Corporate disputes

Customer Advocacy in corporate disputes

Customer Advocacy in corporate disputes


The phrases “corporate raid” or “hostile takeover” are probably familiar to everyone.

Doing business always involves numerous risks, both external and internal, because a situation is not ruled out when the owners of the enterprise cannot find a compromise in the matter of its future activities. Obviously, this state of affairs, let us say, based on Krylov’s fable “Circular firing squad” does not portend well for the business structure and the consequences for the founders of the enterprise can be bad. For example, the founder of LLC may be located outside Dnipro (or outside Ukraine), but no one guarantees that upon arrival other founders will not solemnly hand him the minutes of the general meeting, where (without the knowledge of the absent person) the general meeting decided to expel him from the LLC. And it often happens that no one hands over the minutes of the general meeting, and the founder finds out that he is no longer a participant of the LLC from the Unified State Register (USR), the changes to which were made by the state registrar.

When talking about corporate raids, people usually mean external hostile takeovers of enterprises. But it is worth considering that the seizure of an enterprise most often occurs through the mediation of a person from the structure of the company. This internal raider assistant may be a minority member of the legal entity, its director or other top-level manager. A corporate raid can occur using various schemes, but the general thing is always the same – gaining effective control over the enterprise, even if temporary. In most cases, corporate raids can be “recaptured” only in court, and there are usually several trials in such situations, as raiders actively resist using all possible resources. For example, the appeal of the minutes of the general meeting of the LLC (appeal of the decision of the general meeting of the LLC, drawn up by the relevant protocol) is a fairly common subject of claims in the economic courts of Ukraine. But in a related move, usually the main, law proceeding, other court cases are most often considered: appeal against the actions of the state registrar, disputes regarding the immovable property of an enterprise, and so on. It is as well to remember about criminal proceedings, which can be registered both at the request of the injured party and at the initiative of the “capturers of criminal proceedings”. That is why, in the event of a corporate dispute or the first signs of a corporate raid of an enterprise, the assistance of a corporate lawyer and competent legal advice are extremely important. The above mentioned example of the exclusion of the founder from the LLC is just one particular case of a corporate dispute and one of the variants of corporate raid. In fact, there are dozens of options for the development of events and schemes of corporate raids and takeovers of enterprises, and in such situations the lawyers of “Borysenko & Partners” are ready to provide legal assistance both in Dnipro and throughout Ukraine.

What is a corporate dispute?

A corporate dispute is a dispute between participants (founders, shareholders, members) of a legal entity or a dispute between a legal entity and its participant (founder, shareholder, member), including between a legal entity and a participant who has been terminated. The subject of such a dispute is issues related to the creation, activities, management or termination of activities of such a legal entity (except labor disputes), as well as issues relating to the “turnover” of corporate rights.

Simply said, corporate disputes include disputes between the founders (participants) of an enterprise on issues of its activities (other than labor relations), as well as disputes related to corporate raids of enterprises and their hostile takeovers.

The assistance of a lawyer in the event of such a dispute is necessary, in particular, for the following reasons:

— despite the relative stability of the legal regulations that govern corporate legal relations, the jurisprudence on corporate disputes is extremely changeable and only a specialist in corporate disputes can be well-versed in. Even, one would think, simple procedure of “appealing the minutes of the general meeting” has many nuances, on the subject of which only experienced lawyers in corporate disputes have a good knowledge;

— the process of resolving a corporate dispute sometimes requires a “connection” with various government agencies and authorized persons, in particular with notaries, state registrars and others; corporate lawyers of our company are able to independently contact the above mentioned persons;

— a counteraction to corporate raid and restoring control over the enterprise is always associated with the application of a creative approach and the development of non-standard legal algorithms, which only a lawyer with sufficient knowledge and experience in this field can handle.

Experienced in corporate disputes lawyers of Borysenko & Partners have many years of experience in corporate law and many satisfied clients.

Accurately and promptly we will provide a primary legal consultation at the time of your first appeal, and provide the necessary legal assistance both in situations where someone is trying to raider your company or property, and in cases where it is necessary to restore legal control over the company, which was lost for some other reason.

Disputes between the founders of the enterprise usually arise on the following issues

  • Disputing a resolution of the general meeting of founders (participants) of limited liability company

As you know, the resolution of the general meeting of the LLC must be documented in the minutes of the general meeting of founders (participants). Such a resolution is appealed in the economic courts, because quite often the LLC decision-making procedure is violated by dishonest participants or, in cases of corporate raids, by other persons.

  • Invalidation of corporate charter

The charter of a limited liability company is, in fact and legally, the basis for its activities. We specially focus on that for a business with far-reaching plans and prospects, a charter should be prepared with preliminary legal advice. If you, as a participant of a limited liability company, have detected an“unfairness” in the charter (non-compliance with legal standards and previously stipulated conditions for the enterprise), then such a charter may be rendered invalid under court decision.

  • Distribution of dividends, allotment of profits between participants (founders, shareholders, members)

Legal assistance may also be required during the collection of dividends. The procedure for their payment is established both in terms of legislation and should be registered in the constituent documents. However, the recording in the documents does not at all guarantee the good faith of other founders or participants of the LLC, and there are cases when dividends must be collected by a court order.

  • Declaration of proprietary rights for the participating performance share in authorized capital a legal entity and disputes arising under withdraw of a participant from LLC

Withdrawal of a founder (participant) from LLC is a seemingly simple procedure, however, it can turn out to be painful with the corresponding “road-blocks” of the founders remaining in the LLC. The further fate of his share in the LLC depends on the literacy of the actions of the participant who is withdrawing. It is also important to note that the participant’s withdrawal from the LLC is subject of official registration, and the deadline and compliance with the procedure for submitting documents to the state registrar plays a significant role – in case of violation, the state registrar may refuse to make appropriate changes to the USR and legally the participant (founder) will not be considered withdrawn.

  • Disputes arising from the transfer of corporate rights on the basis of agreements of sale and purchase, gift, and also as a result of inheritance of a share in LLC

Legal relations that arise as a result of the transfer of corporate rights from one entity to another on the basis of various types of contracts require a high level of legal knowledge, which only a corporate lawyer has. Even an incorrectly set comma can “end up paying the price” during subsequent state registration of such a transfer of rights. We note that the public registrar performs his functions only on the basis of the documents submitted to it. An important nuance in such transactions is aspects related to taxation. Therefore, any transfer of corporate rights should be accompanied by professional legal assistance.

Of course, this is not a complete list of possible corporate disputes. Indeed, today the business environment is characterized by relative freedom, and a stumbling block between business partners can arise in other cases as well.

Each of the listed categories of corporate disputes requires high-quality legal assistance, both in the process of pre-trial settlement and directly in court. Note that the legislation does not provide for pre-trial settlement of disputes in the corporate sphere. Providing yourself with competent legal advice and the support of a lawyer, you may be able to “reach out” to partners with whom you have difficulties.

As have been already noted, despite the fact that it’s not the 90s, unfortunately business entities still stand a good chance to find out in practice what a “corporate raid” is.

How the corporate raid if going on

  1. Collection of internal information relating to the management and activities of the enterprise. Therefore, lawyers in corporate disputes, like other lawyers, strongly recommend not neglecting information security issues.
  2. Assessment of the level of protection of the enterprise and its investment attractiveness.
  3. Determining the most optimal method of corporate raid: what are the options for capturing or takeover of an enterprise?
    • registration of criminal proceedings against its owners or heads;
    • acquisition of payable accounts of the enterprise with the subsequent opening of a bankruptcy case;
    • falsification of documents, including minutes of general meetings of participants and the charter of LLC, which are subsequently transferred for registration of changes in the USR to “their” state registrars.

You must also keep in mind that the goals of the raiders may be different. In some cases, the task is to establish permanent control over the enterprise and make a profit from its activities in the long term. In others – the fastest transfer of real estate and other assets to “innocent purchasers”.

Protection of business on an ongoing basis is the only possible way to prevent corporate raid. However, if you have faced with raiders quite literally on the threshold of your office, lawyers and legal experts of Borysenko & Partners are available for legal advice at any time of day or night by the phone of our hotline – 050 200-25-25.

Legal services of “Borysenko & Partners” LF in the area of corporate relations:

  • legal analysis of the situation with the preparation of a legal opinion and appropriate legal consultation;
  • development of the charter, domestic regulations of the LLC, joint-stock company;
  • complete legal support of purchase and sale transactions, donations of corporate rights;
  • holding general meetings of the founders (participants) of the LLC, shareholders of the joint-stock company, execution of documents related to this;
  • development of corporate contracts;
  • assistance in pre-trial settlement of corporate disputes;
  • arrangements with notaries, public registrars;
  • accompaniment of a corporate dispute in court, both on a “turnkey” basis, and at any stage of the judicial review of such a corporate dispute;
  • legal countermeasures to corporate raids, hostile takeovers of enterprises.

Kindly note that lawyers and attorneys of our company render legal assistance in corporate disputes not only in Dnipro – “Borysenko & Partners” will prepare a qualitative legal advise and will help to solve your question regardless of your location.

Corporate disputes differ from other categories of disputes primarily in their high degree of complexity. At the same time, lawyers and attorneys of “Borysenko & Partners” law firm have many years of experience in corporate disputes with a positive result as for the client and as well as for his business.

Legal assistance of “Borysenko & Partners” law firm is your guarantee of professional protection of corporate interests.