Defensive Measures against Unfriendly Corporate Takeovers

Abstract

Despite positive tendencies in the sphere of Russian mergers and acquisitions market development, improvement of M&A transactions spread over the segments, hostile takeovers based on abusive use of subjective rights still prevail. The main reason for Russian unsolicited takeovers is defects of material and procedural legislation which do not secure proper and adequate protection of property rights making any acquisition based on misrepresentation, manipulations and breach of law possible. Thus the article deals with general methods which include federal antimonopoly control, measures of civil, administrative and criminal liability and special methods applying by the companies to reduce economic value of acquisition, increase costs for a hostile company, get temporary delay in order to additional protective measures creation. The article concerns effectiveness of special measures (amendments of OJSC charter, subsidiaries establishment, transfer of shareholder register to foreign country) and measures resulting from securities regulation (transfer of shares to beneficial ownership, American depositary receipts offering, additional shares issuing) use by Russian companies and provides suggestions with regard to Russian corporate legislation improvement.