Recently the protection of the business assets of our clients has become one of the key directions of Patriot Law Firm. Let’s take a closer look at the main characteristics and principles of the business assets protection of economic entities with large capital turnover.
The protection of business assets can be defined as economically pre-adjusted placement of Client’s capital, so that it is protected from external risks, does not attract too much attention of creditors and is not available to them, but at the same time, would be available and easily manageable for the owner of capital.
A successful business, especially in the Ukrainian realities, is a huge daily work, coupled with the risk 24/7. To reduce this risk, put it into frames of deliberate and considered conduct of business is impossible without competent legal audit.
Based on our experience, the main way of protection of the Client’s business assets is the application of the preventive protection system, namely:
The definition of the most favorable organizational and legal form of a business entity, depending on the type of activity. Lately the most economically and organizationally favorable organizational and legal form for big business is a private joint-stock company, holding, less often — group company, in which the capital is divided into shares and the possibility of regulation of management decisions by unauthorized persons is eliminated.
Building a secure and efficient corporate structure of legal entity considering the shareholding structure of the company. Special attention should be paid to the peculiarities of preparation of constituent documents. For example, when it comes to redistribution of responsibilities among the participating companies of the holding, the formation of the scheme of asset protection at the four corners: the company — the owner of the property, the operations conducting company, the management company, protection of business owners.
Reduction of tax risks. Quite an interesting task, which in the case of our client (a major company in the field of hotel industry) was solved by the specialists of our company by transferring the risk source to other businesses, and by outsourcing accounting, financial services and delegation of responsibility for tax risk of insurance organization.
Corporate restructuring of domestic assets with the help of non-resident companies. The most popular model of reducing the financial risks by attracting foreign companies with non-resident jurisdictions to the structure of ukrainian companies has been recently losing its effectiveness in case of ignorance of some aspects of work with offshore zones and lack of experience of dealing with such companies.
When the company achieves certain success and becomes consistently profitable, it is more likely to become an object of hostile takeover in realities of our country. The most dangerous mechanism of the transfer of ownership of the company to a new unfair owner is a hostile takeover.
The most common ways of hostile takeover are:
— the mass purchase of shares from minority shareholders (PJSC, OJSC) or founders’ participating interests in the charter capital of the company (LLC);
— purchase of debt obligations of the company, followed by his artificial bankruptcy in court;
— contestation over the ownership of the company’s fixed assets;
— bringing the company’s management on their side (financial interest, green mail);
— drawing of attention of regulatory agencies to activities of the company by providing, for instance, tax authorities with misleading information;
— shareholder register manipulation (displaying of nominee shareholder in shareholder registers, etc.).The specialists of our company offer our clients the following main preventive mechanisms of protection of business against asset-grabbing:
1) development of a well-considered and stable corporate and management structure (protection of insideinformation, legitimation of the company’s activities, creation of an effective structure of corporate management);
2) control over creditor indebtedness (duediligence of all projects and contractors of the company);
3) identification of problematic aspects of the company and their protection in different areas: legal, judicial, economic, PR — effect of using the media, power, administrative and corporate factor.
A lot of our clients — business owners, given the difficult economic situation in our country and the need to quickly and unconventionally respond to changes in the external environment, come to the conclusion about the necessity of business restructuring.
Restructuring cannot be defined as narrow a concept of the company transformation. It is a complex process that has many directions, depending on the particular task and industry characteristics of the business. The restructuring process consists of improvement of the business management system, economic and financial policy of the enterprise, marketing system, operating activities, human resource management, etc.
Business owners, making a decision on the restructuring of the company, can pursue different aims:
— consolidation of business in the management of one owner;
— simplification of corporate structure and improving management efficiency and transparency of the company;
— improving the competitiveness in the domestic market;
— entering the international arena (transnational level);
— value creation;
— increasing of investment (financial) attractiveness for foreign investors.
In the process of restructuring, reorganization by accession, merger or de-merger of businesses may occur, or a package of restructuring measures for the purpose of steering the company out of economic crisis and further systematic development of the business may be taken.
Our company provides complex legal support of business assets protection of our Clients, ensuring each individual approach, which is contained in the joint search for weaknesses that can cause problems, clear definition of tasks and providing them with an appropriate for the Customer way of solution.
Properly constructed plan for asset protection, offered by the professionals of our company ensures the creation of such system of business operation, in which the cost of its asset-grabbing by the aggressor and loss risk of “business reputation” of the raider will be extremely high, and the legality of passing of title to the business as the object of raid will be significantly hindered or even impossible, that will considerably increase the security level of your business.