How do raider takeovers and greenmail occur? Ways to prevent business takeover

The greater the capitalization and profitability of the company, the greater the interest of ill-wishers to alienate property or control over the enterprise. The number of schemes is only increasing every year, this is facilitated by the improvement of legislation against raiding, paradoxically. Such actions almost always contain elements of a crime included in the Criminal Code of the Russian Federation.

How violation of the law manifests itself, what greenmail is and how to resist all this - you will learn from this article.

What is a raider takeover?

In modern economic realities, a raider takeover is forceful, legal, financial or other influence with the aim of alienating the property of another enterprise or appointing its own leader.

Raiding (from the English “capture”, “violence”) means a change in the ownership of an enterprise’s assets or the seizure of control over its management against the will of the owners and management of the company.

The concept itself has an extremely negative connotation among businesses and among ordinary citizens, since raider takeovers in the 90s and 2000s were often associated with violence, even murder.

Scheme of a classic raider takeover involving a bank

The concept of raiding came from the USA and the Western world, where this practice is widespread, but in a more civilized form, at first glance. Currently in Russia, the redistribution of property is no less fierce, but corruption, fraudulent schemes, and the use of legislation in one’s favor serve as instruments of pressure.

Since the development of the industrial revolution in England, Holland and other countries, entrepreneurs have been subjected to raider attacks from outside. The targets of takeovers were almost always profitable companies with large capitalization.

Until the 16th century, there was no large industrial business, as well as corporate law, so raiding was practically absent, except for piracy.

Customers for a raider takeover can be:

• Competitors who want to monopolize the market by acquiring similar companies.
• Small owners of blocks of shares or shares of PJSC, CJSC, LLC, who want to get more.
• Professional raiders. They usually have extensive experience, a qualified team of lawyers, economists, security officials, and have connections with the authorities.

• Minority owners of PJSC shares blackmailing the owner of a controlling stake so that he buys out their securities at a high price.
• Representatives of government bodies or law enforcement agencies who may seek access to financial flows and control over the enterprise.
• Persons driven by personal motives - envy, revenge, arrogance. In fact, there are many such types of capture customers.

Raiders are not interested in the organizational and legal ownership of the enterprise (LLC, CJSC, PJSC) and its size. They are driven by cold calculation, based on a financial analysis of income from a successful takeover of another company.

Who are the raiders disguised as?

How to protect yourself from raiders

Only a competent entrepreneur can save his business from being captured by ill-wishers. To do this, you need to understand entrepreneurship and build a clear business plan.

Conditions for maintaining business:

1. Confidence and complete understanding of the matter. Do not open a business if you have not set a specific goal for its management and development - this will make it easier to deprive the entrepreneur of his business.
2. Order in documentation. Prepare all codes, charters, check all signatures and powers of attorney. Any mistake can become a weapon in the hands of an experienced raider. Consult with experienced lawyers and notaries to avoid risks.
3. Well-organized team work. Avoid misunderstandings and quarrels so as not to make unnecessary enemies among your employees.
4. No debts and timely fulfillment of financial obligations.
5. Registration of rights to movable and immovable property.
6. The correct position regarding the media. Enlist the support of publishers or famous journalists.

Every year the raiders' actions become smarter and more thoughtful. The era of technology has opened up new channels for influencing competitors. Entrepreneurs should always have their finger on the pulse and not allow outside firms to influence their company.

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Goals

The goals of the raiders are directly related to the varieties of their customers, since they solve different problems.

Let us highlight the main goals pursued by the raiders:

1. Expansion of the market in which the company involved in raiding activities operates. Ideally, the market for a particular product or service should be monopolized from the raider's point of view. How much the FAS can interfere with this is another question.
2. The redistribution of influence within the PJSC, which is initiated by a group of minority shareholders. The goal is to obtain a controlling or blocking stake.
3. Establishing control over the enterprise by changing the director, who can redirect the flow of funds and assets.
4. Blackmail of owners by minority shareholders in order to force the PJSC management to buy back securities at a high price.
5. Sale, dismemberment, destruction of the company by professional raiders, who often act on orders.
6. The ability to receive constant financial income from the company on illegal grounds after raider actions by government or law enforcement agencies.
7. Capture of an enterprise for reorientation of the type of activity or for the construction of residential areas on its land.

Goals are often combined, which increases interest in the enterprise on the part of the raider.

In any case, the ultimate goal of any raider takeover is enrichment in any possible way. Gaining power over an enterprise also leads to enrichment.

Functions of the criminal law industry

The criminal legal branch, as mentioned earlier, has its own characteristic features. They are most clearly manifested in industry functions. Today, scientists identify the following areas of criminal law activity, namely:

• The protective function is manifested in the relationships that arise between law enforcement agencies and violators. That is, individual departments have the right to hold criminals accountable for committing certain acts.
• The preventive function is very often confused with the protective function, but the meaning of each of them is completely different. The preventive orientation of criminal law is manifested in condemning illegal actions and encouraging their suppression.
• The most important is the educational function. Because, thanks to the existence of criminal law legislation, state power develops among the entire population of the Russian Federation a certain “regime” of psychological understanding of the wrongness of committing crimes. However, this function “works” only if the state has a high level of legal culture. As for the Russian Federation, today this indicator is at the proper level, so the implementation of industry activities is quite possible.

Thus, criminal law is an excellent regulator of social relations of an illegal nature. In this case, the specifics of the industry are quite suitable for controlling activities such as raider takeovers. The Criminal Code of the Russian Federation does not yet contain a specific article regarding this activity, however, theoretical understanding of this area helps lawyers little by little develop the institution of responsibility.

Kinds

Today's raider is not a template racketeer from the 90s, demanding to rewrite the stall. Modern methods are much more sophisticated and varied, since legislation has changed significantly: Civil, Tax, Land, Criminal Codes, laws on bankruptcy, LLC, JSC, RCB and others.

The FAS, Investigative Committee, and the Ministry of Internal Affairs are actively monitoring the situation, but not always effectively. Today there are conditionally three types of raiding:

1. White raider takeover , when the takeover of an enterprise occurs strictly in accordance with the law, but against the will of the owner and management of the company. Examples include hidden repurchase of shares to the level of a controlling stake in a PJSC, legal proceedings against owners, including bankruptcy. Often, legal raiding occurs against unprofitable companies that interfere with the expansion of the company's business. To prevent a white raider takeover, you need a good legal department and carefully worked out local acts of the company: charter, orders, decisions, and so on.
2. Black raiding. It is an illegal seizure of the assets of an enterprise, based on forgery of documents, bribery of officials of the enterprise, courts, law enforcement agencies and authorities, fraudulent actions, threats, blackmail, and violent actions. LLCs, CJSCs and other non-public enterprises are least protected from this type of action. Owners need to fight back with the help of law enforcement agencies, prosecutors, courts, appeals to the media and to the public.

   
   Scheme of raider seizure using a recorder

3. Gray raiding represents the most sophisticated method of taking over a company. In form, gray raiding complies with all legislative acts and court decisions, but in its entirety it represents fraudulent actions. To bring the gray raider to justice, a large-scale investigation and an objective court decision upon completion of the investigation are necessary. In fact, this happens extremely rarely for two reasons. Firstly, gray raiders are usually very careful and act only within the law, taking advantage of legal gaps and shortcomings in the document flow of the enterprise. Secondly, investigators are extremely reluctant to take on such cases if there are no judicial prospects.

   
   Scheme of raider seizure of assets by court decision

Regardless of the “color” of the raider takeover, justice remains not on the side of the target of the attack, since assets leave him if proper measures are not taken.

Expert opinion

Yulia Kuznetsova

Expert in financial management, banking

Previously, bank raiding was also very common, when enterprises were bought by the bank due to debts for little money. Currently, most of the banking sector is state property, the rest is tightly controlled by the Bank of Russia. And things like cashing out, raiding, and fraud are extremely difficult to pull off without losing your license.

Criminal law is the main regulator of the criminal sphere

Raiding, or raider takeover, is not something unique in the Russian Federation today. Previously, this area of ​​​​activity was purely criminal. However, in the modern world, people have turned it into a legal business. When we try to qualify this activity from the point of view of the criminal branch of law, we should take into account that the very essence of raiding has every right to exist, which will be discussed later in the article.

However, the methods that are used directly during a raider seizure are criminal. As for the criminal branch of law, it is in it that we need to look for a way to suppress illegal methods of seizure. Because criminal law is a set of rules that regulate social relations in the area of ​​the most dangerous illegal acts. The specifics of this industry can be seen in almost all of its institutions, methods, regulations and structure.

Example with Omsk MPZ

Let us give an interesting example of a double raider takeover, when one raider managed to take away an enterprise from another.

The Omsk MPZ (meat processing plant) at the beginning of the 2000s was a tasty morsel for many: it was the oldest enterprise in its industry, produced high-quality products, and was located on very expensive land in the city center.

In 2001, after the old owner passed away by falsifying documents in the LLC decision and after possibly bribing a notary, a person who knew little about the meat business, but wanted to make money, became the director and owner. The equipment at the enterprise was outdated, so a decision was made to modernize it using loans.

Banks were reluctant to give loans, so the director thoughtlessly took money from private individuals with a semi-criminal past at a high interest rate and a short term. The financial situation quickly deteriorated, modernization never happened, and the loans had to be repaid.

This situation was observed by a well-known company in Omsk that provides services in the field of security and finance. This company offered its services to the director of the MPZ, including the improvement of the business, provided that their person was appointed deputy. The powers of the deputies were practically greater than those of the director. In 3 months, a complete financial and legal picture was collected, and the prosecutor’s office was involved in relation to some violations.

Soon the director was arrested, and the company began to go through bankruptcy proceedings. After this, part of the MPZ area was leased out, and part - for housing development.

How are they trying to take away business?

You need to write down the essence of the conflict. The company BonaFide makes women's sportswear. The company had a general director, Nikita Antonov. At some point, he decided to become a partner and bought a stake in the company. Then the entrepreneurs had a conflict. Nikita decided to leave the business. But before that, he forged the company's charter. As a result, he was able to take back the trademark. And then, together with Vitaly Andreev, who was one of the company’s dealers, he decided to steal goods worth 64 million rubles from the warehouse. Vadim talks about all this in detail in his videos. The police and the courts will put an end to it, but we were interested in talking with one of the participants in the conflict.

Technologies

There is no universal and unified technology for raider capture, but the following methods are used:

1. Fraud . Forgery of documents, falsification of court decisions, minutes of meetings, bribes to officials, nominal registration of an enterprise with the Federal Tax Service with a dummy director, forgery of signatures, production of false documents. It is very common for minority shareholders to hold a general meeting of shareholders without notifying the majority shareholders. At such a meeting, a general director is elected, who immediately withdraws assets and redirects cash flows. Most likely, such a decision of the general meeting of shareholders will be overturned by the court, but the raiders will already carry out their plans. There are often cases when people come to an entrepreneur with a court decision to recover an amount from another region or are sent to a bailiff. After this, the seizure of property and accounts and debt collection begin. In general, fraud leads the list of raiding methods.
2. Forceful seizure threatens the life of owners or relatives. This method is not so common now, but such cases occur in our time too.
3. Taking over an enterprise through bankruptcy . Today's 127-FZ leaves few loopholes for the raider, but if he is the main creditor, then the enterprise will most likely go to him. The owner, observing this course of events, prefers to sign a settlement agreement with the creditor. There is, of course, the option to go through all stages of bankruptcy, which can last from 1.5 years. During this time, it is possible to withdraw assets and financial resources, but in this case the owner violates the law.
4. Pressure from the state or security forces . Most of these security forces act arbitrarily and illegally. There is also an option when there is pressure on a businessman from the federal authorities in order to get an important business. This happened with the owner of Sibneft (now Gazpromneft) Abramovich, although he received billions of dollars from the state, so it’s difficult to talk about raiding here. However, there are other cases. For example, today Rostec is very active, acting more from an administrative position in order to absorb profitable industrial enterprises.
5. Purchase of shares of a public joint stock company through intermediaries and secretly . After receiving a controlling stake, the company changes hands.
6. Bribery and use of enterprise management. This method of transferring ownership rights was very popular in the 90s and 2000s, but does not lose its relevance now. A director bribed by a raider can cause deliberate damage to his enterprise: enter into obviously unprofitable deals, take out unnecessary loans, get rid of assets. All this weakens the company, which becomes easy prey for a raider.
7. Conspiracy of companies against one PJSC . In this case, financial resources are used to secretly buy out shares to acquire a controlling stake.

Technologies of raider capture
In most situations, a raider combines several methods at once in order to achieve the effect as quickly as possible and for relatively little money.

Mistakes of entrepreneurs that lead to loss of business

One of the common mistakes is that management neglects corporate risks when dealing with shares and interests when choosing a method for managing the company and drawing up statutory documents .

For example, owners register a business in the name of a nominal owner when they create a new legal entity or wind down the activities of an old company.

Another mistake: companies prolong a corporate conflict, as a result of which the business becomes vulnerable as a result of labor or other disputes . During legal proceedings, internal company documentation is brought to light and made available. Attackers actively study the information received and then use methods of psychological and physical pressure on company owners and managers.

Bad advice: how to become an easy prey for scammers?

1. Keep the original articles of incorporation in an accessible place.
2. You should not burden yourself and your deputies with the obligation to sign documents; it is better to issue a general power of attorney to the courier with the right to sign anything he wishes.
3. It is not necessary to attend general meetings of participants; it is better to delegate authority to a trusted person.
4. In the office, everyone should always have blank sheets of paper with the signature of the manager.

How can raiding be prevented?

Takeovers usually occur due to sloppy work by top management and the economic security service. To prevent these risks, you need to take simple steps:

• Constant monitoring for interest in your business is unjustified.
• Eliminate possible legal loopholes that you can cling to.
• Diversify your business, create several joint-stock companies or LLCs.
• Protection of confidential company information.

• Avoid “dispersion” of shares, concentrate them in several hands.
• Don't take out a lot of loans.
• Additional issue of shares.
• Re-registration in another region or country.

You can also start legal action against the invading organization, which can drag on for years. Russian legislation has not yet been fully finalized in this area: both in cases of voluntary mergers of joint-stock companies, and in protecting shareholders and owners of enterprises from raider takeover.

Raiding in Russia

Unfortunately, the stories of such appropriation of other people's property are not pages of the past of our country. Raiding is the reality of today. More than 70,000 raider attacks take place in Russia every year. Small and medium-sized companies become their victims.

The specifics of the raiders' actions have partly changed. Violent methods of seizure, in which criminal structures played a leading role, have been replaced by techniques that outwardly imitate legal actions: creating accounts payable from the victim company, changing constituent documents and illegally acquiring shares in the company's capital.

Having created problems in the company's work using such methods, raiders attract lawyers and law enforcement agencies, which leads to large losses for the company. As a result, they buy this business for next to nothing.

The global consequences of raiding for the country are expressed in the destruction of small and medium-sized businesses, job cuts and reduced competition in the market.

What is greenmail?

Greenmail (from English “green letter”) is no less dangerous for business than raider takeovers, and in fact, is its variety. It is a kind of message to the owner or director with an unambiguous hint, but the law is usually not violated.

As a striking example of greenmail, one can cite the head of a horse in the bed of one businessman in the film “The Godfather” from the main character.

Of course, modern business is not so radical and the blackmail is more subtle, but this does not make it any better. For example, a funeral wreath for your birthday, hints to reveal certain secrets, letters with photographs of the children of the owner of the enterprise are at least unpleasant to receive.

Typically, blackmailers do not demand control over the company; they are satisfied with a high amount for their share of shares in a PJSC or share in an LLC.

Expert opinion

Dmitry Dunyashev

Blogger, private investor, project manager real-investment.net

Another version of greenmail is a declaration of corporate war by a minority shareholder. This minority shareholder can endlessly request documents, demand explanations from management, lead people to petitions, and carry out other actions that interfere with the work of the company. The purpose of such actions is one - to sell their stake to the owners at a higher price.

Typically, blackmailers do not demand control over the company; they are satisfied with a high amount for their share of shares in a PJSC or share in an LLC.

How to prevent greenmail?

There is no punishment in the Criminal Code for such actions unless the law has been broken. In general, owners are advised to:

• Select good personnel for the security service.
• Consult through informal channels with representatives of law enforcement agencies; we are not talking about bribes here.

• Engage the legal department to constantly file lawsuits against the blackmailer for any reason.
• Carry out mirror measures, but only within the framework of the law.

If the blackmailer violated the Criminal Code, then immediately file a complaint against him with the law enforcement agencies. Evaluate every action of the blackmailer for violation of laws.

Judicial practice in the field of corporate blackmail

It is quite difficult to talk about judicial practice in the context of corporate blackmail, since it is practically absent. In addition, the Ministry of Internal Affairs absolutely does not keep records of cases of greenmail, since there is no such concept there. But people are imprisoned for fraud (Article 159), for threatening life (119), for extortion and blackmail (Article 163). Detailed list of articles with links in reference materials at the end of the article.

One thing is for sure - greenmail cases rarely go to court. The evidence base of the accusers is usually small and the court often acquits the blackmailer.

Take care of the safety of internal data and documents.

The rule is banal, but many treat it negligently. It is important to understand that an information leak can equal a loss of business . Raiders will exploit every weak point or even falsify your documents to take over the company.

It is important, at a minimum, to prohibit the removal of documents, and, at a maximum, to think about all levels of protection: from IT systems to storing seals and paper documents in a safe. It is worth thinking about the safety of data before an employee is fired or removed from his position, so that he does not take passwords and papers with him.

Also, you should not allow even trusted colleagues to sign important papers on behalf of the head of the company. Reinsurance won't hurt here. Otherwise, a “lost” seal, paper or document signed on your behalf can become a nail in the coffin: without knowing it, you, for example, “donate” your assets to someone.

People inside the company can also take advantage of this vulnerability.

The difference between a legitimate takeover and a hostile one

Merger, acquisition or accession are forms of voluntary reorganization of public joint stock companies in order to increase the authorized capital, assets and other benefits. Situations often arise when, in order to survive in a competitive market, enterprises need to merge into one legal entity, liquidating the old ones.

By combining common assets, financial resources, technology, management, patents, a single company will have much more opportunities for entrepreneurial activity.

Nature of acquisitions

A raider takeover always occurs against the will of the owner and management, and legislation is often violated. The most important difference is that there are no economic prerequisites for takeover during raiding, which would lead to mutual benefit.

Article 159 of the Criminal Code of the Russian Federation against raiding

According to the Criminal Code of the Russian Federation, the raider can be convicted under 10 articles. Article 159 of the Criminal Code of the Russian Federation (fraud) is the most common of them. The concept of raider seizure of property is not considered. Fraud refers to the illegal theft and appropriation of someone else's property. The article contains 7 parts, according to which the type of punishment is divided into:

1. Fraud involves: a monetary penalty of no more than 120 thousand rubles; arrest for 4 months; forced labor; correctional work. In some cases, a penalty of imprisonment for 2 years is chosen.
2. If the fraud is of a group nature, the amount of the monetary penalty can be up to 300 thousand rubles. Compulsory work (up to 480 hours) or correctional work for up to 2 years are applied. The law also provides for punishment in the form of forced labor for up to 5 years with simultaneous restriction of freedom for no more than a year. In some cases, the punishment is arrest for 5 years.
3. Fraud in which official position was used provides for a fine of up to 500 thousand rubles. or forced labor for a period of no more than 5 years. Arrest for up to 6 years with a monetary payment of up to 80 thousand rubles is also possible.
4. Fraud on an especially large scale is punishable by imprisonment for up to 10 years.
5. Fraud on a large scale is subject to imprisonment for 6 years.
6. Fraud in business activities involving failure to fulfill contractual obligations – imprisonment for up to 5 years.

Thus, the worst outcome facing a raider is 10 years of arrest with monetary payments.

The difference between greenmail and raiding

Raiding is considered a more severe form of taking property and money from the owner of an enterprise. Many people are imprisoned for raider takeovers; this phenomenon has been criminalized. Preparing a raid requires large financial, human, administrative and other resources. Every year new laws are adopted, amendments are made, FAS decisions are made that complicate the activities of raiders.

Greenmail is also a way of taking money from a business owner, but it is very difficult to prove the criminal component here. Essentially, this is a method of blackmail, methodical and persistent, which does not break the law, but the target of the blackmail is aware of what is happening. The blackmailer's hope is not to seize ownership or control of the entire company, but to receive money, for example, for selling a block of securities at a price much higher than the exchange price.

Prerequisites

Often before a raider takeover occurs, it is preceded by:

• quarrel with partner,
• dissatisfaction from minority shareholders,
• the presence of internal corporate conflicts,
• excessive fight against competitors, bordering on going beyond the law,
• acquisition of the company's accounts payable.

Attention! If, when making a transaction, people are asked to provide certain documents that have nothing to do with it, one may suspect that a base is being prepared for raiding.

All types of businesses are at risk, but most of all this applies to small and medium-sized businesses due to insufficient resources to protect their assets. The most interesting for invaders are:

• real estate,
• expensive equipment,
• large sums of money in bank accounts,
• obtaining property and non-property types of rights.

Useful materials (download)

#	File	file size
1	Article 159. Fraud	186 KB
2	Article 163. Extortion	832 KB
3	Article 185. Abuses during the issue of securities	831 KB
4	Article 285. Abuse of official powers	836 KB
5	Article 330. Arbitrariness	110 KB
6	Article 119. Threat of murder or grievous bodily harm	829 KB

Who is the “aggressor”?

The raider takeover of a factory, company or enterprise is not carried out by ordinary citizens. In most cases, the “aggressors” are trained market professionals. In this case, they are not interested in the industry focus of the company. The main indicator is the economic potential of the company, that is, its monetary side. As a rule, the subjects of raider activity include:

• financial and industrial groups;
• oligarchs;
• intermediaries who act, as a rule, in the interests of a third party - the customer;
• professional investors, greenmailers.

As we can see, all the parties presented are “experienced” market players, which indicates the danger they pose.

Other methods of capture

There are other ways to seize firms and enterprises, in addition to those that have already been indicated earlier. One of the simplest and most interesting is the sale of a ready-made company. In most cases, the victim entrepreneur does not even realize that such a “product” has errors in the legal registration process. Subsequently, the raiders seek in court the invalidity of such a transaction, which entails various kinds of negative consequences. One of the most negative is the inclusion of a raider on the board of directors. At this stage, attackers begin deliberately destabilizing the work of the object of their interest.

Techniques for conducting a “black” takeover

Seizing an enterprise in a white and gray way does not imply the use of force. Tough measures are characteristic of black raiding. The behavior of black raiders during an operation to seize an enterprise is aggressive and includes:

A). removal of security;

b). breaking doors to premises;

V). taking hostages from among employees and management;

G). blackmail, intimidation, kidnapping;

d). beating, sometimes resulting in death.

The result is a forced change of leadership.

However, these days, black-hat methods hardly occur. And if they are all committed, then the raiders, through blackmail and intimidation, make it impossible for all participants in the case to report these crimes to the police. Unfortunately, effective, effective methods of combating black raiding have not yet been introduced at the legislative level.

Which companies are at risk?

Since a raider takeover is the activity of taking over someone else’s business using various methods, almost any enterprise can be at risk. The following organizations are most often targeted:

1. Enterprises with attractive assets.

2. Organizations that violate the law in their activities.

3. Enterprises with a fragmented block of shares.

4. Organizations with uncontrollable accounts payable.

5. Enterprises whose management manages their property ineffectively and does not control the timeliness and correctness of execution of documents related to their activities.

Consequently, a raider takeover is a long and labor-intensive activity of raiders. Therefore, before engaging in it, attackers carry out appropriate preparation. They study information about the object of interest, probing its weak points (name of the enterprise, legal form, shareholders and their shares, main asset). They are also looking at the security service, legal and accounting structures. They preliminary study financial resources, connections with law enforcement agencies, managers, lobbying opportunities, relationships in the team, etc.

Judicial cascade

As a rule, the judicial cascade is applied first. Its purpose is to use the necessary measures to secure the claim, which is withdrawn by the invaders themselves after a certain period. Winning in the process is not the goal itself. This measure is carried out by filing a lawsuit. Thus, a ruling is made to establish interim measures, and all or part of the enterprise’s property is seized. Consequently, the organization will no longer be able to protect its property from raider attacks. Such lawsuits are cascading in court. As a result, the organization's main assets become blocked. Consequently, it will be impossible to sell or mortgage them.