have a takeover law or any official initiative to implement a takeover law, except on the financial and insurance Sectors. A New Securities issuance law is in discussion, with provisions regarding takeover legislation and notices for publicly traded entities.

Even though the Commercial Code was recently amended, no provisions regarding takeover were amended or enacted.

Some anti-takeover contractual provisions do exist but have not yet been assessed in courts.

Is not customary in Guatemala for a bidder to build a stake in the target prior to launching an offer, mainly because the acquisition strategies of a target usually entail the purchase of shares of a company. The regulations for stakeholder building in the stock market only apply when announcing an increase in publicly traded company for the purchase of a majority stake of the shares of the company.

In regulated industries stakebuilding has been used as a strategy for foreign acquisition of local entities. Note that there is no regulatory difference in stakebuilding.

In Guatemala there are not any applicable material shareholding disclosure thresholds, the only legal requirement related to the share-ownership is that any corporation or limited liability company shall have at least two shareholders or equity owners. Disclosure obligations for direct or indirect holders of more than 5% of 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 the Securities Law Decree 34-96. Control means a majority of the shares of the controlled entity.

The only applicable legal filing obligations related to share ownership is the requirement for any share-based company to file a notice at the Mercantile Registry every time new shares are issued, and the mandatory offering of shares via media publications of edicts for existing shareholders to exercise pre-emptive rights existing under the Code of Commerce for new share issuance within authorised capital of a target entity prior to a third-party offering.

Before shareholder meetings take place, the Board of Directors or sole director have to place the information regarding such shareholder meetings with 15 days advanced notice in the company's place of Business. The administration of the company must place at the disposal of the shareholders the annual accounts, including financial statements, yearly balance, management discussion and analysis report, remunerations received by management and the projection for dividend distribution 15 days prior to the annual mandatory shareholder meeting, which must take place 90 days after expiration of the annual period of the company.

The Commerce Code, Decree 2-70, stipulates mandatory and minimum reporting standards for all types of companies, meaning, each company can introduce additional reporting requirements in their articles of incorporation as long as the minimum are complied with. There are not any other hurdles to stakebuilding in Guatemala. Information rights are minimum requirements of 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 mandated confidentiality rules for company information.

In Guatemala, dealing in derivatives is allowed. Some derivative regulation exists under the Laws 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 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 non deductibility of derivatives transactions, for Guatemalan tax purposes.

In accordance with the Law of the Securities and Merchandise Market, filing/reporting obligations depend on the nature of the derivatives offer. When offered to 35 persons or more, 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 on such agreements and when existing they are usually dealt 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 which are registered securities for public offering purposes, 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 of 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 institution is it required to disclose a deal, preferably (but not mandatorily) when a negotiation commence, to the Superintendency of Banks for its approval prior to 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 in order to complete the deal.

Share capital increases are subject to a right of first refusal by shareholders which must be waived or not exercised before a third party can participate in any shareholding arising from increases in 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 is a requirement. The Commercial Code authorises board approval for 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, the market practice does not differ, on the contrary, the market practice in our jurisdiction is to disclose once the terms and conditions of the acquisition have been agreed between the parties and the public. Disclosure is not required.

Please note that there is no offering requirement to purchase the rest of shares under Guatemalan Law. Local entities are not publicly traded and, therefore, do not have any market practice at all.

The scope of the 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.

In the energy sector, force majeure situations became an issue in view of certain provisions regarding consumer protections that were enacted.

Due to COVID-19, the financial part of the company will be analysed in detail for the specific risks for that sector. Workplace Health and Safety Manuals were updated, and a general system for the containment of COVID-19 in the workplace was established.

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 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, if 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 prior to closing the deal.

If the acquisition of 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 ten business days for owned entities, and one month for majority shares acquisitions which require public notice of shareholder meetings.

No special measure has been taken during the pandemic.

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 in accordance with the Law of the Securities and Merchandise Market. Offers between existing shareholders of local entities, even if made to more than 35 persons is not deemed a public offer.

In Guatemala, it is more common to use cash as consideration, but is also common for the consideration to be mixed, part cash and part securities, not just shares, but bonds as well.

Common tools to bridge value gaps between the parties include escrow accounts to determine certainty on final decisions in litigation matters.

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.
• for all regulatory, governmental approvals and/or permits required to complete the offer are granted on terms acceptable to the offeror.
• that no material adverse effect has or will occur in a certain period of time.
• 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 restriction imposed by law and enforced by regulators, is the acquisition of a controlling interest in shares of a publicly traded entity, stated above and those applicable to financial institutions and is referred to obtaining prior approval from the Monetary Board to acquire more than 5% of the shares of any institution supervised and regulated by the Superintendency of Banks.

The minimum acceptance condition for tender offers in Guatemala are as follows:

• agree on the percentage of shares to be acquired;
• to obtain all regulatory and/or governmental approvals and/or permits required to complete the offer;
• no material adverse effect has or will occur in a certain period of time;
• 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 depending on the financing.

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

Workplace Health and Safety Manuals have been updated in Guatemala to include containment issues of COVID-19 cases.

In Guatemala, it has been requested for the target to appoint independent directors and for certain board of directors’ meetings to exclude management. Information rights before shareholder meetings and rights to appoint a director are usual, 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.

The holding of the shareholders' and directors' meetings must be conducted with due observance of the corresponding health protocols for the COVID-19 prevention.

Shareholders voting by proxy is permissible in accordance with Article 1687 of Guatemala's Civil Code. The commercial code allowed at distance participation in meetings and COVID-19 regulations allowed for virtual meetings during the pandemic.

There are no squeeze-out mechanisms contemplated under the law, short form mergers or other mechanisms to buy shareholders, which have not tendered. Extensive litigation has existed when attempts to force squeeze-out mechanisms available under foreign legislation when mergers with foreign entities are attempted.

Share capital reductions are available. Rules to select shareholders subject to reduction are ample and open, however, not seen in practice.

It is not common to obtain irrevocable commitments. Voting trusts are not commonly used for such purpose in Guatemala; they are allowed under Guatemalan law, but not commonly used due to the shareholding structure of the majority of target companies in Guatemala.

Considering that, in Guatemala, most of the 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 to the public, after the deal has closed.

There are not any specific disclosure requirements for non-public issuers of securities, for the issuance of shares in a business combination, other than the usual, which include the effective payment of the shares to be issued and the subsequent notice to the Mercantile Registry indicating the number of shares paid, issued and their nominative value.

Controlling entities need to disclose the following information if the target has registered securities in the Securities Registry. When control is acquired, information regarding the controlling entity needs to be recorded as part of the public offering registration stating the following information:

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

There is no legal requirement for bidders to produce financial statements in their disclosure documents. As of today, most of Guatemala's medium to big companies are preparing their financial statements using IFRS. IFRS has been the method use by tax authorities for tax auditing mechanisms increasingly, although tax rules change and a conversion into 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.

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

It is common for board of directors to establish special committees in business combinations, and such 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 and thus decisions of the Committee must be ratified and adopted as decisions of the board 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 completely 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 has a duty to abstain from participating in any manner, including in the room in which the matter is subject to approval and in participate in discussions and decisions when and if the decision carries a conflict of interest to him or her. 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 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 in relation to big targets.

Boards in Guatemala do not hold powers to use defensive measures against acquisitions in general. Board compensation is not within the powers of the board, but a shareholder has, in such manner that boards to not have at its 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 the board may use them if allowed.

There is no specific subject regulation. There are only general considerations on good faith in business.

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 complied with the resolution taken by such authority. Directors do not have authority to decide upon offers to purchase shares. Directors have authority, except were 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 in the shares or assets of the target. Minority rights litigation is more normal when minority shareholders' rights are not protected in the deal.

Because of the fact that 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 is found after acquisition.

Litigation has been menaced in broken deals within the region, in cases in which deals have been made subject to US jurisdiction.

Arbitrations have been conducted on issues such as electricity and regulated matters.

Shareholder activism is a force upon infringement of minority rights as a root cause. Due to shareholding structure, it is not an important force. Shareholding tends to behave in certain entities as a dividend provision scheme in cases of utilities and other entities, in some cases with employee share participation, and the driving force is when dividends are not distributed.

Social activism does exist in Guatemala especially in the mining, hydroelectric industries, and telecommunications. The activism is referred to the implementation of the ILO 169 Convention.

Shareholder activism does not seek any of the above stated results. Social activism seeks major divestitures and even the close of operating businesses, that even cause capital flights.

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