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Preliminary agreements
What preliminary agreements are commonly drafted?

The most common preliminary agreements are confidentiality agreements, memoranda of understanding, letters of intent and term sheets. Where several parties bid to acquire the same target, the bidders must submit indicative non-binding offers during the early stages of the sale process.

Principal documentation
What documents are required?

The main documents include share purchase agreements, subscription agreements and merger agreements. In addition to the main acquisition agreement, parties must enter into ancillary agreements (eg, escrow agreements, share pledge agreements, shareholders’ agreements and operation and maintenance agreements).

Which side normally prepares the first drafts?

The seller.

What are the substantive clauses that comprise an acquisition agreement?

Peruvian M&A transactions typically follow the structure of acquisition agreements used in common law countries. Thus, the main clauses comprising an acquisition agreement are as follows:

  • purchase price and form of payment;  
  • post-closing price adjustments;
  • representations and warranties;
  • conditions precedent;
  • covenants;
  • remedies;
  • indemnity provisions; and
  • termination events.

What provisions are made for deal protection?

Provisions commonly used for deal protection include:

  • standstill provisions;
  • break fees;
  • ordinary course of business covenants; and
  • indemnity provisions. 

Closing documentation
What documents are normally executed at signing and closing?

The documents generally executed at signing include the relevant share purchase agreement, subscription agreement or merger agreement. These documents normally set out the main conditions for closing, typically including the execution of ancillary documents.

If signing and closing do not take place on the same date, the ancillary documents which are typically executed and delivered at closing include:

  • share certificates;
  • entries in the relevant share ledger evidencing the transfer of shares;
  • shareholders’ resolutions evidencing the appointment of new management members;
  • the removal and revocation of authorities of existing officers; and
  • the amendment of certain provisions of the target’s bylaws, in certain cases.

Depending on the industry, closing may also involve entering into management agreements, operation and maintenance agreements, trademark licensing agreements and non-compete and non-solicitation agreements.   

If the buyer does not acquire all outstanding share capital in the target, it is common for the new majority shareholder to enter into a shareholders’ agreement with the minority shareholder, setting forth:

  • the usual rules of corporate governance;
  • veto rights;
  • rights to appoint key management officers;
  • deadlock provisions;
  • share transfer restrictions;
  • rights of first refusal;
  • call and put options; and
  • tag-along and drag-along rights.

Are there formalities for the execution of documents by foreign companies?

Subject to law, there are no specific formal requirements for foreign companies to enter into contracts. However, should the parties choose to formalise the relevant contracts in the form of a public deed to be executed in the presence of a Peruvian notary public, the foreign company must grant a power of attorney and register it with the public registry.

Are digital signatures binding and enforceable?

Yes, provided that the local regulations on digital signatures are complied with. 

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