Argentina is one of Latin America's most innovative tech hubs and home to several pan-regional unicorn start-ups. However, until now, it lacked an adequate legal framework to fund start-ups through venture capital, crowdfunding platforms or seed capital. In order to boost local financing of new projects, Congress recently approved the long-awaited Entrepreneurship Law, which is set to change the start-up environment.
The Constitutional Court recently ruled on whether the Squeeze-Out Act is compatible with the Constitution. The plaintiff argued that certain provisions of the Squeeze-Out Act violate the Constitution because they restrict shareholders' property rights and the principle of equality (rights enshrined in both the Constitution and the European Convention on Human Rights). However, the Constitutional Court held that this was not the case.
Companies regularly store information about their customers, clients, employees, investors, partners and vendors. Privacy and data security are therefore important aspects of most M&A transactions. Although the risk of non-compliance with privacy laws may result in severe negative consequences, many M&A agreements still lack adequate privacy-related representations and warranties.
In 2014 the Austrian Supreme Court submitted a request to the European Court of Justice (ECJ) for a preliminary ruling on the interpretation of EU law regarding cross-border mergers. The ECJ recently ruled that in cases of merger by acquisition, all contracts entered into by the transferor company pass to the acquiring company without novation. Thus, the law applicable to the contracts before the merger also applies to the underlying contracts after the merger.
Cyprus is a popular jurisdiction for establishing special purpose vehicles with an increased involvement in shadow banking, which takes the form of, among other things, securities lending, repurchase and derivatives transactions. This has resulted in a call for strengthened regulations to mitigate risks and support financial stability. Newly introduced regulations now bring non-financial counterparties, such as limited liability companies, into the ambit of transparency reporting.
The disclosure, transfer and processing of data raises concerns at several stages of the due diligence process during a transaction and undoubtedly makes things more complicated. Unless companies can navigate their way around the rules set out by the General Data Protection Regulation, it is highly likely that they will encounter significant difficulties and potential data protection breaches in the context of due diligence work undertaken for M&A transactions.
The European Union has proposed a new EU framework for screening foreign investment that raises security and public order concerns for the European Union and its member states. The commission intends to launch, and possibly complete, the proposed framework by the end of 2018. Opposition by several member states means that it is unclear whether the proposal will be approved by the Council of the European Union.
In the context of the acquisition of group companies, the parties will carefully select what to insert in the bylaws of the company, whereas in separate private agreements, which are confidential, the parties may include further, more detailed information. If the advantage of such private agreements is their confidentiality, the drawback is their lack of enforceability towards third parties. The Supreme Court recently held that a sale made in violation of the shareholders' agreement was void by application of the bylaws.
Over the past 10 years, the French M&A market has seen the rise of a powerful new player: the French state. A newly introduced bill would expand the state's ability to oppose the sale or transfer of assets by certain strategic companies in which it holds shares. The changes, which are of particular interest to the M&A community, are part of an omnibus reform of French corporations law known as the Action Plan for Business Growth and Transformation.
A recent Supreme Court decision has confirmed previous case law and explicitly recalled the importance that should be given to the drafting of provisions governing the duration of shareholders' agreements. The court highlighted the fact that shareholders' agreements concluded for as long as the signatories remain shareholders are considered concluded for an indefinite period and may be terminated by any party thereto at any time.
Ordinance 2017-1674 of December 8 2017 introduced into French law the legal framework for the use of a blockchain in order to record the ownership and transfer of unlisted securities. This groundbreaking reform is an essential step towards the modernisation of the existing rules governing the transfer of unlisted securities. Blockchain technology will considerably facilitate and secure the transfer of securities and will undoubtedly have an impact on private M&A deals.
Following the introduction of Ordinance 2016-1635 and Decree 2017-1094, non-listed companies which previously were not required to disclose the identity of their shareholders and maintained confidentiality through shareholders' agreements must now disclose their beneficial owners not only when a company is set up, but also on a continuous basis. However, the definition of a 'beneficial owner' remains unclear.