Best Acquisition / Leveraged Finance Lawyers in Philippines

About Acquisition / Leveraged Finance Law in Philippines

Acquisition and leveraged finance in the Philippines refers to the specialized area of law that deals with the funding and structuring of company acquisitions, most frequently using borrowed funds. These transactions are often complex, involving multiple parties such as borrowers, lenders, investors, and target companies. Philippine acquisition and leveraged finance typically involves both local and foreign financial institutions, and transactions may be structured as loans, syndicated facilities, or the issuance of bonds and other debt instruments. The legal landscape is shaped by local corporate laws, regulatory policies of the Bangko Sentral ng Pilipinas (BSP), and securities regulations administered by the Securities and Exchange Commission (SEC).

Why You May Need a Lawyer

The process of acquiring a company using borrowed funds, or leveraging an existing company for business expansion, involves numerous legal and regulatory hurdles. You may need a lawyer when:

• Structuring and negotiating acquisition deals to ensure compliance with Philippine laws.
• Drafting and reviewing complex finance documents, including facility agreements, security documents, and guarantees.
• Navigating cross-border transactions involving both local and international banks or investors.
• Obtaining government approvals and clearances from regulatory bodies like the BSP, SEC, or the Philippine Competition Commission (PCC).
• Conducting legal due diligence to uncover potential risks before completing a transaction.
• Assisting with restructuring or refinancing if the target company faces financial challenges post-acquisition.
• Ensuring the protection of your rights and interests during negotiations and post-acquisition integration.

Local Laws Overview

Acquisition and leveraged finance transactions in the Philippines are governed by several important regulations and laws. Key aspects include:

• The Corporation Code of the Philippines governs the formation, ownership, and management of corporations, including rules on mergers and acquisitions.
• The Bangko Sentral ng Pilipinas (BSP) issues regulations affecting loans and cross-border financing, including debt repayment and foreign exchange rules.
• The Philippine Competition Act requires that certain mergers and acquisitions be reviewed by the Philippine Competition Commission.
• The Securities Regulation Code governs the issuance of debt securities in connection with leveraged finance.
• Security interests like mortgages and pledges are subject to requirements under the Civil Code of the Philippines and Chattel Mortgage Law.
• Foreign investment regulations may apply, especially where foreign entities acquire interests in Philippine companies.
• Debt restructuring may fall under the Financial Rehabilitation and Insolvency Act if a distressed situation arises post-acquisition.

Frequently Asked Questions

What is leveraged finance?

Leveraged finance refers to the use of borrowed funds to acquire a company or asset, often using the assets of the acquired business as security. The goal is typically to maximize returns using debt capital.

Are there restrictions on foreign participation in acquisition finance in the Philippines?

Yes, certain sectors have foreign ownership restrictions under the Foreign Investments Act and the Philippine Constitution. Legal advice is needed to ensure compliance with relevant sectoral limits.

What types of security can lenders take in Philippine leveraged financings?

Lenders commonly take mortgages over real property, chattel mortgages over movable assets, and pledges of shares or receivables. Proper documentation and registration with appropriate government agencies are necessary to perfect these securities.

What government approvals are required for merger or acquisition deals?

Depending on deal size and structure, approval may be required from the Philippine Competition Commission, SEC, or sector-specific regulators. Cross-border deals may also require BSP registration.

Can acquisition finance be structured using Philippine or offshore entities?

Yes, acquisitions can be structured using local or offshore entities, depending on business goals and regulatory requirements. However, there are legal, tax, and foreign exchange considerations for each approach.

What taxes are imposed on acquisition finance transactions?

Common taxes include documentary stamp tax, capital gains tax, value added tax, and possibly withholding taxes on interest payments. Seeking legal and tax advice is important for proper structuring.

How long does it take to close an acquisition financing in the Philippines?

Timing varies based on deal complexity, due diligence, negotiation, and regulatory approvals, but most transactions take several months from inception to closing.

What is the role of due diligence in these transactions?

Due diligence involves investigating the target company's finances, legal status, contracts, assets, liabilities, and any regulatory issues, to identify risks and inform the structure of the deal.

Are there regulations on financial assistance by Philippine companies?

Yes, under the Corporation Code, certain restrictions exist on companies giving financial assistance for the acquisition of their own shares. Legal advice is important to navigate these rules.

What happens if the target company is distressed after the acquisition?

If the company faces financial difficulties, legal remedies like restructuring, rehabilitation, or insolvency may need to be considered under the Financial Rehabilitation and Insolvency Act.

Additional Resources

For further information or guidance on acquisition and leveraged finance in the Philippines, the following organizations and government agencies can be helpful:

• Bureau of Internal Revenue (BIR) - for tax matters related to transactions
• Bangko Sentral ng Pilipinas (BSP) - for rules on cross-border lending and foreign exchange
• Securities and Exchange Commission (SEC) - for company registration, reporting, and approval of some transactions
• Philippine Competition Commission (PCC) - for merger and acquisition review
• Department of Trade and Industry (DTI) - for foreign investment inquiries
• Integrated Bar of the Philippines (IBP) - for lawyer referrals and legal assistance

Next Steps

If you require legal assistance in acquisition or leveraged finance in the Philippines:

• Research and shortlist law firms or lawyers with expertise in corporate finance and mergers and acquisitions.
• Prepare any relevant documents, such as company profiles, financial statements, or draft term sheets, prior to consultation.
• Schedule an initial meeting to discuss your objectives, and seek advice on legal options, structuring, and compliance requirements.
• Work with your legal advisor to conduct due diligence, negotiate agreements, and coordinate with government agencies for approvals.
• Maintain ongoing communication with your lawyer throughout the transaction for guidance on any legal, regulatory, or practical issues that arise.

Taking the right legal steps in acquisition or leveraged finance transactions will help safeguard your interests and increase the likelihood of a successful deal.