Protection against hostile mergers and acquisitions. Classification of various methods

This article presents brief analysis the main means of protection against hostile mergers and acquisitions used in the world and in Russia. The possibility of applying in the Russian legal space certain means of protection used in world practice is also being considered.

The given examples from Russian practice are not exhaustive - their choice was determined by the frequency of mention in open sources of information and the compliance with the proposed classification. It should be noted that some of these protection tools can be used in everyday management practice, regardless of the threat from an unfriendly company.

The global market for cross-border and national mergers and acquisitions in last years is developing rapidly. The number and volume of mergers and acquisitions have increased significantly. And here Russia plays an important role1. The recent surge in mergers and acquisitions, in particular in the Russian oil and gas sector, suggests that Russia, along with the US, Japan and Europe, is becoming an equal player in the corporate M&A market.

World practice shows that in most cases mergers and acquisitions are carried out by mutual agreement of the top management personnel of both companies. However, the practice of hostile mergers and acquisitions is also not uncommon, when the management of the “target” company does not agree with the deal being prepared and implements a number of anti-seizure measures2. In this case, an organization that would like to acquire the company of interest to it, applies directly to its shareholders, bypassing the management team.

World experience in protection against hostile takeovers

In world practice, a whole system of anti-seizure measures is known, which are used by both managers and shareholders in order to counter unwanted transactions. By their nature, all anti-seizure measures are divided into economic and legal. Their combination is also possible, when the economic measure is strengthened by the legal one (and vice versa).

The main types of protection against unwanted absorption, according to general rule, are divided into those that are effective:

1. before the public announcement of the intention to take over the company;
2. after such an announcement.

Protection of the company before the public announcement of its takeover

Among the means of protecting a company from takeover before a public announcement of a transaction, the following measures can be distinguished, which are most often used in the global market for mergers and acquisitions:

1. amendments to the company's charter ("shark repellents"). Among these changes are the following:
   • rotation of the board of directors: the board is divided into several parts, while only one part is elected each year;
   • supermajority: approval of the merger transaction by the supermajority of shareholders;
   • fair price: restricts mergers to shareholders holding more than a certain percentage of shares outstanding unless a fair price (determined by a formula or an appropriate valuation procedure) is paid;
2. change of place of registration of the company. Taking into account the difference in the legislation of individual regions, the place for registration is chosen where it is easier to carry out anti-seizure amendments to the charter and facilitate judicial protection;
3. "poison pill" (poison pill) 4. Such measures are used by the company in order to reduce its attractiveness to a potential invader. For example, existing shareholders are given rights that, if a significant shareholding is purchased by an invader, can be used to acquire the company's common stock at a low price - usually half the market price;
4. issue of shares with higher voting rights. The distribution of a new class of common stock with higher voting rights allows the managers of the "target" company to obtain a majority of the votes without owning a larger share of the shares;
5. A leveraged buyout is a highly leveraged purchase of a company or subdivision by a group of private investors. The shares of a company that is bought out in this way are no longer freely traded on the stock market. When a group of investors is led by its managers in a buyout of a company, such a transaction is called a buyout of the company by managers.

Protection of the company after the public announcement of its takeover

Among the means of protecting the company from takeover after the public announcement of the transaction, we note the following:

1. Pac-Man defense - counterattack on the invader's shares;
2. litigation. Litigation is brought against the occupier for violating antitrust or antitrust laws. valuable papers Oh;
3. merging with the "white knight" (white knight). As a takeover protection option, you can use the option of merging with a friendly company, which is usually called the "white knight".
4. "green armor" (greenmail). Some companies make a buyback offer at a premium to a group of investors threatening to take over, that is, an offer by the company to buy back its shares at a price higher than the market price (and also, as a rule, the price that the group paid for these shares);
5. management contracts. Companies enter into management contracts with their management staff, which provide for high remuneration for the work of management. This serves as an effective means of increasing the price of the company being taken over, since the value of "golden parachutes" (golden parachutes) in this case increases significantly;
6. asset restructuring - the purchase of assets that will not please the invader or create antitrust problems;
7. restructuring of liabilities - issue of shares to a friendly third party or increase in the number of shareholders, buyback of shares at a premium from existing shareholders.

Other means of protection

The means of protection against hostile takeovers listed above are only a part of those used in world practice. Others include the following:

1. "macaroni defense" (macaroni defense). The target company issues a large amount of bonds, which, according to the terms of the issue, must be redeemed ahead of schedule at a higher price in the event of a takeover of the company. Consequently, the cost of redeeming bonds increases when a company is threatened by a takeover (like pasta swells when cooked), making the takeover prohibitively expensive;
2. scorched-earth policy. A method used by the target company to make itself less attractive to the buyer. For example, it may agree to sell the most attractive parts of its business, called "crown jewels", or order the payment of all debts immediately after the merger;
3. "white armor" (whitemail). The target company sells a large number of its shares in a friendly company at a price below the market price. This puts the would-be 'invader' in the position of having to buy roughly the same number of shares, but at an inflated price, in order to seize control of the company. This method helps the current management of the company to maintain its position;
4. "white cavalier" (white squire) - a broker who acquires less shares than in a controlling stake in the company.

Russian practice of protection against hostile takeovers

The Russian practice of corporate mergers and acquisitions was formed against the backdrop of an underdeveloped legal framework in the field of corporate law and the absence of historically established, evolutionary economic relations which made hostile takeovers the most effective method of corporate strategy in Russia. In fact, the methods of hostile takeovers and the corresponding protection measures applied in Russia on initial stage formation of statehood, have undergone certain changes only thanks to the development of corporate legislation. It is solely in connection with this process that some of the means used to protect against hostile takeovers may no longer be as effective as they were at the dawn of the Russian corporate market. As a result of new legislative changes, the means of protection against hostile takeovers used in Russia have ceased to be exclusively administrative in nature and are approaching the means of protection widely used throughout the world.

Below we will consider the most common economic and legal methods resistance to a potential invader, which are used by the management (shareholders) of the target company:

1. the purchase of shares by companies owned by management, or the repurchase by the company of its own shares, including their subsequent sale to employees and management (of companies owned by it) to increase the share of "insiders" to the detriment of external shareholders. This strategy became widespread in Russia in the second half of the 1990s. - the actions of the management of some metallurgical enterprises can serve as an example;
2. control over the register of shareholders, as well as restricting access to or manipulation of the register of shareholders. This method is effective for complex protection measures: its use without any additional means cannot prevent absorption. An example of such a complex tactic is the actions of one of the regional pharmaceutical companies. In the late 1990s the company was attacked by a Moscow pharmaceutical holding, which intended to buy a controlling stake on the secondary market, but due to complex measures, which included strict control of the shareholder register, the takeover did not take place;
3. change of size authorized capital companies, in particular, the purposeful reduction ("diluting") of the share of specific "foreign" shareholders by placing shares of new issues on preferential terms among the administration and employees, as well as friendly external and pseudo-external shareholders. This method has been used by almost all large companies in oil and gas industry, primarily for the purpose of consolidating, creating the most manageable corporate structure. Thus, the risk of absorption is reduced due to the coordinated actions of all structural divisions companies;
4. involvement of local authorities to introduce administrative restrictions on the activities of "foreign" intermediaries and companies that buy up employees' shares. One example is the refusal of one of the regional administrations to sell a block of shares in a budget-forming enterprise, which was the object of an attack by a financial holding and a large metallurgical plant;
5. lawsuits to invalidate certain stock transactions supported by local authorities. A striking example of such tactics is the corporate war that has unfolded over Russia's largest timber industry facilities.

Other means of protection

The list of means of protection against hostile takeovers used in Russia is not limited to the measures described above; moreover, there are no restrictions on expanding the arsenal of methods both for conducting a takeover and for protecting against hostile corporate actions. It should be emphasized once again the Russian features of the means of protection - in addition to the measures already described, we will give a number of methods typical for Russian companies:

1. local authorities by management in case the enterprise is a budget-forming enterprise;
2. the introduction of various material and administrative sanctions in relation to employees-shareholders who intend to sell their shares to an "outside" buyer;
3. formation of dual power in the company (two general meetings, two boards of directors, two general directors);
4. withdrawal of assets or reorganization of the company with the allocation of liquid assets into separate structures, etc.

At this stage of development of the Russian market of corporate mergers and acquisitions, the national component is obvious, reflecting the peculiarities of the development of market relations in the country. Most of the means of protection against hostile takeovers used in Russia cannot be unambiguously qualified in accordance with the recognized global institutions of corporate takeover, since not only the range of means of obtaining control over the "target" company, but also the means of protection against such a takeover are not subject to standard criteria adopted in international practice. Nevertheless, I would like to note the shift in Russian corporate legislation. The shift is definitely positive.

Note

1. Thus, among the largest mergers and acquisitions in 2003, experts distinguish the following: TNK (Russia) and BP PLC (Great Britain), Orenburgneft (Russia) and TNK (Russia), Lenzoloto (Russia) and Norilsk Nickel (Russia), Rouge Industries ( USA) and Severstal (Russia), etc. (Ernst & Young report on the market of mergers and acquisitions in Russia dated March 24, 2004).
2. Rudyk N. B., Semenkova E. V. Corporate control market: mergers, hard acquisitions and debt buyouts. M.: Finance and statistics, 2000.
3. See Patrick A. Gaughan. Mergers, Acquisitions and Corporate Restructuring. third edition. university edition. John Wiley & Sons Inc. pp. 165-234; Gerard Picot. Handbook of International Mergers and Acquisitions. Preparation, Implementation and Integration. Palgrave Macmillan, 2002. Pp. 99-101.
4. The method was invented by corporate lawyer Martin Lipton, who first tried it in 1982 to protect El Paso Electric from a takeover by General American Oil.

All methods of protection against hostile takeovers that are used by companies on Russian market, can be conditionally divided into two classes - preventive and active methods Rudyk N.B. Methods of protection against hostile takeover: Proc. practical Benefit. - M.: business, 2006. p. 309

Due to the specific features of Russian hostile takeovers, preventive methods of defense, on average, have a much greater potential effectiveness than active ones. After all, after a Russian company has been attacked, it simply may not have enough serious protective measures. Preventive defenses are used by companies to reduce the likelihood of ever becoming the target of a hostile takeover. AT Russian Federation The following preventive methods of protection against hostile takeovers have gained the greatest popularity:

• 1. Reorganization: delisting and transformation into a CJSC (LLC);
• 2. Redemption of shares from minority shareholders (protection against green blackmail);
• 3. “Freezing out” of minority shareholders (withdrawal of assets and subsequent buyback of shares);
• 4. Separation of the company;
• 5. Liquidation of the company and transfer of its property to a new one legal entity(LLC or CJSC);
• 6. Withdrawal of assets to subsidiaries (CJSC or LLC);
• 7. Change of registrar;
• 8. Monitoring of the debt burden;
• 9. Shark repellent;
• 10. Search for the "white knight";
• 11. Creation of a strategic alliance.;
• 12. Exit to the IPO.

Let's consider some of the preventive methods of protection against congenital absorptions.

Supermajority. This method is used when special decisions are made, for example, when considering a proposal to buy a company in a takeover or the question of changing its management. The supermajority clause ranges from 60% to 80%, which is the minimum percentage of shareholders required to approve any decision. This measure limits the ability of the acquiring company to take over the target company, even if the aggressor managed to control the board of directors, and helps to balance the interests of management with the interests of shareholders of the target company.

A number of studies show that the supermajority clause increases the value of shares, while other studies indicate no corresponding effect. At the same time, the growth of costs for coordinating the actions of shareholders is often neutralized by a decrease in agency costs. raider hostile merger takeover

The supermajority condition for regulating the most important issues relating to the company's activities is contained in the charters of many Russian firms. For example, VimpelCom has a supermajority threshold of 80%. This fact came to light when failed attempt raider in 2005 to overturn this provision with a lawsuit by a minority shareholder of the company, which demanded that it change the charter so that a simple majority on the board of directors would be sufficient to resolve the most important issues, the Norwegian company Telenor, whose interests as a shareholder of VimpelCom were violated in this case , managed to defend the 80% norm only in the Supreme Court of the Russian Federation (28).

Creation of a strategic alliance. This type of protection resembles the "white knight" method, but unlike the latter, it is applied before the threat of absorption arises. A strategic alliance between two or more businesses can protect all parties from unwanted takeovers. However, there is a risk that strategic partner transforms into a “gray knight” and tries to take over a partner company himself, using the insider information available to him. In addition, the creation of an effective alliance is a very difficult task.

In Russian practice, there are examples of successful organization of strategic alliances: the Verysell group created a whole technology for acquiring attractive businesses at the end of 2002, Vest and Metatechnology formed a single and quite effective organism. However, many attempts to create an equitable or "inclusive" association fail. Caught between three centers of gravity (Verysell, Compulink, White Wind), retail network"Compulink" practically ceased to exist, "Parus" and "Galaktika" after a short partnership split up again Tuzhilin A. Creation of a system of protection against hostile actions of competitors in the group of companies. - In: Securities Market, 2003, No. 11, p. 18-21.

Asset protection. The ideal defense is a legal structure that prevents raiders from depriving the owners of their assets or makes the aggressors pay a high price for them, so that the owners can retain the necessary degree of control.

The transfer of assets to a third party is a common defense measure in Russia. As a rule, such transactions are rather controversial, sometimes feigned, and do not imply the receipt of an appropriate equivalent in return. However, they violate the rights of minority shareholders. In case of insufficient legality of the transaction and the loss of assets, minority shareholders can sue to receive compensation for their losses, which can be paid from the managers' personal funds if their actions are found to be illegal. As a result, they can easily lose their property. More fair is the option in which companies exchange assets of equal value (such an operation is called cross-collateralization). At the same time, the state of their balance sheets does not worsen. In general, the risk that asset protection will lead to losses not only for managers and controlling shareholders, but also for minority shareholders, is too high. Until Russian corporate law establishes clear rules for regulating takeover defense methods, such countermeasures will be costly and risky.

A prime example of the use of a trust to protect assets was the ownership structure of Yukos. According to Kommersant newspaper, 44% of Yukos shares belonged to eight trusts. They were managed by two trust companies registered in the British Channel Islands. Moreover, the transfer of assets from individual owners to trust companies took place only in February 2004. The trust structure made it possible to reliably hide the source of the origin of funds used to repay debts, and very quickly, given the ease of changing the beneficiary, to offer potential investors security for the return of borrowed funds.

Another type of asset protection is the restructuring of liabilities through debt buildup. This means the transfer of all assets and liabilities to the enterprise that economic activity. This method was successfully used by the management of Togliattiazot.

strategic acquisitions. They make it possible to complicate the process of hostile takeover. However, their shortcomings as a preventive measure include the unpredictability of the behavior of a potential aggressor before an official takeover offer is made. Therefore, this type of protection has practically not received distribution in Russia.

One of the few examples of the application of this method is the acquisition by Norilsk Nickel of a controlling stake in the registrar CJSC Unified Registrar in April 2005. Using the capabilities of its “own” (controlled) registrar facilitates the construction of a system of protection against hostile takeover.

Active methods of protection against hostile takeovers available to Russian companies do not differ in variety. Ignatishin Yu. Mergers and Acquisitions: Strategy, Tactics, Finance. - St. Petersburg: Peter, 2005. - p. 334..

Here are some of the active protection methods that can be most often observed in practice:

• - Blocking the movement of shares
• - Registry takedown lock
• - Counterclaims
• -Additional emission
• -Urgent withdrawal of assets to a new legal entity
• - Counter-purchase of own shares

However, if the aggressor is a professional in the Russian market of hostile takeovers, then most likely he has already “taken care of” everything, and the company has few chances for successful defense. If the aggressor has access to an administrative resource, then the target corporation loses even these chances.

It is possible to talk about an effective protection strategy in the conditions of the Russian Federation only in relation to preventive methods of protection.

The results of assessing the potential effectiveness of Western methods of protection against hostile takeovers in the Russian corporate control market are presented in Table. 2.

Table 2. The potential of using Western methods of protection against hostile takeovers in the Russian Federation Molotnikov A. Mergers and Acquisitions: Russian experience. - M., 2006. - p. 301.

western method	Potential in Russia
Divided board of directors	Impossible (AO law)
supermajority	maybe
fair price	Impossible
poison pills	Impossible
Toxic securities	maybe
Recapitalization	Impossible
Green blackmail	maybe
non-intervention agreement	maybe
White knight	maybe
Restructuring of assets and liabilities	maybe
golden parachutes	maybe
Management buy-out	maybe
reincorporation	Impossible
Trials	maybe

The low potential effectiveness of the application in Russia of many protection methods developed in the Western corporate control markets is explained by the following reasons:

• 1. extremely “peculiar” methods of attack used by Russian corporations-buyers;
• 2. there is no proper legal basis for the application of many Western methods of protection;
• 3. the stock market is not developed;
• 4. The vast majority of open Russian companies are only formally open joint stock companies, but in fact they are private companies (and many Western methods of protection were created specifically with open joint stock companies in mind).

In conclusion, I would like to note the following. The methods of conducting hostile takeovers in Russian practice are a direct consequence of the “wild” stage of the initial redistribution of property that took place in our country in the early 1990s. it seems that the consequences of this stage will be felt for a long time to come in a variety of areas.

Mergers and acquisitions as one of the forms of reorganization of a legal entity is a normal and clearly regulated process throughout the world, but, unfortunately, in Russia this process has acquired a pronounced criminal and predatory connotation.

The action, in fact, is the same as "the key to the apartment where the money is." It often turns out that the corporate “apartment” is rich, and its doors are flimsy, and the key itself, if you want, you can get your hands on without much difficulty: the owners are gullible people and do not think that they can be robbed. Thus begins the hunt for someone else's property, the ultimate goal of which is to establish control over someone else's business. In domestic business practice, such actions are called "capture of the enterprise" or "hostile takeover". Hostile takeover- this is the taking of one company by another under its control, its management with the acquisition of absolute or partial ownership of it, and this taking is carried out either without the consent of the management of the absorbed company, or even in secret from the managers.

The question of the effectiveness and expediency of using hostile takeovers as a way of reorganizing corporate capital is, in general, quite debatable. On the one hand, hostile takeover is a serious optimization tool corporate governance and an incentive to make the most efficient use of resources. But on the other hand, such actions are often used for speculative purposes and are destructive for the economy of enterprises and, of course, for the country as a whole.

Within the framework of this work, an attempt was made to consider various methods of protection against forceful seizures of enterprises, hostile takeovers. The development of effective measures to minimize the risk of financial and property losses from the actions of unfriendly companies is largely based on the creation of practical obstacles in the way of the aggressor. As you know, guessing and fortune-telling about whether something will happen or not, in the matter of protecting a money-bearing asset, can lead to complete business losses. There are many examples of this, it is no coincidence that in PPG there are special units developing options for a hostile takeover of competing companies.

At any level (international, regional, city) there are people who are ready to pick up everything that lies badly. For this purpose, specialized companies are often created, receiving an order to take over a particular enterprise or asset. Moreover, as a rule, such companies work for a percentage of the absorbed asset, i.e. their financial interest in the positive outcome of the takeover is evident.

Of course, it is necessary to defend against such aggressors. However, agreeing with this need, many owners of enterprises consider it sufficient to increase their stake to 75% or appoint "their" general director. And then they stop paying attention to protecting their assets. And only with obvious signs of an unfriendly takeover or merger, they remember the need to build a comprehensive defense. But to what extent will it become complex and, consequently, effective? Acquisition practice and common sense show that individual measures are less effective than well-timed complex strategic and tactical defenses.

1. The main methods of hostile takeover

One of the basics of the tactics of military operations is the principle "Know the weapon of the enemy, be able to resist it and use it in your own interests." Modern business in conditions of fierce competition - the same war, only waged by other means. Therefore, in order to effectively build a system of protection against an unfriendly attack, it is first necessary to determine those possible ways takeovers that can be applied to the enterprise.

In the West, there are hostile takeover tactics such as bear hugs and tender offers to buy shares.

Bear hug. Sending messages to the top management of the target companies about the upcoming takeover, demanding that they take a quick decision on this proposal. In case of refusal, the acquiring company goes directly to the shareholders of this company behind the back of its management with a tender offer.

Tender offer. The management of the target company may advise shareholders to accept the offer or resist the intentions of the potential buyer. The tender offer can be implemented in various ways.

Two-tier offer - the price at which the acquiring company promises to buy the shares of the acquiring company is differentiated. First, a block of shares of a higher level (for example, 51%) is bought at a higher price, which is announced simultaneously with the tender offers. The rest of the shares are then bought at a lower price.

Partial offer – the acquiring company announces maximum amount shares it intends to acquire, but does not disclose its plans for the rest of the shares.

Both of these bidding methods aim to reduce the total acquisition price of the target company's shares and at the same time encourage the shareholders of the target company to sell their shares faster by promising a higher price when buying a starter shareholding.

The most common hostile takeover methods in modern Russia steel: consolidation (purchase) of small blocks of shares; deliberate bringing to bankruptcy; targeted reduction in the value of the enterprise and the acquisition of its assets; contesting property rights to strategically important assets (industrial and technological complex, subsoil use rights, etc.); "purchase" of enterprise managers.

As can be seen from the above list, these methods are quite diverse. This study does not aim to tell about all of them, and even more so to oppose adequate protection options to each method. The paper attempts to give an overview systems approach to the protection of the enterprise.

2. Preliminary protective measures

Strategic methods of protection - the methods provided for by the enterprise strategy (i.e., a long-term business development plan), their use causes serious organizational changes in the business management system. These methods are used in the systematic organization of business protection, as a rule, when the attack has not yet begun and there is no real visible threat of takeover.

Strategic methods of protection include, mainly, organizational and managerial measures: building a corporate structure, forming a system economic security business, organization of an effective system of motivation for top managers, etc.

1. Actions to change the nature of management.

Successful protection against hostile takeovers and mergers is based on confidence in the clear and coordinated work of society as a whole, its governing bodies and managers as the main driving force that overcomes any encroachment.

Legal basis The protection of the company should be carefully developed internal documents (the Articles of Association, the Regulations on the governing bodies, the Agreement with the Management Company, etc.), corresponding to the chosen protection strategy. Often, these documents are treated as an unpleasant formality, repeating the imperative norms of corporate law in them. Business owners often do not take into account that in the event of a threat of a hostile takeover, they may simply not have enough time to eliminate contradictions in documents and make the additions necessary for organizing protection. The internal documents of the company should clearly define the procedure for making strategic decisions about the fate of the business, the procedure for exiting the business, the procedure for determining the price of the assigned share in the business.

a) Since the board of directors is a key governing body in most companies, the support of board members is important for the aggressor. According to the law, members of the board of directors are elected at the annual meeting of shareholders, which means that a major shareholder may well make his candidacies. Therefore, it is proposed to divide the board of directors into three groups. Thus, each year only one group can be re-elected, as a result of which the acquiring company cannot immediately take control of the target company, i.e. the capture process is delayed. However, in Russia this method is poorly applicable, because. according to Art. 66 of the Federal Law of the Russian Federation “On Joint Stock Companies”, the election of the board of directors must take place once a year for a period of one year, in addition, any member of the board of directors can be re-elected ahead of time by decision of the meeting of shareholders.

b) With an unfriendly takeover, most often attempts to change the management bodies are carried out even before gaining control over even half of the shares of the company. The current joint stock legislation provides for alternatives regarding the body competent to elect the general director or the chairman of the board of directors. If the right to elect them is attributed to the competence of the general meeting, then the aggressor, in order to receive operational control it will no longer be enough to enlist the support of half of the members of the board of directors, the convening of a general meeting of shareholders is required. And if we additionally provide for the election of the board of directors by cumulative voting, then the term for holding an extraordinary general meeting can be postponed from 40 days to 70. In terms of protection, an additional month may not be superfluous at all.

Example:

During the takeover of one company, the aggressor managed to negotiate with several members of its board of directors, offering them guarantees for the extension of their powers under the new owner. However, the aggressor could not remove the general director and seize the operational management of the company, since in its charter the election of the general director and members of the board of directors was referred to the competence of the general meeting. Of course, at the request of the members of the board of directors, an extraordinary general meeting shareholders. But the charter provided for the election of the board of directors by cumulative voting, and the period for holding an extraordinary general meeting was automatically moved from 40 days to 70. In the issue of protection, an additional month played a decisive role. During this time, the company has taken a number of actions, including an exemplary purchase of its shares at an inflated price, which actually blocked the subsequent increase in the aggressor's shareholding, and work was carried out with shareholders. After an extraordinary general meeting was held, which did not re-elect unfriendly members of the board of directors and confirmed the powers of the acting general director, the company's stake was bought back from the aggressor at an acceptable price.

c) The Articles of Association may stipulate in advance a simplified procedure for convening the board of directors. In the event of an attack on an object, this allows you to gain time and increase flexibility in control.

d) The articles of association may include special requirements for the election of members of the board of directors, for example, on work experience or education. Thus, when appointing a general director in a number of regions of energy companies, the main requirement was a ten-year experience in the energy sector.

e) One of the most common methods of hostile takeover is the purchase of accounts payable. And in this regard, the eternal question of the main shareholder of the company will be - does the management act in the interests of the company and does it make decisions on concluding transactions with due diligence?

The current legislation allows shareholders to legitimately restrict the capabilities of individual officials, in particular the CEO, in order to avoid accidentally or deliberately creating an unfavorable situation in society.

First of all, this is a direct instruction in the Charter additional restrictions in making transactions by their size (the option of restriction by types of transactions, by counterparties is not excluded). Sole executive body for current legislation independently enters into transactions up to 25% of the book value of the company's assets. In order to establish greater control over its activities, it can be limited to 5-10%, etc. This is especially expedient with a significant balance sheet value of assets or in the presence of several technologically interconnected, but legally separate industries.

f) The competence of the general director in the implementation of transactions can be limited through a change in the structure of management bodies. In companies where the presence of a board of directors is not mandatory, it is possible to introduce this body and transfer part of its powers to it. In the middle and large companies powers executive body redistributed between CEO and the board. The creation of a board of directors and a board of directors also makes it possible to use such a tactical method of protection as the bureaucratization of the decision-making procedure in society.

g) Provide for a supermajority condition, which implies the consent of the absolute majority of shareholders to carry out particularly important decisions. A typical example of a super-majority would be a requirement to receive 75% of the votes on amendments to the charter, reorganizations and major transactions. This requirement stipulated in Art. 48 and 49 of the Federal Law of the Russian Federation "On Joint Stock Companies". In other cases, the consent of up to 95% of the voters is required for the adoption of individual decisions. The reverse side of this technology is a decrease in flexibility in the approval of complex management decisions.

h) Monitoring the current state. When buying up the most interesting assets, many aggressors act according to the principle: “Why buy an enterprise if you can buy its management?” Indeed, if an effective system of independent monitoring of its financial and economic activities (in other words, a system of business economic security) has not been built at an enterprise, it will not be so difficult for an aggressor to implement this principle.

The monitoring system is traditionally implemented through the creation of the current monitoring service itself (economic security service) and the control and audit service, whose tasks include conducting comprehensive audits of compliance with the management procedures established at the enterprise.

i) The procedural issues of making decisions that are strategically important for society should be clearly regulated in the regulations on the governing bodies and such an extremely important for any commercial organization document as the Regulations on the procedure for concluding contracts. Correct alignment management process the conclusion of an agreement and its clear legal regulation in most cases makes it possible to avoid the threat of actions by the management and employees of the company in the interests of the aggressor (accept the terms of the transaction that are enslaving for society, provide an easy opportunity for the aggressor to buy up the obligations of the company, etc.).

j) Selecting a registrar is a separate security issue. Societies do not always transfer their register to a professional registrar, when this is not directly required by law. But when they come to the enterprise with a custom “check” government bodies(be it the prosecutor’s office or the Ministry of Internal Affairs with their new powers, it doesn’t matter) and, based on the extended list of documents that they have the right to request, require the submission of a register of shareholders, one has to come up with formal grounds for refusal. When is the register joint-stock company transferred to a well-audited specialized registrar, it can be expected that during the verification it will refer to an exhaustive list of grounds for disclosing such information.

We should also not forget that the use of a specialized registrar for the main owner of a joint-stock company is an additional way to regulate transactions with the most liquid asset society - its shares and a way to reasonably narrow the uncontrolled powers of top management.

When choosing a registrar, a cautious owner will definitely check whether it is a well-known company on the securities market with a good reputation; whether the registrar will provide an opportunity to obtain operational information on the movement of the company's shares; whether it is independent of potentially hostile structures.

k) In this regard, it is appropriate to talk about the adoption of a charter that protects against takeover. A charter protecting against takeovers is a collective term denoting a whole range of measures that exclude the possibility of an aggressor using common mistakes and provide additional features procedural protection (for example, the procedure for conducting transactions with shares of the company, the procedure for selecting and terminating the powers of persons acting on behalf of the company, the procedure for amending the charter) are clearly prescribed.

2. Stock protection.

Fund protection consists in carrying out operations with securities aimed at limiting the turnover of shares and counteracting the accumulation of significant blocks of shares by the initiators of the takeover.

Securities transactions may include both the diversification of rights in different groups of securities owned by shareholders, and the possibility of changing the rights to securities in case of adverse events.

a) Double capitalization method implies the presence of two or more groups of shares with a different number of votes per share. Shareholders in control artificially inflate the number of votes by issuing more shares with more votes per share. In order to avoid prosecutions for violation of shareholders' rights during the additional issue, new shares are distributed among all shareholders up to a certain period, as well as the possibility of exchanging new shares for old ones. As a rule, newly issued shares have lower dividend payout rates and quotes, so they can be easily exchanged by shareholders.

An effective stock protection is a predetermined purchase price of shares in the case of purchases of large blocks. Of course, the price is set at a higher level than the market rate. So did the Pecheney Co.

b) Another form of stock protection is transfer of shares in trust management to related companies. Owning companies (and there are two types - owners of blocks of shares and intangible assets and owners of capital-intensive and most liquid property) do not themselves conduct any financial and economic activities, which allows minimizing the risk of their capture through the concentration of accounts payable or by imposing responsibility for activities of the production business units of the holding. They only determine the key appointments in the management company and exercise control over the use of the holding's main assets.

The direct management of the holding's activities is carried out by a specially created management company, which exercises its power in relation to production business units and service companies through an agreement between the management company and the subsidiary. This agreement defines the division of powers and responsibilities between the management company and the subsidiary, defines the mechanism for coordinating and making decisions on key aspects of activity. Depending on the distribution of powers that have taken place, the degree of centralization / decentralization of management in the holding is determined. Thus, the concentration of assets and their transfer to a safe place is carried out. Cross co-ownership can also create additional barriers to the invader's path.

c) A sufficiently effective measure is restriction of circulation of shares or division of markets for their circulation. This measure is not very popular in the West, since the restriction of the circulation of shares has a negative effect on share prices. In our country, Gazprom resorts to a similar technique, limiting the volume of traded securities on one trading platform. Technically, this is done by setting quotas for the size of the block of shares acquired within a certain period of time.

d) In addition to time and quantitative restrictions on the circulation of securities, as part of the construction of preliminary protection, the company may conduct change in legal form. Open joint-stock companies can be transformed into closed or even limited liability companies. If the company's shares are traded on the stock market, they are redeemed at market value, and then changes organizational legal form. Surgutneftegaz recently resorted to a similar practice in Russia. It should be noted, however, that in this case the company loses a significant part of its market value, therefore, if the company's resources are limited, its production and financial performance may suffer.

3. Other organizational and specific activities.

a) Poison pill method not new to Russian practice for a long time. The preparation of "poison pills" involves taking measures that reduce the company's attractiveness to potential aggressors or make the takeover procedures as difficult as possible.

"Poison pills" can be organized in the following forms:

Issue of rights to securities;

Issue of preferred shares;

Issue of debt securities with a put option.

In the first case, protective measures are understood as the issuance of rights to securities that are distributed within the management team and, in the event of a takeover, will allow the defenders to make an additional issue and subsequent distribution of shares among loyal shareholders.

In the second case, a decision is made to pay dividends to shareholders in the form of preferred shares. It is stipulated in advance that in the event of the initiation of a hostile takeover or change of ownership as a result of such a takeover, the company undertakes to redeem these shares at fixed price(more than market).

In the case of issuing debt securities, the company undertakes to buy back these securities at a predetermined value in the event of a successful takeover. Typically, this is a severe blow to the solvency of the acquiring company, even as it resorts to heavy borrowing to carry out a hostile takeover. The advantage of "poison pills" as a way to protect against takeovers also lies in the possibility of changing or canceling these measures with the full consent of the company's management. Naturally, this is possible when the aggression is stopped or the hostile takeover is changed to a friendly one.

b) The basis of any team management system is the correct motivation of managers and leading specialists. It is they who make up the core of the company and largely determine the success of this business. Therefore, one of the effective mechanisms for protecting business is the creation of a motivation system that orients the company's management towards the growth of the value and efficiency of the business. In the Western business community, partnership schemes for top managers and key specialists in business. We are talking about signing contracts with the company's management. This includes how creation of "golden parachutes", and the conclusion of direct labor doctors, providing care in the event of a hostile takeover. Under the "golden parachutes" we mean significant compensation to the company's management in the event of a takeover and change of the management team. In the absence of hostile action, this measure can be automatically extended for a year or more before the takeover is initiated. The amount of compensation is unique in each specific case, but, as a rule, it amounts to several annual salaries of an employee (in modern Russia, these mechanisms are almost never used, which, in our opinion, indicates an insufficient development of a corporate governance culture rather than a fundamental impossibility of using these schemes on domestic soil).

However, often a hostile takeover is aimed at maintaining the efficiency of the business at the current level. This is not possible without saving frames. Therefore, as part of the preliminary protection, the target company stipulates the possibility of leaving key employees in the event of a hostile takeover.

in) Building strategic partnerships and alliances(strategic stakes) is also one of the protection measures. Formally, participation in an alliance can be strengthened by the exchange of shares of participants, but simply having a strong partner who is ready to help in initiating a hostile takeover plays a big role.

d) Of the rather simple, but, nevertheless, reliable methods of preliminary protection, one can note competent organization register maintenance. Most often, depositories become the sources of information about the exact ownership structure of the target. Therefore, the company must be aware of the risks in case of cost savings on the registrar.

3. Protection after absorption initiation

Let's say that despite all the precautionary measures taken, the company was attacked by an outside company. This means that the time comes for protective measures after the initiation of the takeover (tactical methods of protection). We note right away that, compared with preliminary protection, these measures are much more capital-intensive.

1. Very common in world practice litigation with absorption initiators. It is expressed in lawsuits challenging the election of new members of the board of directors; arrests of blocks of shares bought up by the invader; litigation of significant decisions, such as an additional issue or reorganization of assets. It is possible to involve the initiator of the takeover (as well as the target company) in legal proceedings at any stage of the takeover. This tactic allows you to buy time when preparing other defensive moves.

2. In the early stages of absorption is possible redemption of their shares the company under attack. This is in line with the asset concentration guidelines outlined in the Preliminary Safeguard Actions. Another thing is that, unlike preliminary measures, the purchase will be carried out not only directly on the stock market, but also from agents involved in asset speculation. Accordingly, redemption costs can be quite significant. An alternative to own buyout can be a tender counteroffer, when an offer is made to the aggressor to buy out a controlling stake at a price that is significantly higher than the market price.

As the number of shares in free float decreases, the management of the object of attack may begin to dilute the blocks of shares owned by the invader, for example, by conducting an additional issue or issuing dividends to management and loyal shareholders in the form of blocks of new shares. Also, a decision on the double capitalization of issued shares can be carried out through the board of directors.

3. One of the most radical methods of protection is attack on the aggressor or the so-called "Pacman defense". This method can slow down or stop hostile takeovers due to the reallocation of the initiator's resources to its own defense. Also, the shares of the takeover initiator can be exchanged for their own. The adoption of this measure of protection must be well prepared, since it is very expensive and not always effective due to the lack of accurate information about the ownership structure of the aggressor.

4. An important part of the defense organization is its financing. Often, the company simply does not have own funds for protection. In this case, it is necessary to involve third party funding. In Western practice, this technique is called "attracting the" white knight ". An ally can be a financial group associated with the object by economic and business relations, or a third party bank. “The involvement of the “white knight” can be carried out with or without the transfer of control over the object. If the former owner retains control, the ally company has the right to count on certain benefits and advantages.

5. Another protective measure available at any stage of the takeover is asset restructuring in order to increase their security. Naturally, it is better to take these actions long before the start of a hostile takeover, since it is highly likely that, carried out in the course of active actions, they will be challenged by opponents.

The last way to protect in case of continuation of the acquisition procedure is the deterioration of financial performance or asset structure. This method is a series of actions - from the withdrawal of the most significant assets to individual companies to a full range of measures for deliberate bankruptcy (the so-called "scorched earth" tactics).

The withdrawal of assets can be carried out both for the purpose of selling them to the initiator to terminate the takeover procedure, and for the purpose of improving their protection against takeover. In the case of a more radical form of protection, the next step after the restructuring is the withdrawal of funds in the form of dividends, investments, etc. Another form of deterioration in the financial picture is the attraction of external financing with the subsequent withdrawal of the funds received. Thus, as a result of absorption, the aggressor receives an empty and unattractive shell. On the other hand, such measures in the vast majority of cases do not make a positive contribution to the development of the company and can be challenged in court by the opposing party.

It is worth highlighting several very effective methods of protection against hostile takeovers, which stand apart from the above classification.

"Greenmail"

Repurchase of shares of the target company at a premium to the market price from shareholders. Often, the buyback is made from the acquiring company itself.

"reincorporation"

Re-registration of a company in another region

No action agreement

A voluntary agreement with the shareholder from whom the shares are being redeemed that he will not acquire the shares of the target company for a certain period of time.

Redemption with leverage / Management buyout

Already discussed above, this mechanism is an effective method of protection against hostile takeovers. A company bought out by management is of much less interest to the acquiring company, since it is no longer possible to reach an agreement with shareholders - all shares are concentrated in the hands of top management. In addition, after the management buyout is completed, the target company becomes burdened with excess debt, which makes it less attractive.

Thus, it can be concluded that successful defense is a combination of economic and legal measures. The above methods are far from complete list modern mechanisms of absorption and protection against it. It should also be noted that the comparative costs and effectiveness of protective measures were deliberately not given, since it is extremely difficult to determine which of them will be effective without knowing all the conditions of each particular case. It can be summarized that the protection of the company in any situation is a unique project and requires the maximum concentration of enterprise resources.

The approach proposed in this paper to the organization of complex protection against hostile takeovers makes it possible to combine the most common methods of protection into a system. However, when adjusting the business strategy, it is also necessary to take into account the issues of its effective protection.

To service takeovers, as mentioned above, infrastructures are being created, consisting of several firms specializing in developing schemes for the forcible takeover of companies and, presumably, in bribing judges and officials. All this damages the state, makes Russia unattractive for many strategic investors, discredits judicial system countries and ongoing market reforms. Therefore, it is necessary and necessary to fight hostile takeovers. And when forming a protection system, one should use the old, like the world, rule "The one who is warned is armed."

4. Ensuring the interests of shareholders in the redistribution of corporate control

So, we have established that one of the ways to establish shareholder control is a takeover, i.e. acquisition of a controlling stake. The objectives of the legislative regulation of the takeover are to ensure the rights of shareholders when consolidating a block of shares of a certain amount from a person or persons who, as a result of such consolidation, acquire leverage (up to full control) on the decisions of the general meeting of shareholders, which in turn may affect the market value of shares and dividend policy of the company.

It is necessary to legislate the following main mechanisms for ensuring the rights of shareholders and investors with the possibility of change and change of control:

· establishing a procedure for timely and complete informing shareholders and investors about the intentions and actions of the acquirer (potential acquirer);

· Establishing a complicated procedure for making decisions on protective measures in case of takeover in order to provide shareholders with the right to choose a more efficient owner and prevent the withdrawal of capital by management;

· creation of a mechanism for exercising the right of minority shareholders to sell shares at a fair price in the event of a change in material conditions compared to those on the basis of which the shareholder made an investment decision;

· consolidation of mechanisms that ensure the balance of interests of the largest corporate owner (90% or 95% of the authorized capital) and minority shareholders in the implementation of the so-called "crowding out", in which the shares of minority shareholders are redeemed at a fair price.

Lecture number 8. Hostile takeover protection.

Lecture plan.

Features of the Russian practice of applying protective measures against hostile takeovers.

Classic ways to counter hostile takeovers.

The set of measures to counteract hostile takeovers is divided into two parts: preventive and active Events. A task preventive measures– reduce the very likelihood of a hostile takeover. Active events intended for immediate defensive action after the start of a hostile takeover.

The following types of preventive (precautionary) measures are known:

"Poisonous (poisoned) pills,

Amendments to the articles of incorporation,

"Poison Pills". These are various options for additional securities issued by a company in order to reduce its attractiveness to a potential buyer. The most commonly used two options for protective "pills": external and internal .External "pills" give the right to the shareholders of the company under threat of takeover to purchase the shares of the aggressor company at a significant discount. internal pills provide a similar right in relation to the company's own shares - the subject of a potential takeover.

The release of "poison pills" is associated with the possibility of the onset of the so-called. "launch" event. Such an event can be:

acquisition of 20 or more percent of the company's shares by any legal or natural person;

tender offer for the purchase of 30 percent or more of the shares.

In most cases, "poison pills" are issued by decision of the board of directors and can be withdrawn for a symbolic price at any time before the "triggering" event. This policy of issuing "poison pills" provides the board with room for maneuver in the event of, for example, a friendly acquisition offer.

Poison pills, as a method of protection against hostile takeovers, were invented by the famous American lawyer specializing in takeovers, Martin Lipton. They were first successfully used in 1982 in the USA in a fight between ELPaso Electric and General American Oil. In the 1990s, protection with "poison pills" became commonplace for most American corporations.

The development and continuous improvement of methods of protection against hostile takeovers has led to the emergence of various forms of "poison pills":

Issues of preferred shares;

Issues of rights;

Issues of bonds with a put option.

Issue of preferred shares . This is the first generation of "poison pills".

The target company enjoying such protection distributes to its shareholders dividends in the form of convertible preferred shares. In addition to fixed dividends on such shares, shareholders receive certain additional rights in the event of a “starting” event. In particular, the conditions for issuing said shares may provide for all their owners the right to demand from the joint-stock company the redemption of their shares for cash at the maximum price paid by the aggressor-buyer for the shares of the target company during the last year. In addition, if the aggressor succeeds in carrying out the takeover, then the preferred shares of the target company can be converted into ordinary shares of the aggressor at a market value determined similarly to the previous case.

Issue rights. The "poison pills" in the form of a preferred stock issue had certain drawbacks, so over time they were replaced by a new generation of "poison pills" in the form of a rights issue. Rights are a type of call option issued by a joint-stock company and giving shareholders the right to purchase shares at a fixed price for a certain period of time (usually at least 10 years). The rights to purchase shares are distributed to shareholders as dividends.

In accordance with the terms of the issue, the right to purchase shares becomes effective only if a “triggering” event occurs. It is at the moment of occurrence of such an event that certificates of rights are sent to shareholders. As in the case of preferred shares, the issuer stipulates in the terms of the issue of rights the possibility of their withdrawal during the entire period of circulation for a symbolic price until the “starting” event occurs.

Issuing bonds with a put option . This is the third generation of "poison pills". The issuance of such bonds provides for the right of their owner to demand redemption of the bonds at face value in the event of a hostile takeover. The issuer, resorting to the use of this "poison pill", expects that in the event of a takeover, the presentation of bonds for redemption may create serious problems for the absorber due to a lack of financial resources.

Amendments to the statutory documents. Changes in the charter of a joint-stock company are the most common and least costly way of preventive protection against takeovers. Various changes to the founding documents of a company that fears a hostile takeover typically include:

Multi-stage conditions for elections to the Board of Directors,

Regulation on a qualified majority for making decisions on mergers and acquisitions,

Double capitalization, etc.

"Split" board of directors. The "divided" board clause is intended to create obstacles in the path of the aggressor in the process of changing the board of directors. Its essence lies in the division of the board of directors into several groups, while no more than one group of directors can be re-elected at the annual meeting. The most typical variant is the division of the board of directors into three groups with the annual election of one third of the directors. Thus, it may take more than two years for the aggressor to gain full control over the acquired business.

"supermajority" clause. This clause stipulates that more than a simple majority of votes is required to approve a takeover transaction, i.e. "supermajority" (qualified majority). A typical example of a supermajority is 75-80% of the votes, in some situations its size can reach 90-95%. The "supermajority" clause may contain an overriding condition whereby the "supermajority" clause does not apply if the takeover is approved by the board of directors of the target company.

double capitalization. Double capitalization provides for the presence in circulation of two or more types of ordinary shares of the company with a different number of votes per share. The main purpose of double capitalization is to give more votes to shareholders who are loyal to the target company.

The most typical example of double capitalization is an additional issue of shares that have a large number of votes compared to previously placed shares of the company. In 1988, the US Securities and Exchange Commission banned such share issues leading to a reduction in the number of votes of existing shareholders. However, this prohibition normative act does not have retroactive effect, i.e. does not apply to US companies that double capitalized before 1988.

"Gold and Silver Parachutes". Special agreements with senior executives, managers or company personnel to pay them one-time compensation in the event of their voluntary or involuntary dismissal at the time of the takeover or for some time after it. Agreements on "gold" and "silver" parachutes can be concluded for a certain period, but in most cases they contain the so-called. an "evergreen" clause, according to which the initially fixed period of one year is automatically extended for a year if there is no hostile takeover.

Active defense against hostile takeovers includes a wide range of activities:

Greenmail and dormancy agreements,

"White knight",

"White Squire"

recapitalization,

Litigation,

Pac-Man Defense.

Greenmail called buyback of shares from the buyer with a premium. The payment of the greenmail is usually accompanied by a dormant agreement, under which the buyer undertakes not to buy additional shares in excess of a certain amount specified in the agreement. For this consent, the buyer receives a fee.

"White knight" - a friendly company that agrees to be the best buyer.

"White Squire" - a kind of "white knight". Unlike the latter, the “white squire” carries out a friendly takeover not for himself, but to protect the partner company.

Recapitalization - change in the capital structure by a sharp increase in the share loan capital for the purpose of deliberately worsening the financial condition of a company that has undergone a hostile takeover. This is, in essence, the transformation of the company into its own "white knight".

Litigation - all kinds of legal legal actions aimed at complicating the takeover process. The most accessible and widespread form of protection against hostile takeovers.

Baek-Man Defense - a mirror response tender offer to the buyer to acquire its shares. The most radical measure of defense against hostile takeovers (defense through attack).

2. Features of the Russian practice of applying protective measures against hostile takeovers.

The measures applied in the Russian practice of counteracting hostile takeovers also include preventive and active protective measures. However, their list differs significantly from the classical methods of protection used in foreign countries.

In Russia, specific methods of protection based on a direct violation of the law or on the use of its shortcomings have become widespread. Due to the imperfection of Russian legislation, many civilized methods of combating hostile takeovers are not applied at all or are applied in a very peculiar way.

"Poison pills" in Russian conditions . The release of "poison pills" is not provided for in Russian legislation, however, and is not prohibited. In foreign practice, as already noted, the issue and placement of special rights in the form of "poison pills" is carried out by decision of the board of directors of the joint-stock company. A similar procedure is defined by the Russian law "On Joint Stock Companies".

Thus, nothing prevents in Russian conditions from issuing rights to purchase shares, however, certain provisions of the Law "On Joint Stock Companies" seriously limit the possibility of using the issue of rights as a "poison pill". For example, Article 36 of this law establishes that the payment for shares is carried out at market value, but not below their nominal value. Due to the above legislative restrictions, “poison pills” are used in Russian practice in a very peculiar way.

Under "poison pills" in Russia, it is customary to understand the various actions of the management of the target company, aimed at creating all sorts of obstacles to the aggressor company. The most common varieties of Russian "poison pills" are:

Bonded deals concluded shortly before the seizure of the enterprise;

Issuance of bills for astronomical sums;

Lease of real estate for long-term lease;

Concealment or destruction of all documents of the target company;

The division of the target company into two enterprises.

"supermajority" clause . Russian companies do not have the opportunity to resort to this method of protection, since the "supermajority" clause is actually defined in our country by law and does not require additional changes to the company's charter. According to Russian legislation, 75% of the votes are required to make decisions on all the most important issues in the life of joint-stock companies, including mergers and acquisitions. Based on this, there is only one way for the target company in Russia to block any hostile takeover attempts - controlling more than 25% of the votes of the shareholders of its company.

Double capitalization is also banned in Russia, although this ban applies only to ordinary shares. The Russian law "On Joint Stock Companies" provides that each ordinary share of a company provides the shareholder with the same amount of rights. In other words, Russian joint-stock companies cannot issue ordinary shares with different amounts of rights granted to shareholders.

As for preferred shares, they can be used for double capitalization in Russia. To do this, it is enough to make appropriate changes to the charter of the joint-stock company, which give preference shares of a certain issue the right to vote.

"Gold and Silver Parachutes". This is the only protective measure of a preventive nature that can be used in Russia without restrictions. Russian legislation allows for the inclusion in the labor contract with the top manager of the target company of a special clause, by virtue of which, in the event of early termination of his powers, he receives significant monetary compensation. However, the Russian practice of protection against hostile takeovers so far very rarely uses the possibilities of "golden and silver parachutes".

Active defenses against hostile takeovers in Russia . The situation with the use of classical active means of protection against hostile takeovers in Russia is largely similar to the picture described above with preventive measures. For example, the use of greenmail in Russia is practically impossible and can easily be challenged as violating the rights and interests of other shareholders not participating in the share buyback.

The fact is that in Russia every shareholder - the owner of shares of certain categories, the decision to acquire which has been made, has the right to sell his shares, and the company is obliged to purchase them. In this regard, it is impossible in practice to carry out a division between the ordinary shares of greenmailer and other shareholders. Therefore, when deciding to buy back shares at a premium, it is likely that all shareholders will offer their shares for buyback. In such a situation, the target company would be required to make a proportional share buyback and, accordingly, the planned buyback targets would not be achieved.

Recapitalization . In Russian conditions, the use of recapitalization of the target company is difficult, primarily due to the underdevelopment of the corporate bond market. Currently, only very large Russian companies have real access to the corporate bond market. The majority of Russian companies experience no less difficulties in attracting bank loans, since recapitalization requires the attraction of a significant amount of borrowed funds.

"White Knight" or "White Squire" Invitation . Both types of such protection, in principle, can be easily used in Russian practice. However, it is difficult to find a “white knight” in Russia, since there are still practically no investment banks in our country that usually select suitable candidates. In addition, the “white knight” most often conditions his participation in the fate of the target company with certain concessions, which in Russian conditions can quickly become the subject of litigation, as violating the legitimate rights and interests of shareholders.

In the case of attracting a "white squire", difficulties may arise related to the registration of an additional issue of shares: Russian legislation does not provide for the possibility of a backup registration, as, for example, in the United States.

Pac-Man Defense . In its pure form, such protection in Russia is impossible due to the lack of legislation on the tender offer. In the Russian version, the protection of Peck-Man is a set of all measures to actively combat the aggressor company:

Appeals to law enforcement agencies with statements and complaints about the illegal actions of the aggressor company in buying up shares;

Appeal to the courts with claims against the aggressor company;

Bringing public attention to what is happening

Purchase of shares of enterprises owned by the aggressor company;

Disruption of individual events of the aggressor company.

Litigation . This is the only active protective measure from the classic set of foreign companies that is applied in Russia in a similar way. Moreover, the lack of elaboration, and often the complete absence of regulations relating to various aspects of mergers and acquisitions, creates extensive opportunities for the use of litigation as one of the main methods of combating hostile takeovers in Russian practice. Antimonopoly legislation is especially convenient for effective judicial opposition to hostile takeovers in Russia.

Specifically Russian Ways to Protect Against a Hostile Takeover . Considering that the use of most classical foreign methods combating hostile takeovers in Russia is not possible or effective, Russian companies have developed their own methods that are typical only for domestic practice. Specifically Russian ways of protecting business from hostile takeovers are usually classified into two groups:

Strategic ways of protection;

Tactical defenses.

To strategic Ways to protect against hostile takeovers in Russia include:

Formation of a secure corporate structure.

Ensuring effective economic security of the enterprise.

Creation of conditions preventing the purchase of shares.

Creation of a system of control over accounts payable.

Formation of a secure corporate structure . The essence of this strategic method of protection lies in the formation of such a corporate structure of the business, which would almost completely exclude the possibility of its unfriendly takeover. This method is based on the principle of dividing the company's property complex into parts, which is usually achieved using two schemes:

Reorganization of a potential target company in the form of a spin-off of several small companies that are not interesting from the point of view of a hostile takeover.

Conclusion of the most attractive assets from the point of view of the aggressor companies to subsidiaries related to each other by cross-ownership of shares.

Ensuring effective economic security of the enterprise . To be always ready to repel an attack on a business, its owners must constantly monitor the current situation. To do this, you need to organize your own professional economic security service, which will monitor everything that happens around the target company.

Creation of conditions preventing mass buying of shares . The most common scheme to prevent aggressive mass buying of shares is the construction of cross-shareholding. The essence of cross-ownership of shares is as follows. The potential target company creates a subsidiary structure with a majority stake in authorized capital(51 percent or more). As other founders of this subsidiary minority shareholders act, who contribute their shares of the parent company in the form of a contribution to the authorized capital. Thus, a controlling stake in the parent company is consolidated from the subsidiary, which guarantees full control over the parent company.

Creation of a control system for accounts payable . Effective control over accounts payable can be carried out in various areas:

Avoiding arrears.

Refusal of contractual relations with unknown companies.

Establishment of a special company that accumulates accounts payable.

Implementation of all finished products through a controlled trading house.

To the number tactical Measures to combat hostile takeovers in Russia include:

Counterpurchase of shares.

Asset restructuring.

Blocking of a block of shares acquired by the aggressor.

Working with shareholders.

Defense through attack.

Counterpurchase of shares . This method of tactical struggle against hostile takeovers is the simplest, but also the most costly. The main purpose of counterbuying shares is to prevent the aggressor company from acquiring a controlling stake in the target company.

Restructuring of the assets of the target company . Blocking of a block of shares acquired by the aggressor company The target company, using completely legal legal mechanisms, blocks the block of shares acquired by the aggressor company. To do this, you need to find any formal clue in the actions of the aggressor company to buy shares associated with a violation of the current legislation. Along with blocking the aggressor, an additional issue of shares is simultaneously carried out in order to reduce the share of the aggressor in the authorized capital of the target company.

Work with shareholders . This measure is not legal. It is associated with the identification and suppression of unfriendly actions of certain groups of shareholders helping the aggressor company, explanatory work with shareholders in order to maintain their loyalty to the target company.

Defense through attack . It is a counter attack on the aggressor company, including:

Buying shares of the aggressor company or shares of enterprises owned by it.

Handling applications and complaints to the courts and law enforcement agencies on the illegal actions of the aggressor company.

Organization of relevant publications in the press.

Disruption of the activities of the aggressor company aimed at capturing the target company.

Methods for protecting a company from a hostile takeover

Redistribution of property as feature Russian business reality remains relevant today. But if ten years ago they divided state property, today they have reached private property. No joint-stock company can be guaranteed to be protected from such a "redistribution". If it is joint-stock, then it is public. And if it is public, then we will share it. Unfortunately, the seizure and division of property through hostile takeovers remains a favorite pastime. Russian business. It is to the methods of protecting your enterprise from a business aggressor that we decided to devote today's material.

The threat of a hostile takeover is so real and serious that this time we will leave aside literary delights and try to give you the clearest possible course of action in possible situations.

FIRST CALL to the fact that clouds began to gather over your company, are:
an unexpected offer to sell a share of the company;
· an unexpected proposal to redistribute the responsibilities of senior officials;
· a sharp increase in the number of small transactions with shares;
Massive negative media coverage.

STEPS YOU SHOULD TAKE URGENTLY

1. Change the registrar.
The reason is obvious - how does the aggressor know the list of shareholders?
2. Pay off all outstanding debts.

One of the methods of company capture is absorption through bankruptcy proceedings. Sometimes the aggressor can artificially make you a debtor.

Example 1
You are negotiating a partnership with a large supplier company. As is often the case in Russian reality, you stipulate some conditions orally, in particular the question of deferring payment. After some time, the stipulated condition is “forgotten”, and you find yourself embroiled in bankruptcy proceedings.

Example 2
The aggressor buys your debts. A few days before the payment of the debt, the creditor-capturer closes his accounts, changes his address, and after 3 months, files a lawsuit with a request to declare the debtor bankrupt.

3. Carry out an urgent reorganization in order to:
transformation into a CJSC or LLC;
buyback of shares and getting rid of minority shareholders.

One of the ways may be to make a decision at the general meeting on the consolidation of shares, for example, 100 into one. In this case, the owners of a smaller number of shares will become owners of fractional shares (1/4 shares, 2/3 shares, etc.). And fractional shares may be subject to redemption by a joint-stock company.
· The reorganization can take place in the form of a division into several companies, each of which individually is not of interest to the invader.
· Withdraw valuable company assets to a new legal entity or subsidiary, followed by a spin-off.

4. Start buying up your shares on the secondary market.

5. Launch a powerful PR in the media.

In fact, you had to keep an eye on your favorable media coverage, but even now, support in the media will not hurt.

6. Conclude secret agreements that will significantly worsen the financial gain of the aggressor in the event of capture.

So, for example, you can enter into a secret agreement with another company (also owned by you), according to which the exclusive right to purchase the products of the firm (which is encroached on) at a fixed (low) price for 50 years is transferred to it.

7. Replug employment contracts with the entire administration of the enterprise and include in them a clause on large (huge) monetary compensation in case of dismissal.

This will also burden the new management with debt.

EXTREME MEASURES

1. Counterattack on the actions of the aggressor.
2. Search for a "white knight" (another large firm for a friendly merger).
3. Deliberately burdening the company with debts, acquiring distressed assets and liabilities.

PREVENTIVE MEASURES

If you are only thinking about forming a joint-stock company, but are seriously afraid of the threats considered, include the following clauses in the Charter and this will greatly reduce the likelihood of hostile attacks.

1. The condition of a high percentage of required votes to deal with acquisitions and mergers. Some Western companies bring the required majority up to 95%.

2. Division of the board of directors into 3 parts. According to this clause, during the next 3 years, only one part can be elected by the meeting of shareholders for 1 year.

3. Fair price condition. Determination of a fixed premium to the current share price for a buyer who purchases any large block of voting shares.

And finally one more important advice. Always clearly comply with all requirements of the law, even in small things. One general meeting, which was not notified to small shareholders, gives the owner of even one share a reason to go to court with a demand to annul the decisions of your meeting on the basis of a violation of the rights of shareholders. And if this shareholder represents the interests of the invader, and the court is also on the side of the aggressor, you have every chance of losing the company. AT Russian history captures also occurred on smaller occasions.