The Mergers & Acquisitions Review: Colombia

Overview of M&A activity

The Colombian economy and the Colombian M&A market were affected by the covid-19 outbreak and by the uncertainty of the global markets. In 2020, M&A activity in Colombia decreased by 36 per cent as compared with 2019.2 However, M&A activity increased in the third quarter of 2020 and we expect this trend to remain during 2021, mainly because of an increasingly stronger economy. Despite the challenges presented by the covid-19 pandemic, Colombia remains attractive for foreign investment. Set forth below are some of the key factors that will foster M&A activity in Colombia:

  1. investors seeking to purchase assets at a discount price and looking for companies under financial distress or undergoing restructuring due to the effects of the covid-19 outbreak;
  2. lower valuations owing to the effect of the currency exchange rates of strong foreign currencies as compared to Colombian pesos, which result in cheaper targets;
  3. buyers and sellers looking for businesses expansion, partnerships and strategic alliances in a pandemic and post-pandemic era;
  4. favourable regulatory environment, including a flexible foreign investment regime and tax benefits for investors;
  5. strong rule of law;
  6. the Colombian government, seeking to raise funds to recover the country's economy, by means of the sale of certain state-owned companies (i.e., in the energy sector), through privatisation processes governed by Law 226 of 1995;
  7. the Colombian government has launched the fifth generation (5G) infrastructure programme. Investments are expected to reach an estimated US$5.9 billion, this will attract foreign investors willing to invest in Colombian infrastructure and energy projects; and
  8. international businesses which continue to expand their operations in the country, highlighting Colombia's positioning as an export platform.


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General introduction to the legal framework for M&A

The Colombian Commercial Code is the principal legal framework that sets forth the legal vehicles that are available to foreign investors in Colombia and the rules related to corporate governance of Colombian companies, such as quorums, veto rights, fiduciary duties of directors and officers, and general rules applicable to foreign investors aiming to conduct businesses in Colombia.

Acquisitions of public companies (public takeovers) have special regulations under Colombian law, and are regulated primarily by, inter alia, Law 964/2005, which is the general statute regulating the Colombian securities market, and Decree 2555/2010, which regulates public takeovers.

Nevertheless, many features of Colombian M&A are familiar to global businesses and are similar to international standards of other jurisdictions, especially to New York law standards and styles. Over the past years, the common law contractual model has influenced the way acquisition agreements are drafted and negotiated in Colombia. It has become common in the legal market that shareholders' agreements, asset purchase agreements and share purchase agreements are drafted in a manner similar to New York law-governed agreements, sharing similar provisions.

For instance, in the past couple of years, local arbitrators and case law have accepted pro-sandbagging provisions under Colombian law and the right of buyers to be indemnified via share purchase agreements due to a breach of sellers' representations and warranties of the sellers and of the target company. Such judicial decisions by local arbitrators have clarified that concepts arising out of share purchase agreements, although not expressly regulated under Colombian law, do have a legal reasoning and support under Colombian corporate principles and rules.

Therefore, the increasingly sophisticated M&A market in Colombia is another trend and reason for foreign investors to have confidence in the Colombian market.

Some key provisions that are frequently incorporated into the Colombian agreements that are common to New York-style provisions are as follows:

  1. purchase price adjustments, including working capital adjustments and cash-free, debt-free adjustments, and the use of locked box mechanisms;
  2. non-compete provisions and agreements, which now regularly include non-solicitation clauses for the protection of employees and existing commercial relations and which are legal in Colombia only in the context of an acquisition process in order to protect the buyer and the value of the company; and
  3. escrow agreements (holdback provisions are less common, although they are becoming increasingly more common, depending on the target).

In connection with indemnity provisions, limitations of liability (caps) are typically heavily negotiated and may vary depending on the risk level of the target, although the cap typically ranges between 15 to 20 per cent of the purchase price. Carveouts to the cap are generally accepted for fraud, special indemnities and fundamental representations (such as capitalisation, due authority and organisation, and ownership of shares or quotas).

It has become increasingly common to leave Foreign Corrupt Practices Act or anti-bribery carveouts as fundamental representations and uncapped, especially when private equity funds are involved in deals and for infrastructure deals.

In connection with shareholders agreements under Colombian law, provisions for minority rights protections, such as the appointment of directors, information rights, veto rights with respect to key legal and business matters at the board and shareholders assembly, the appointment of executive officers of the company, pre-emptive rights, right of first refusal and tag-along rights are heavily negotiated between shareholders. In addition, controlling shareholders often negotiate strongly for drag-along rights and control of the day-to-day management of the company.

In the past, the enforceability of tag-along rights and drag-along rights under Colombian law were widely discussed, as this was not clear among arbitrators, judges and legal academia. According to a thesis by the Superintendence of Corporations and the flexibility of the simplified stock corporation form, these rights are increasingly common under Colombian shareholders' agreements.


The Colombian arbitration statute sets out provisions for domestic and international arbitration and includes flexible and modern regulations for the benefit of foreign investors. For instance, with respect to dispute resolutions, it is increasingly common that when an international party is involved in a deal and the assets are located in Colombia, the international arbitration has Bogotá as the seat of arbitration. The advantage to this is that an award issued within an international arbitration seated in Bogotá is treated as a national award, and is enforceable without any recognition procedure. By contrast, when an award is issued outside Colombia, recognition is required prior to enforcement. It is also possible to have Bogotá as the venue and for hearings to be held in a neutral place.

In addition to having Bogotá as the seat of arbitration, foreign investors might choose as the rules of arbitration either the rules of the International Chamber of Commerce or the rules of the Bogotá Chamber of Commerce, which allows the choosing of international arbitrators instead of local arbitrators.

Strategies to increase transparency and predictability

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Developments in corporate and takeover law and their impact

i Tax reform

The Colombian tax system underwent a large-scale reform in 2018 as part of efforts to obtain the income required by an unbalanced governmental budget. The Constitutional Court considered that this reform did not comply with the legal enactment process and it granted a term to the Congress to issue a new tax reform before 31 December 2019.6

The new tax reform was enacted and it included several main amendments that were included in the first reform, such as: (i) reduction of the corporate income tax rate; (ii) progressive elimination of the presumptive income rate; and (iii) exclusion of companies from wealth tax. Furthermore, the tax reform includes the following key changes, which are particularly important in the M&A area:7

  1. it includes indirect sales of shares, rights or assets located in Colombia as taxable events as if such shares, rights or assets were sold directly;
  2. it modifies the general rule to determine the fair market value (FMV) of direct sales of assets to include special rules designed to prevent tax avoidance; it also extended said rules to rendered services;
  3. it includes a withholding tax of 7.5 per cent applicable to the dividends payable to national legal persons, transferable to a foreign investor or to a local individual shareholder;
  4. it modifies the tax regime applicable to dividends payable to individuals; and
  5. it creates the Colombian holding regime (CHC) to grant certain tax benefits to companies created with the purpose of investing in other companies.

Withholding tax: dividends

A special 7.5 per cent withholding tax rate applies to dividends distributed as non-taxable income to resident companies (increased from 5 per cent in the original finance law bill). The withholding tax is payable only when an initial distribution is made to a resident company, and is treated as an imputed tax credit on a subsequent distribution to a Colombian resident (individuals) or an investor resident abroad. Dividends paid out of profits that were not taxed at the corporate level are subject to the general income tax rate (32 per cent for taxable year 2020). In this last case, the 7.5 per cent withholding tax also applies after deducting the tax paid at the general rate, resulting in an effective rate of 37.1 per cent for taxable year 2020. These rates also apply to dividends distributed to non-resident individuals and foreign entities, subject to certain exceptions.8

Indirect transfers

The indirect transfer of shares or assets in Colombian entities are taxed in Colombia as if the underlying Colombian asset had been directly transferred. If a seller fails to report the deemed income arising out of an indirect transfer as taxable income or capital gain on the income tax return, the subordinate Colombian company would be jointly and severally liable for such applicable tax, as well as for any associated interest and penalties. The purchaser also would be jointly and severally liable if the purchaser becomes aware that the transaction constitutes abuse for tax purposes. These rules do not apply where:

  1. the underlying Colombian assets are shares that are listed on a stock exchange recognised by a governmental authority, and no more than 20 per cent of the shares are owned by a single beneficial owner; or
  2. where they represent less than 20 per cent of both the book value and the FMV of the total assets held by the foreign entity being transferred.

These measures will certainly discourage indirect transfers of shares. However, if an indirect transfer of shares were to be performed, the following contractual measures shall be taken into account from the M&A perspective as per joint and several liability:

  1. a fundamental representation and warranty, probably on the seller's side, shall be included in the share purchase agreement stating that the transaction does not constitute abuse for tax purposes. Such fundamental representation shall survive as per the applicable statute of limitations and shall not be subject to any limitation of liability included in the share purchase agreement (i.e., cap, basket, de minimis); and
  2. a covenant on the seller's side shall be included in the share purchase agreement stating that the seller will comply with the obligation to report the deemed income arising from the indirect transfer.

Tax incentives for potential investors

During the few past years, the Colombian government has incorporated several tax benefits (tax exemptions, tax credits, special deductions, among others) that seek to encourage priority sectors for the national economy, improve infrastructure and assets of the country's companies.

Mega investments

Companies with qualified investments (investments of more than US$320 million and which create at least 400 new jobs), will have the following tax benefits:

  1. preferential income tax rate: 27 per cent (as opposed to 32 per cent);
  2. depreciation of fixed assets in a minimum period of two years;
  3. not subject to presumptive income tax;
  4. not subject to dividends tax;
  5. the application of these benefits during the 20-year term is ensured through the execution of legal stability agreements; and
  6. holders of this benefit must pay a premium equal to 0.75 per cent if the value of the investment made each year during the five-year investment period.

CHC regime

The CHC regime is introduced for resident companies whose main activities are holding securities, investing in foreign or Colombian shares, or administering such investments, and that comply with certain additional requirements. The following rules apply under the CHC regime:

  1. dividends received by a CHC from a non-resident entity are exempt from tax in Colombia;
  2. dividends distributed by a CHC to a non-resident individual or foreign company are considered foreign-source income and therefore not taxed in Colombia (but dividends distributed by a CHC to a resident individual or Colombian entity are taxed at the normal rate, and are subject to the general income tax regime); and
  3. the distribution of premiums for the placement of shares is subject to the same treatment as ordinary dividends: that is, as exempt income when the beneficiary is a CHC, as foreign-source income if distributed by the CHC to a non-resident, or as taxable income if distributed to a Colombian resident.

Private equity funds

The rules for the realisation of income by capital funds have been amended so that in certain cases, and subject to the fulfilment of strict conditions, income from such funds will be deemed to arise or to be realised for income tax purposes when the profits are effectively distributed or paid to the beneficiary.

ii Foreign exchange rules9

Applicable foreign exchange regulations have aimed to increase Colombia's competitiveness in foreign markets, internationalise the domestic economy and increase the investment of Colombians abroad. Decree 117/2017 sets forth the rules governing foreign investments in Colombia and Colombian investments overseas, alongside the secondary legislation issued by the Colombian Central Bank. Highlights of these include the following:

  1. Financial investments and investments in assets abroad made by Colombian investors do not need to be registered if the investment was paid with cash that does not need to be transacted through Colombian financial intermediaries (except for investment in shares). However, the rule requiring registration when cash is remitted from Colombia remains in place.
  2. While not directly related to foreign investments in companies, applicable law regulates in a clear manner the purchase of local, Colombian peso-denominated A/Rs by non-Colombian investors seeking to become creditors of Colombian obligors under commercial transactions. This included rules on the acquisition of A/Rs held by local oil and gas companies subject to the special foreign exchange regime. These new regulations solved the controversy of whether Colombian peso-denominated A/Rs could be converted into foreign-currency assets held by offshore creditors.
  3. The Central Bank's rules do not require Colombian financial entities to enter into credit default swaps with foreign counterparties only whenever there was a related foreign investment operation. However, the Central Bank has maintained the provision mandating that local financial entities may only act as protection buyers and not as protection providers.
  4. Local financial entities may enter into commodities derivatives with foreign counterparties. Furthermore, the Central Bank has removed the limited list of derivatives products that local counterparties may enter into. Finally, restrictions on the settlement (delivery or non-delivery) have been lifted.

iii New private equity regulation10

To boost the development of the private equity funds industry in Colombia and attract new investors, the government recently issued Decree 1884 2018, which is aligned with international standards and best practices. The most important developments of the new Decree are as follows:

  1. allowing private equity funds to issue bonds (the issuance of bonds is restricted to private equity funds that grant credits);
  2. allowing private equity to grant credits to individuals and corporations and to buy receivables;
  3. units of private equity funds can be negotiated in the secondary market;
  4. private equity funds and their compartments are able to merge or spin-off, and are able to be assigned to an authorised manager; and
  5. new rules related to corporate governance have been introduced. For instance:
    • principles related to management;
    • the prevalence of the interest of investors in all the decisions to be made by a manager;
    • private equity funds shall have the obligation to prepare a conflict of interest policy; and
    • the investment committee shall meet at least once every three months.

During 2020, with the aim of broadening the scope of investors in private equity funds, the government issued Decree 1291/2020. Its most salient features are:

  1. The minimum amount of investment in private equity funds is eliminated. Under the previous regime, investors had to fund up to approximately US$150,000. This requisite has been replaced by the following: retail customers may not invest amounts in excess of 20 per cent of their annual income or net worth. There is no requisite for wholesale investors.
  2. The definition of wholesale investor was also modified by substantially reducing the standard to be considered as such. This provides even more flexibility for attracting investors to private equity funds, and consequently it is expected that it will increase the possibilities of raising capital.

Us antitrust enforcement: the year in review

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Foreign involvement in M&A transactions

Since 2010, US-based companies have been the most acquisitive in the Colombian market. Internet and technology companies have been the most attractive to foreign investors by deal volume.11 Among the main transactions that took place in 2019 and 2020, the following rank as some of the biggest deals:

  1. Empresas de Energía Públicas de Medellin (state-owned company that supplies around 30 per cent of the Colombian energy demand), was advised by Baker McKenzie Bogotá, in the acquisition of part of the assets of Electricaribe (an energy commercialisation and distribution company). The purchase price was more than US$1 billion.
  2. Brookfield Infrastructure Group, advised by Baker McKenzie Bogotá, sold 99.2 per cent of the shares of Empresa de Energía de Boyacá SA ESP (electricity distribution and marketing company) to Northland Power Inc. This deal was awarded Deal of the Month and Deal of the Quarter by TTR (2020). The purchase price was US$750 million.
  3. Grupo Romero, advised by Baker McKenzie Bogotá, acquired a minority stake in Oleoducto Central SA – Ocensa (which is the main Colombian pipeline operator). The purchase price was more than US$900 million.
  4. The Carlyle Group acquired Occidental's entire onshore portfolio in Colombia for a total consideration of approximately US$825 million.
  5. Colombia-based on-demand delivery company Rappi raised over US$300 million in a new funding round from investors including asset management firm T Rowe Price. Rappi is an on-demand delivery service for a wide variety of products and currently operates in nine countries across Latin America.
  6. Australian financial group Macquarie Capital acquired a 100 per cent stake in the Briceño-Tunja-Sogamoso highway concession in Colombia.

Significant transactions, key trends and hot industries

i 5G infrastructure programme

The Colombian government launched the 5G infrastructure programme. The first wave of 5G projects embraces 12 initiatives in road network, railway, airport and fluvial infrastructure. The investments will reach an estimated value of US$5.9 billion and will create approximately 90,000 jobs.12

ProjectInvestment (US$ million)*
Buga – Buenaventura Highway829
Road network of Valle del Cauca393
Ruta del Sol 2 Highway (Pto. Salgar – Barrancabermeja)663
Ruta del Sol 2 Highway (Barranca – San Roque)551
Magdalena River (First Stage)200
Dique Canal676
La Dorada- Chiriguana Railway (Optimization)406
ALO Sur223
North Accesses (Calle 196 Calle 245 7ma)406
New Cartagena Airport (Bayunca)1,015
Rafael Nuñez Airport Expansion (Cartagena)186
Cali Airport Expansion338
* The first road project of the 5G road concessions was announced in Colombia. The selected project is Cali-Palmira access road project in Valle del Cauca region. Cali-Palmira access road project will be 310km in length. The project will have an investment of US$293 million and will have social and economic components that mainly benefit the communities living in the project's areas of influence. The concession will be for a period of 29 years.13

We expect M&A infrastructure activities to continue to grow in Colombia, primarily for the following reasons:

  1. the sale of the participation interests of some of the concessionaires of the 4G infrastructure projects;
  2. the appetite of international investors (Chinese, Brazilian, Spanish and Canadian investors, among others) in infrastructure projects; and
  3. the government's promotion of foreign investment and the development of the country's infrastructure.

Public–private partnership regulation

Because of advances on the regulation and the strengthening of institutions for public–private partnership (PPP) initiatives in the infrastructure industry, Colombia is considered the second most favourable country in the region to develop such businesses. Reassurances provided by Law 1882 of 2018 include an enhancement of transparency in public procurement, and an increase of the possibilities for regional and municipal governments and state-owned companies to engage in PPPs. As regards the adequacy of the Colombian PPP agency's staff, the National Infrastructure Agency received an award for its performance in 2018. Furthermore, the President has promoted transparency mechanisms as a response to the Odebrecht corruption scandals.

ii Energy – non-conventional sources

According to the World Economic Forum's 2020 Energy Transition Index,14 Colombia ranks second in the Americas and 25th out of 115 countries worldwide in terms of its capacity to supply quality energy in a self-sustaining, accessible and environmentally friendly manner.15

Colombia has a high potential to generate energy from non-conventional renewable energy sources due to its availability of resources such as the sun (4.5kWh/m2 daily average solar radiation, higher than the global average of 3.9kWh/m2), the wind (potential to implement wind power plants of more than 25GW, with wind speeds in La Guajira twice as high as the world average), and biomass (enough potential to supply 46 per cent of the national energy demand – more than 500,000 TJ per year).16

Additionally, the Colombian government has issued regulations17 to foster investments in non-conventional renewable projects in the country and to support sustainable growth. Some of the incentives are the following:

  1. deduction for income tax of up to 50 per cent of the total amount invested in plant expansion projects, new projects and research and development in connection with non-conventional renewable energy for 15 years;
  2. energy generation equipment imports are exempt from custom duties and VAT;
  3. acquisition of solar panels and solar generation equipment is exempted from VAT; and
  4. deductions of up to 20 per cent of the tax basis of the assets, as a depreciation deduction, which could be claimed over five years (accelerated depreciation).

The above-mentioned framework bolsters the investments in this sector and we expect to have in 2021 and in the years to come, a lot of interest from local and foreign investors in non-conventional renewable sources.

iii Representation and warranties insurance

The increased use of representation and warranties (R&W) insurance in transactions has become a trend that reduces risks for buyers and investors in Colombia. Buyers increasingly are willing to use R&W insurance in acquisition proposals to make their bids more attractive and competitive to sellers. In Colombia, this is still an emerging trend that is being analysed by buyers and sellers, and the insurance policies that are available are also being scrutinised.

The terms of the typical indemnity packages differ substantially between transactions that use or do not use R&W insurance. For example, the indemnity escrow amount and indemnity cap size are typically drastically lower in transactions using R&W insurance as compared to transactions that do not use such insurance. Therefore, from a seller's perspective, R&W insurance may help expedite the sale process and improve sellers' return on their investments. By purchasing R&W insurance at a fixed cost, a seller may significantly reduce or eliminate contingent indemnification obligations. This protection is especially important for minority or passive sellers who have minimal knowledge or control over a target company.18

From a buyer's perspective, R&W insurance mitigates the risk of not being able to enforce indemnity provisions where inter-jurisdictional legal processes may complicate matters. R&W insurance policies can also be greatly customised: they can provide protection beyond a limited indemnity cap, extend the duration of indemnification rights or replace indemnification altogether, providing a sole remedy for breaches of representations and warranties.

Financing of m&a: main sources and developments

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Employment law

i Legislation relevant for M&A

The labour legislation relevant for M&A in the Colombian jurisdiction varies depending on whether a transaction is conducted as an asset transfer or as a purchase of shares. When a business is acquired by means of a stock purchase agreement, the transaction will not involve a change of employer. Therefore, employees and their conditions, benefits and entitlements are unaffected.

However, if a deal is structured as an asset deal that involves the transfer of personnel, and if the parties involved in the transaction do not previously assign or terminate their employment agreements, this would be considered to be an employer substitution. Pursuant to Colombian law, this would operate automatically upon the execution of an asset purchase agreement and the transfer of personnel.

The main effects of employer substitution under Colombian law are the following:19

  1. Employment agreements of employees are not modified, suspended or terminated, and all risks, duties and liabilities will be transferred to the buyer.
  2. The buyer must therefore match the salaries and benefits that the employees are already receiving.
  3. If the incoming employees have enjoyed different employment benefits compared with those of the purchaser's existing employees in similar job roles, the purchaser might be forced to match these by offering all employees the most favourable conditions (unless otherwise agreed with all the employees, both old and new).
  4. All employees' seniority must be preserved for all legal purposes.
  5. The pension liabilities of the seller will be transferred to the buyer.
  6. The former and new employers would be considered jointly and severally liable for all labour obligations relating to the employment agreements existing at the time the employer substitution takes place, and the new employer will be responsible for the obligations that come into effect after the substitution occurs. If the new employer assumes payments regarding labour obligations that the old employer was forced to recognise, then the new employer can recover them from the old employer, unless agreed otherwise.

Tax law

See Section III.i.

Competition law

i Competition law relevant for M&A

20As per the Colombian competition rules,21 M&A are subject to antitrust clearance by the Superintendence of Industry and Commerce (SIC) when the following criteria are met:

  1. objective criteria: total assets or joint operating income of the parties involved in the transaction during the fiscal year prior to the closing date, individually or combined, exceed the annual thresholds established by the SIC. For transactions undertaken in 2020, the threshold is equivalent to approximately US$13.8 million; and
  2. subjective criteria: the parties involved in the transaction are engaged in the same economic activity and therefore establish a horizontal relationship (horizontal mergers); or participate in the same chain of value,22 establishing a vertical relationship (vertical mergers) in one or more markets in Colombia regardless of the legal structure used for such purpose.

However, if the subjective criteria set forth above are met but the combined market share of the parties involved in the transaction is under 20 per cent, the parties can apply for a fast-track (implied) approval by submitting a simplified form (notice) before the SIC. The SIC, however, does not issue any opinion or ruling confirming such approval, and the notice is answered by a letter whereby the SIC acknowledges receipt of such notice, within 10 business days counted from the day of the filing before the SIC. Nevertheless, if the combined market share of the parties is equal to or above 20 per cent, the parties must obtain clearance from the SIC through a full filing from which the SIC has the right to approve, or oppose the proposed transaction, or to impose remedies on the proposed transaction. The time frame for clearance depends on the complexity of the competition issues triggered by a transaction, and usually takes from four to eight months.23

ii Gun jumping

During the past year, the SIC has become increasingly active in regulating pre-closing behaviours and transaction structures, and this is a trend we expect to continue. Gun jumping relates to the unlawful coordination between the parties of an M&A deal pre-acquisition or pre-merger. Specifically, gun jumping may occur during the negotiation or due diligence process, between signing and closing, or before the closing of a transaction when:

  1. the parties take (or participate in) concrete decisions in relation to the other party's business affairs, customer relationships, marketing programmes, pricing, price setting, price-related decisions, suppliers or supply-related decisions, or any other commercial decision;
  2. the parties exchange competitively sensitive information between the parties involved in the transaction, absent additional safeguards;
  3. one party intervenes in another party's business decisions or operational management decisions (e.g., by way of a consent mechanism as part of the share purchase agreement covenants);
  4. one party provides access to another party's IT systems or other support functions; and
  5. there is any other action that could be construed as contributing to one party having control over the activities of the other or others before gaining clearance by the antitrust authority and before the transaction is closed.

Clean teams

To mitigate the risk of gun jumping, it is advisable to take certain measures and implement them until closing, especially in the due diligence and negotiation phases of a transaction.

Such measures include designating specialised teams in each of the parties involved, with such members being the only individuals on each side of the negotiation with access to the other parties' competitively sensitive information. Clean team members should only have access to this information to the extent they do not have influence over the commercial decisions of the company that they represent and pursuant to certain confidentiality protocols.

Parties may also agree on interim operating covenants that do not grant them any decision-making power or control over the other party (including veto powers) but that reflect the purchaser's interest in preserving the value of the investment. Parties should implement these covenants through clean team protocols.

Clean team covenants should avoid situations where either party can:

  1. influence the appointment of the senior management of the other party;
  2. influence the other party's pricing policies;
  3. influence commercial decisions of the other party (e.g., through vetoing of tax filings);
  4. influence the target while entering into, terminating or modifying commercial contracts or agreements; or
  5. access commercially sensitive information of the other party during the period before signing and closing.

The design of the protocols should guarantee that should the transaction not close, the parties will continue to act as independent competitors within the relevant market.


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1 Alexandra Montealegre Osorio is a senior associate at Baker McKenzie.

3 Arbitrator's award dated 1 September 2011 (Baclin Investments SL, Altra Inversiones Ltda, Mauricio Camargo Mejía and Dario Duran Echeverry as the buyers and claimants v. Jairo Gutierrez Robayo, Jimena Gross Mejía, Carlos Andrés Torres Robayo, Nelson Andrés Beltrán Algarra and Monserrat Gross Mejía as the Sellers and Plaintiffs).

4 Some of the most important veto rights for the minority shareholders are the following: (1) CEO/CFO appointments; (2) approval of annual business plan, budget and capital expenditures; (3) capitalisations; (4) making any loan or advance or give any credit; (5) giving any guarantee, indemnity or security to secure the liabilities or obligations of any person; and (6) mergers and spin-offs.

5 Law 1563 of 2012.

6 The author extends a special thank you to Carlos Gómez and Valeria Osorio, associates in the tax team at Baker McKenzie Bogotá DC, for their contributions to this section.

7 Doing Business in Colombia: A Guide to the Legal Issues. Published by Baker McKenzie in 2017.

9 The author extends a special thank you to Daniel Botero, senior associate in the banking and finance team at Baker McKenzie Bogotá DC, for his contributions to this section.

10 The author extends a special thank you to Sebastián Boada, senior associate in the banking and finance team at Baker McKenzie Bogotá DC, for his contributions to this section.

17 Law 1715 of 2014; law 1955 of 2019 and Decree 829 of 2020.

19 Global M&A Handbook, Volume 1. Published by Baker McKenzie in 2015.

20 The author extends a special thank you to the antitrust team at Baker McKenzie Bogotá – Carolina Pardo, principal partner, Angélica Navarro, senior associate, and Mariana Camacho, junior associate – for their analysis and contributions to this competition law section.

21 Law 155/1959, Law 1340/2009 and Decree 2153/1992 (among others).

22 A chain of value is a performed set of activities whose product provides the input for another product.

23 Global Public M&A Guide, 2nd Edition. Published by Baker McKenzie in 2018.

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