GUATEMALA: An Introduction to Corporate/M&A

Mergers or acquisitions of Guatemalan companies have historically not entailed many requirements. In the case of a merger, requirements have been the execution of the merger agreement, the publications at the Commercial Registry, the granting of the merger public deed, and the registration of the merger before the Commercial Registry. For share acquisitions, the purchase agreement regulates the transaction without the need for any related public filing. The sale of shares would entail the execution of the sale agreement, the endorsement of the share certificates, and registration of the transfer in the company’s Shareholders Registry. Therefore, Guatemalan companies currently undergo mergers and acquisitions without needing any regulatory approval from a competition standpoint. This has simplified processes significantly. Businesses have been able to conduct mergers swiftly, avoiding prolonged bureaucratic procedures, facilitating faster strategic decisions, and allowing parties to have simultaneous signing and closings. This will all change as of 9 December 2026, as explained below.

The Guatemalan Congress recently enacted Decree 32-2024, or Ley de Competencia (the Competition Act). The Decree was published in the Official Bulletin on 9 December 2024, and partially came into effect on 1 January 2025 with respect to certain general and institutional provisions. The Act’s substantive provisions, including those on merger controls, will take effect two years after publication, on 9 December 2026. During the interim period, the Act requires the establishment of a Competition Authority (Superintendencia de Competencia), a process that has already begun. Candidates for the Authority’ directorate must undergo an examination process entrusted to an internationally recognised educational institution. This seeks to ensure that those appointed are experts in Competition Law.

Prior to the Act’s existence, Guatemala did not regulate mergers and acquisitions from an antitrust perspective. This meant that there were no requirements for a competition authority to authorise mergers, acquisition of companies or changes of control in Guatemalan entities, except in the case of regulated financial institutions which, under existing banking laws, require prior approval of the Banks and Monetary Board Authority to merge or be acquired by third parties. However, this will change from 9 December 2026, when the parties involved in a merger, acquisition or change of control will be required to obtain prior approval from the Competition Authority if the operation meets certain thresholds established in the recently enacted law.

The new law establishes that approval from the Competition Authority will be required if: (a) the combined assets in Guatemala owned by the companies to be merged exceed seven (7) million times the amount of the minimum wage in effect for non-agricultural employees (currently GTQ3,723.05, which is equivalent to USD472.58); or (b) the combined annual income of the Guatemalan companies to be merged exceeds nine (9) million times the same parameter. Consequently, prior approval from the Competition Authority must be obtained before the merger or acquisition takes place, even when the change of control or merger is to take place abroad and has effects in Guatemala. Failure to do this will result in the merger being considered an irregular concentration (concentración irregular) and subject to sanctions by the Competition Authority. In this case, the Competition Authority may also request that a Judge issue an injunction ordering that the concentration be terminated, thus ceasing the change of control with respect to the Guatemalan entities.

It is important to note that the new law envisages approval exemptions for certain mergers, acquisitions or changes of control, such as corporate restructurings, increases in equity interest by existing shareholders, certain types of investment transactions, and cases where mergers do not appear to affect the market. These exemptions aim to balance regulatory oversight with practical business needs, ensuring that not all mergers become unduly burdened by the new requirements.

However, if the merger or change of control does not meet the stated thresholds, it may proceed without additional actions or filings, complying only with the general rules of the Guatemalan Business Code. Therefore, there will be no need to file a notice either before or after the transaction. This provision facilitates a more efficient merger or acquisition process – unlike other jurisdictions, where notices are always mandatory.

This new regulation represents challenges for all parties involved. The introduction of a mandatory approval process will lengthen the timeline for completing mergers and acquisitions that meet the established thresholds, causing the parties to consider delayed closing. Companies used to quick turnarounds must now prepare for extended periods of review, which could impact strategic planning and execution and even cause uncertainty for the approval. Additionally, the learning curve associated with understanding and complying with the new regulatory framework may contribute to initial delays. Legal advisors must familiarise themselves with the new regulations, without prior experience to draw upon due to the lack of precedent.

The complexity of the new regime will also represent increased costs for legal counsel and consultation. The extensive documentation and analysis required to demonstrate compliance will demand significant resources, including financial consultants and others, to verify whether an operation will be subject to competition regulation. Furthermore, companies may face uncertainty regarding the outcome of their applications until the Competition Authority establishes a record of decisions. This unpredictability could discourage mergers or prompt companies to reconsider their strategies. On the other hand, mergers and acquisitions may increase during the initial two-year period to avoid the application of the Competition Act before those provisions come into effect.

Despite these challenges, the introduction of merger control regulations is considered by some market sectors as a crucial step in encouraging a competitive market environment in Guatemala, although others may consider it an obstacle. Over time, as the Competition Authority gains experience and legal advisers adapt to the new process, the system should become more streamlined and efficient, helping to reduce anti-competitive practices.

In summary, Guatemala's forthcoming merger control regulations represent a significant shift from the current unregulated environment. This will impact future mergers and acquisitions while counsels, authorities and consultants adapt to the new law. While the new requirements pose challenges, particularly concerning timelines, learning curves, and costs, they may assist in ensuring that market competition remains robust.