Legal support for a sale of a participatory interest in a Russian company to a consortium of Japanese companies
The work was done to increase the manageability and transparency of the company (the ownership structure was changed, including the formation of a holding structure on the side of the sellers), comprehensive due diligence was carried out, governance bodies were established: a board of directors, an alternative management board (executive committee), a system of checks and balances was formed, and many-hours-long negotiations were held.
Many documents were drafted (most of them under the English law): an agreement for contribution to the authorised capital, an agreement for sale and purchase of participatory interests; a resolution increasing the authorised capital; two counter pledge agreements: the sellers pledge the remaining participatory interests for performance of certain obligations, and the buyer pledges its participatory interest to secure payment of the remaining amount after two years, with the pledge being released in parts as the conditions precedent are fulfilled; new articles of association as there are new governance bodies, corresponding covenants related to the business and management of the company; a shareholders’ agreement.The transaction had a complex structure: part of the amount was paid to the owners of the company for selling the participatory interests in it in two stages: 1) upon conclusion of the transaction; 2) after two years upon performance of certain conditions. The remaining amount will be invested by the Japanese companies in the business as a contribution to the authorised capital. Another complex step from the organisational point of view was the last stage — the transaction signing —since all the arrangements were to be finalised during lockdown due to the Covid-19 pandemic, and both the parties to the transaction and the consultants were in different countries and cities with a significant time lag, and the transaction itself required notarisation and four consecutive registrations with the Russian tax inspectorate. Despite this, we managed to complete everything within the expected time frame.