Mergers and Acquisitions in Guatemala: Process Guide

## What are mergers and acquisitions? Mergers and acquisitions (M&A) are processes through which two or more companies combine, or one company purchases another, to grow, diversify, or restructure. In Guatemala, these processes are regulated primarily by the **Commercial Code (Decree 2-70)**, specifically articles 243 to 266, which govern the merger and transformation of companies. --- ## Types of transactions ### Merger Two or more companies dissolve to form a new one, or one absorbs the other. The Commercial Code distinguishes: - **Proper merger:** Companies dissolve and form a new one - **Merger by absorption:** One company absorbs another, which dissolves without liquidation ### Acquisition A company purchases the shares or assets of another. Does not necessarily involve dissolution. Can be: - Purchase of shares/partnership interests - Purchase of assets ### Corporate restructuring Internal reorganization of a company: changes in company type, reorganization of ownership, spin-offs. --- ## Step-by-step process ### Step 1: Due diligence Before any transaction, the buyer conducts a thorough investigation of the target company: - Legal review (bylaws, litigation, contracts) - Financial review (financial statements, debts, liabilities) - Tax review (tax compliance, contingencies with SAT) - Labor review (contracts, IGSS, severance) - Intellectual property and asset review ### Step 2: Letter of intent (LOI) The buyer presents a letter of intent with preliminary terms: price, conditions, exclusivity period, and confidentiality. ### Step 3: Merger or acquisition agreement The definitive contract is drafted. If it is a merger, it must be in a **public deed** before a notary. The agreement must include: - Transaction terms - Valuation and payment mechanism - Representations and warranties - Closing conditions - Confidentiality and non-compete clauses ### Step 4: Corporate approval The merger requires approval from the general assembly of shareholders or partners, depending on the company type. The Commercial Code requires a qualified majority. ### Step 5: Registration at the Commercial Registry The merger deed is registered at the **General Commercial Registry of the Republic (RMG)**. Registration produces effects vis-à-vis third parties. ### Step 6: Creditor opposition period The Commercial Code (art. 254) grants creditors a **30-day** period to oppose the merger, counted from publication of the notice. If there is opposition, the company must guarantee payment of the debt. ### Step 7: Closing and consolidation Closing is signed, assets are transferred, and registries are updated (RMG, SAT, General Property Registry, IGSS). --- ## Documents you will need - Recent financial statements of the target company (preferably audited) - Current corporate documents (incorporation deed, minutes, bylaws) - Tax returns and payments for the last 5 years - Current contracts with clients, suppliers, and employees - Certifications from the Commercial Registry and the General Property Registry - IGSS certification (solvency or account status) - Pending litigation (civil, labor, criminal, administrative) - Current licenses, permits, and authorizations --- ## Authorities involved | Authority | Role | |---|---| | Authorized notary | Drafts the public deed of merger | | General Commercial Registry (RMG) | Registers the merger or transformation | | Superintendence of Tax Administration (SAT) | Verifies tax compliance | | Guatemalan Social Security Institute (IGSS) | Verifies labor compliance | | General Property Registry | Transfers real estate | | Ministry of Economy | Reviews competition matters (if applicable) | --- ## Estimated timeline - **Due diligence:** 1 to 3 months - **Negotiation and signing:** 1 to 3 months - **Registration and opposition period:** 1 to 2 months - **Total:** 3 to 12 months depending on complexity --- ## Legal basis - **Commercial Code** (Decree 2-70), articles 243-266 (merger), 267-294 (dissolution and liquidation) - Available at: www.congreso.gob.gt *This article is informational and does not constitute legal advice.*