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Bolivia

Published on Wednesday 4th January 2017

    Applicable legislation and the competent authorities

    • Bolivia

      There is no general market merger control legislation in place, only regulation for specific industries and sectors. Since the middle of the nineties, merger control is imposed on specific regulated sectors and industries in Bolivia. As a result, certain regulations that pertain to mergers and joint ventures can be found in the Electricity Law, the Telecommunications Law, the Hydrocarbons Law, the Banks and Financial Institutions Law, the Securities Law and the Insurance Law. These specific regulations are administered and enforced by the supervisory and control authorities for each sector. To the extent the target to the merger has instruments issued and traded in public markets, then it must also inform the Supervisory Authority of the Financial System.

      In addition, mergers of Bolivian corporations are regulated by the Bolivian Commercial Code, which requires that the companies involved in the merger give notice to their creditors and shareholders regarding the proposed merger, and such creditors and shareholders may object through a judicial procedure before a civil judge.

      If the merger will result in a foreign direct investment into Bolivia, then such investment must be registered before the Bolivian Central Bank as a result of the recently approved Investment Promotion Law.

      The Bolivian Company’s Regulator has announced it intends to regulate and impose a broad merger control on all companies; however, no specific legislation has yet been proposed. 

      Last verified on Thursday 9th March 2017

    • Bolivia

      Only regulated sectors, industries and activities are caught within the merger control policies. Regulated sectors that contain certain merger control policies are:

      • oil, gas and other fossil fuel distributors and transporters;
      • electricity generation, transmission and distribution;
      • telecommunications providers that provide services in Bolivia;
      • banks and other financial institutions, including loans and savings cooperatives or associations and foreign exchange houses; and
      • insurance and registered foreign reinsurance companies. 

      Companies that have outstanding instruments issued in public securities markets must inform the markets and the Supervisory Authority of the Financial System of any relevant change regarding the company, including mergers and joint ventures.

      Last verified on Thursday 9th March 2017

    • Bolivia

      Before implementing any merger process, a regulated company must obtain regulatory authorisation. This means that in regulated industries parties must wait for clearance before closing. Failure to adequately file or obtain regulatory authorisation will typically result in the initiation of a regulatory procedure for the revocation of the licence under which the regulated activity is carried out.

      Since this control is specific to each sector, the filing requirements, thresholds to be met and the time involved to receive clearance will vary greatly depending on the specific sector and the relevant authority.  

      Last verified on Thursday 9th March 2017

    • Bolivia

      We are not aware of a transaction being questioned or challenged after having been reviewed and approved by the relevant authority. We believe this may only happen to the extent the authority was not provided with important information and as a result it can argue that it was not made aware of important factors that could have led it to withhold its authorisation. 

      Last verified on Thursday 9th March 2017

    • Bolivia

      Since this control is specific to each sector the relevant authority will be the regulator for that particular regulated industry:

      • the Hydrocarbons Control Authority: oil, gas and other fossil fuel distributors and transporters;
      • the Electricity Control Authority: electricity generation, transmission and distribution;
      • the Telecomm and Transport Control Authority: telecommunications providers that provide services in Bolivia; and
      • the Financial Institutions Control Authority: banks and other financial institutions, including loans and savings cooperatives or associations and foreign exchange houses; insurance and registered foreign reinsurance companies.

      Non-regulated companies that are registered before the Bolivian securities market need only file a notice of a relevant change with the securities regulator in the event the merger or acquisition involves a substantial change in the control of the company within 24 hours of closing.

      The merger of Bolivian companies must be filed before the Registry of Commerce and notified to creditors 30 days before closing. Failure to follow the notice procedure will result in the merger not being approved or registered before the Bolivian Registry of Commerce until the process is completed.

      Last verified on Thursday 9th March 2017

  • Time frames

    • Bolivia

      This information is not publicly available from the different sector regulators and none of these cases have been appealed before the Bolivian Supreme Court where they would be part of public record.  

      Last verified on Thursday 9th March 2017

    • Bolivia

      In sectors such as financial entities and banks that have more stringent and detailed filing requirements when requesting authorisation for a merger and may involve greater scrutiny by the Supervisory Authority of the Financial System the time from notification to approval may be of several months.

      Last verified on Thursday 9th March 2017

  • Notifiable transactions: thresholds

    • Bolivia

      To trigger regulatory intervention, mergers must typically involve the change of effective control over the relevant regulated company.

      Certain sectors such as banking and insurance, however, have additional considerations above and beyond a mere change in control to exercise regulatory scrutiny in a change of ownership, such as the provision of adequate guarantees that the services will continue to be provided pursuant to industry standards.

      Joint ventures that do not result in the merger or change of ownership of the relevant regulated company are generally not caught within the scrutiny of merger control. However, joint ventures that involve regulated companies are subject to some review and could be opposed by the relevant regulator to the extent the joint ventures could be questioned as contrary to antitrust or competition policies.

      Acquisition or licensing of intellectual property rights and long-term supply agreements are not caught within the scrutiny of merger control.

      Last verified on Thursday 9th March 2017

    • Bolivia

      ‘Control’ is defined in laws, such as the Electricity Law, as the ability of a company to control others through its direct or indirect participation in more than 50 per cent of the capital stock or voting rights or in the control of the direction of subsidiaries or affiliates.

      Last verified on Thursday 9th March 2017

    • Bolivia

      There are no general thresholds in terms of economic importance that would determine whether a merger is subject to regulatory scrutiny or not. As discussed above, the mergers that will be subject to regulatory scrutiny and, in certain cases, prior authorisation, are dependent on sector specific regulations. We can make reference to thresholds within the electricity sector whereby a merger or acquisition that would grant an electricity generation company a market share of more than 36 per cent would be restricted. Other regulated sectors do not have the same clearly defined jurisdictional thresholds.

      In regulated sectors, a local effects test may be applied by the regulator to determine whether the resulting company’s local presence will create a dominant market player or a prohibited vertical integration.

      Last verified on Thursday 9th March 2017

    • Bolivia

      Typically, the Bolivian authorities are strict regarding mergers, joint ventures or the change of ownership of companies in regulated companies or markets at a national level. They are generally less concerned about changes of ownership or joint ventures made among parent companies or ultimate shareholders that are located and operate outside of Bolivia. Nonetheless, the test to determine whether a foreign-to-foreign merger is caught by the regulatory scrutiny will depend on the relevant industry sector and the activity involved.

      Under the new Investment Promotion Law foreign to foreign mergers will now have to be notified to the Bolivian Central Bank.

      Last verified on Thursday 9th March 2017

  • Notification procedure, timing and penalties for non-compliance

    • Bolivia

      The Bolivian-regulated company is the entity required to file any notices in relation to a merger or foreign investment.

      Non-regulated companies that are registered before the Bolivian securities market must file a notice of a relevant change with the securities regulator in the event the merger or acquisition involves a substantial change in the control of the company within 24 hours of closing.

      The merger of Bolivian companies must be filed before the Registry of Commerce and notified to creditors 30 days before closing. Failure to follow the notice procedure will result in the merger not being approved or registered before the Bolivian Registry of Commerce until the process is completed.

      The registration of a foreign investment in Bolivia has been regulated by the Bolivian Central Bank and as a result any company with foreign capital must file a special form called the Registration of Foreign Investments in Bolivia and Financial Operations Abroad (RIOF) every quarter with the Bolivian Central Bank updating issues in relation to the foreign investment and any distribution to the foreign owner. The person responsible for filing the RIOF is the legal representative of each local company. 

      Last verified on Thursday 9th March 2017

    • Bolivia

      Filings before the specific sector regulators have no filing fees. However, there may be fees for the legalisation of documents before the Bolivian Consulate in order to be filed with the regulator (when required).

      The filing and registration of the merger of Bolivian entities before the Bolivian Registrar of Commerce will entail the payment of filing fees.

      Last verified on Thursday 9th March 2017

    • Bolivia

      There is no standard form and many regulators, initially only require an explanatory letter from the regulated entity describing the proposed transaction. However, as described above, certain regulators require much more information and documentations in order to consider an application.

      Typically a market analysis is not required.

      Generally reports and strategy papers prepared during the negotiation of the deal are not required to be filed. However, certain board resolutions and proposed transactional documents may need to be filed. 

      Last verified on Thursday 9th March 2017

    • Bolivia

      Outside of the regulated sectors, notifications must be made soon after the transaction has actually closed.

      In regulated sectors, however, notification must be made before the merger actually takes place. Generally the triggering event in order to file a notification to a regulator occurs when the transaction involves the transfer of control or ownership in the target entities located in Bolivia.  

      Last verified on Thursday 9th March 2017

    • Bolivia

      There is no pre-notification requirement, but in regulated sectors we recommend that, whenever possible, the regulator be approached early on in the transaction to describe the proposed transaction and address preliminary comments and questions so as to have the regulators opinion regarding the proposed transaction before making the formal notification. 

      Last verified on Thursday 9th March 2017

    • Bolivia

      There is no specific legislation and no regulatory guidance in this regard. Nonetheless, based on the strict scrutiny regulated industries are subjected to in Bolivia we expect that acquisition of non-voting securities or options should be notified at time of acquisition. Otherwise, there is substantial risk of the regulator applying sanctions.

      Last verified on Thursday 9th March 2017

    • Bolivia

      There is no guidance from the authority as to how parties should go forward while review is pending. However, we believe that when a large international transaction is going forward, different alternatives whereby closing occurs in other jurisdictions and closings are made into escrow or other vehicles may be available.  

      Last verified on Thursday 9th March 2017

    • Bolivia

      The filing and approval procedure will vary depending on the regulatory body for regulated companies and may take up to a month to be completed. This process may be sped up substantially in the event that there is significant public interest in the project.

      Last verified on Thursday 9th March 2017

    • Bolivia

      The post-clearance obligation imposed on the parties is to close the transaction as disclosed and described to the regulator. There are typically no time periods given for the transaction to actually close. 

      Last verified on Thursday 9th March 2017

    • Bolivia

      There are no special rules applicable for public takeover bids, private equity transactions or for corporate restructuring under bankruptcy procedures.

      Last verified on Thursday 9th March 2017

    • Bolivia

      The authority may be consulted on a no-names basis for guidance on notification requirements. This is a very useful practice as it allows to structure certain transactions so that filing or prior approval is not required. 

      Last verified on Thursday 9th March 2017

    • Bolivia

      Within regulated sectors, the failure to file and obtain the requisite authorisation may entail the intervention of the regulator in the operation of the regulated company, the revocation of the relevant licence or contract and the initiation of a bidding procedure to grant the concession or licence to a different company along with all the assets of the outgoing company. In practice, there has never been an instance where an authority has sanctioned a company for a merger or acquisition that was contrary to the relevant legislation.

      Pursuant to law, the merger of Bolivian companies will not be effective until after the filing and waiting periods have been duly complied with.

      Last verified on Thursday 9th March 2017

  • The review process, confidentiality and the role or influence of third parties

    • Bolivia

      The authority may require the production of information and documentation. Sometimes certain documentation must even be provided in legalised form and as a result may take some time in being completed. 

      Last verified on Thursday 9th March 2017

    • Bolivia

      As a matter of practice the authorities rely mainly on the submissions and information provided by the regulated entity. They may receive filings from competitors but they typically do not consult with them and do not give too much weight to such third-party information. 

      Last verified on Thursday 9th March 2017

    • Bolivia

      Under the current legislation third parties have no right to be informed of the process, much less to have access to the investigation file. They have limited right to intervene by presenting information in the investigation process. 

      Last verified on Thursday 9th March 2017

    • Bolivia

      We recommend that, whenever possible, the regulator be approached early on in the transaction to describe the proposed transaction and address preliminary comments and questions so as to have the Regulators opinion regarding the proposed transaction before making the formal notification.

      Last verified on Thursday 9th March 2017

    • Bolivia

      Most regulatory authorities are more open to share their concerns regarding a proposed transaction. Interested parties may productively participate in the evaluation process by approaching the regulator early on and delivering all requisite information in a timely manner.  

      Last verified on Thursday 9th March 2017

  • Substantive analysis and remedies

    • Bolivia

      As described above, there are very few guidelines in this regard, and as a result it is unlikely that economic efficiency arguments will be taken into account.

      Last verified on Thursday 9th March 2017

    • Bolivia

      The administrative procedure in general allows for the transaction party to submit a decision from the authority to reconsideration and thereafter to an appeal. 

      Last verified on Thursday 9th March 2017

  • Judicial review

    • Bolivia

      A decision from the regulator may be initially appealed to the Ministry that is in charge of the regulated sector. Upon the decision of the relevant hierarchical authority, the decision may be appealed before the Bolivian Supreme Court through a contentious administrative claim. Such claims typically take two or three years to be resolved by the Supreme Court. 

      Last verified on Thursday 9th March 2017

    • Bolivia

      When reviewing decisions from the sector regulators the Supreme Court may look into both procedural aspects as well as to the substance of the authority’s analysis.

      Last verified on Thursday 9th March 2017

  • Case law

    • Bolivia

      The recently enacted Bolivian Investment Promotion Law is being put into effect as a result of recent regulations enacted by the Bolivian Central Bank. As a result of this any company that has a foreign investment is required to register a special form (RIOF) every trimester.

      As a result of such registration the Bolivian Central Bank must issue a certificate of investment that makes reference to the origin, destiny, amount and investment mechanisms. The Central Bank will also register any distribution, capital repayment, and even payments to creditors or third-party goods and services providers.  

      No sanctions or administrative processes stemming from this filing, or omission thereof, have been initiated.

      Last verified on Thursday 9th March 2017

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