This firm was representing the interests of the seller of the major Russian market within the sphere of advertising. A major strategic investor acted as a buyer. 50% of the share package was at stake. The transaction became more difficult due to the fact that the indicated package of shares belonged to the former business partner of the client willing to withdraw from business. Thus, the transaction consisted of two parts – purchase of shares from the withdrawing shareholders along with a simultaneous sale to a strategic investor. The issue on simultaneous character of the transactions was the key issue since the shares of the withdrawing shareholders were to be paid by the strategic investor and not by the client.
Another element complicating the transaction was a disunity of a share capital – the client and the withdrawing shareholders owned the companies without any clear/distinct structure, i.e. some of the companies were owned by physical persons, some – by companies in foreign jurisdictions and some – via authorized representatives. Such shareholding structure left absolutely no possibility for a simultaneous settlement under the transaction.
In order to eliminate all indicated restrictions within half a year period the specialists of PRESIDENT CONSULT have conducted significant scope of work on creation of a united holding controlling all business companies owned by the client and the withdrawing shareholders on pari passu basis.
The parent company is registered in the foreign jurisdiction both for the purposes of the transaction which was carried out in accordance with the English law and for implementation of all arrangements between the parties of the transaction some of which could not have been fulfilled under the Russian Law.
For the purposes of protection of interests of entire parties to the transaction on transfer of shares and payment thereof an escrow agent located in London was engaged. Upon agreement with the escrow agent a price of the transaction was reserved at the bank account of the escrow agent by the purchaser.
Share sale and purchase agreements agreed upon earlier by and between the withdrawing shareholders and the client, the client and the strategic investor were signed at the date of the transaction. Furthermore, the client and strategic investor entered into the shareholders agreement under the English law regulating their relationship as regards future business activity of the holding. Following the signing of the agreements the shares have been transferred to the strategic investor and the corresponding payment was made by the escrow agent in favour of the client and the withdrawing shareholder, accordingly.
The entire transaction, as of the moment of beginning of the negotiations and until its closing date, took 10 months. Within the process of this transaction the lawyers of PRESIDENT CONSULT have used their multiyear professional experience as well knack of co-operation with foreign consultants, registration agents in foreign jurisdictions, Russian notaries and interpreters. Moreover, we have guaranteed a successful completion of an intricate chain of negotiations on terms of the transaction with the lawyers of the strategic investor.
A foreign investor addressed our company with the following: there emerged a conflict between the investor and his business partners which ended up in a loss of control over the investment project on construction of a wood-working factory in Leningrad region.
The loss of control was manifested by the illegal removal of the General directors appointed by the foreign investor, sale of real-estate property and production lines for nothing to the third party companies affiliated with the unlawfully appointed directors and, mainly, in the fact that the foreign investor lost the status of a majority shareholder and participant of the companies established for implementation of the project.
The specialists of PRESIDENT CONSULT have developed and implemented a strategy seeking a protection of the client’s interests as a result of which, by virtue of the court order, the foreign investor received back the entire package of shares, and its shareholding in the project remains at the same level as it was prior to the conflict; the persons under control of the foreign investor have regained their positions of directors; certain transactions entered into with violation of law have been disputed.
Such successful results have been reached due to the comprehensive work of the team of lawyers carried out simultaneously in various directions: - arbitration courts; - courts of general jurisdiction; - criminal part; - application and interference of the high-ranking officials of the state into the situation; and due to application of all possible legal instruments such as: injunctions as arrests and bans from taking certain actions both by private and state entities, conduction of various expertise and researches including complex expertise; amendments to the constitutive documents of the companies diminishing a possibility of a hostile takeover.
An owner of approximately 25% of shares of a major Russian factory has undertaken actions on taking control over the factory with the purpose of receiving access to the possibility of disposal of property, including real-estate, being in the ownership of the factory. An injunction from court was obtained which banned the owner of the majority package of shares from voting on certain issues on the agenda of the general meetings of shareholders. Simultaneously, an invader has convoked a shareholders’ meeting which took a decision on change of the factory’s management. A majority shareholder and legally elected general director applied to PRESIDENT CONSULT for legal support.
Having perused the situation the lawyers of PRESIDENT CONSULT jointly with the client took the decision on carrying out a re-organization of the factory in the form of merger with another legal entity. As a result of such a merger, a share of the invader in the newly established legal entity following the reorganization constituted 10% and the injunction from court under the existing court decision was not valid in relation to the newly founded legal entity. All corporate procedures associated with the reorganization were conducted in strict compliance with the current legislation and within the framework of injunction established by the court orders that were in the possession of the invader. At the same time, all measures were taken very swiftly which enabled preventing the transfer of control over the factory to the invader. The latter tried to dispute the actions taken by our firm in an administrative order as well as in courts, but, however, our actions were supported both by courts and by the competent law enforcement bodies.
Within the course of work on this project we have painstakingly investigated and inventively applied the legislation valid at the time of the corporate conflict. Given to a significant experience of interaction with the state bodies, we have also managed to guarantee a swift and smooth implementation of all necessary registration procedures. As a result of this – a control over business was returned to a majority shareholder that continued carrying out a successful business activity of the factory.
In relation to one Russian company, that owns some major commercial real-estate objects there were attempts to purchase its shares with the aim to change the company’s management and gain access to control over the real-estate property. In accordance to various information, from 25% to 40% percent of the company’s shares were purchased. The majority shareholder that was controlling the management of the company refused from making any entries into the shareholders register having stated that the presented documents were not in formal compliance with the requirements of the law.
A new shareholder transferred the purchased shares to a specifically created off-shore company, which without having the required quorum, had nevertheless held a shareholders’ meeting and had appointed a new General director of the Russian company. He signed the agreements on alienation of real-estate in favour of yet another created offshore. The offshore company to which the shares of the Russian legal entity were transferred, had obtained the decisions of the Russian courts confirming the validity of the concluded transactions evidencing the ownership title of the offshore for a relevant real-estate as well as the fact that the legitimately elected General director of a Russian legal entity was banned from executing its authorities. Partially a registration of rights of the offshore company for real-estate was performed. Thus, the rights for real-estate, which initially belonged to a Russian legal entity, were transferred to invaders. The invaders procured the actions taken by court bailiffs jointly with the official enforcement agencies on establishing of control over the premises where the management of the Russian legal entity was located and the seizure of documents was performed. By the time these actions were finalized, the term during which the court decisions could have been appealed in compliance with the legislation valid at that time had expired.
The majority shareholder addressed PRESIDENT CONSULT seeking assistance in defence of violated rights.
Our specialists conducted a serious legal job, initiated court hearings as a result of which the procedural terms were restored; the illegitimately taken judicial acts were appealed; the real-estate returned to the Russian legal entity.