Resolving Corporate Challenges

Conflicts and challenging situations are not new to the Russian corporate landscape. One of our key activities is work to resolve such situations in our members’ favor.

To accomplish this, we engage in:
  • Negotiations with management and controlling shareholders;
  • Attempts to form coalitions of minority investors to attain blocking stakes, if possible;
  • Public relations work through the media;
  • Court disputes.
Of these, negotiations is by far the most effective and preferred method of protecting investors’ rights. The Russian legal system is oftentimes inadequate for a number of reasons, and is not an effective venue for investors to try to ensure their rights are met. Individual investors that have taken this route in the past have typically not been successful.

Maxim Sokov, head of strategy of UC Rusal, speaks about the shareholder conflict at Norilsk Nickel at an IPA conference in 2009.

Majority shareholders are often unlikely to regard minority interests at first, and are more interested in immediate benefit – such as, for instance, repurchasing issued shares at below the listing price. But when presented with a well-argued case by a consortium of large market participants, they often come to weight the long-term consequences more heavily than the short-term gains.

Not every case is a success, but in the most recent period, we have successfully resolved conflicts and challenging situations at the following companies:
  • The Svyazinvest group of companies being consolidated under Rostelecom;
  • GAZ;
  • OMZ;
  • Dalsvyaz;
  • Centrenergogaz;
  • Ryazneftekhimproduct;
  • TGK-2;
  • Numerous others.
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