We were instructed by the shareholders of a company registered in Ecuador to a UK listed company. There were a number of interesting issues which arose in this sale, including the following:
- Although the agreement for the sale itself was governed by English law, there were various matters which needed to be the subject of advice by Ecuadorian lawyers and accountants whom we engaged including due diligence.
- The transaction fell within a category of transactions which needed approval of the Ecuadorian competition authorities. Completion of the agreement was made conditional on extensive obligations on the Sellers to procure that the business of the Target between exchange and completion be conducted in accordance with the requirements, as negotiated in detail, by the Buyer, and also as to the way in which the Buyer dealt with it seeking approval of the transaction from the Ecuadorian competition authority.
- The purchase price was to be discharged by the issue of loan notes to our client’s shareholders secured by a charge over the sale shares in favour of our clients and by a debenture to be given by the Target company.
- The price was to be adjusted by reference to the value of completion net assets to be determined by completion accounts.
- Completion was also conditional on:
- The domain names and other intellectual property of the Target being transferred to the Buyer in accordance with the requirements of an agreement made between the Target and Internet Corporation for Assigned Names and Numbers (ICANN).
- An agreement being reached by a shareholder and the Target as to the terms of the Target’s occupation of premises owned by the shareholder.
- Agreements entered into by each of the shareholders with the Target and the Buyer as to their conduct after completion.
After many months of detailed negotiation with the Buyer’s English lawyers, including video conferencing calls with Ecuadorian lawyers and accountants, unfortunately this transaction, which was on the verge of exchange, did not proceed as a result of differences between the shareholders.