A commonly negotiated rule in M&A transactions is the clause that provides for the buyer's indemnity right. This clause aims to limit the liability of the parties involved in the transaction for losses relating to the company or the asset traded and can be structured in several ways. The Sao Paulo Court of Justice recently highlighted the importance of expressly regulating this type of clause in M&A contracts.
The recent dispute between StoneCo Ltd and TOTVS SA over the acquisition of Linx SA has brought to light many important matters, especially directors' responsibility for damages caused to a company or its shareholders. TOTVS presented a hostile takeover offer, something which the Brazilian market is not used to since most companies have a controller group which owns 50% or more of the voting shares.