Buy a running business in Russia

+74991108055

Buy a running profitable business in Russia

Why legal support for buying a business is so important?

When salling and buying business, the legal aspect of the whole process is extremely important. The essence of this deal is the transfer by the seller to the buyer of the company with all the property and assets, or part of it in the ownership. Unprofessional approach to the implementation of such a transaction can have serious negative consequences. This may happen, for example, when a seller conceals large debts or the fact of non-payment of mandatory contributions to tax or pension authorities.

Lack of verification of all necessary factors can lead to the fact that the buyer acquires an unprofitable company.Also, incorrect preparation of documents may be followed by actions that the property rights of the new owner be challenged or invalidated.

Competent support for the sale or purchase of business must be carried out by relevant experts such as lawyers, auditors, appraisers, accountants and other high quality professionals. When selling property complexes, it is required to conduct a full inventory, register the enterprise in this capacity, and secure the transfer ownership. The main purpose of ordering the legal support services for sale and purchase of companies (business) is to make a profitable deal. For the buyer, it is important to get an operating firm without hidden defects, encumbrances and problems associated with incorrect or illegal actions of previous owners.

For this to be done, the Vita Liberta company experts are ready to do the following:

carry out a thorough preliminary inspection of an enterprise: it is necessary to conduct a legal audit (Due Diligence), evaluate its value as a property complex, study possible encumbrances and obligations, pledges, etc., work through all the constituent documentation;
develop schemes for doing transactions, negotiations and signing contracts, represent the interests of clients;
analyze the possible risks associated with both the purchase of the company and its future activities;
support the deal at the final stage: optimal expropriation options are developed, bank cells are prepared (if necessary), transactions are notarized and assets are transferred into the hands of the new owner.

Existing legal mechanisms for buying and selling businesses in Russia

There are three basic mechanisms for selling business in Russia:

sale of an enterprise as a property complex. This mechanism is governed by art. 559-566 of the Civil Code of the Russian Federation;
sale of shares in a limited liability company (or shares in a joint-stock company), which is regulated by the Federal Law of the Russian Federation “On Limited Liability Companies” dated February 8, 1998; of December 29, 2015 (Federal Law of the Russian Federation “On Joint-Stock Companies” dated December 26, 1995, edition of June 29, 2015);
reorganization of a legal entity - merger or acquisition of companies, art. 57 of the Civil Code of the Russian Federation.

Buying and selling an enterprise as a property complex

According to paragraph 1 of Art. 559 of the Civil Code of the Russian Federation the subject of the contract is the enterprise as a whole property complex, which includes all types of property intended for its activities, including land, buildings, structures, equipment, inventory, raw materials, products, claims, debts, trademarks and so on.

The deal of purchase or sale of an enterprise can be divided into several main stages:

determination of the composition and cost of the enterprise being sold;
drafting and signing a contract of sale;
notifying creditors about the sale of the enterprise;
enterprise transfer;
state registration of transfer of ownership of the enterprise.

Purchase of stake in the authorized capital of LLC

According to Article 21 of the Law “On the LLC”, the transfer of a share in the authorized capital (or its part) to other participants of the company or to third parties is possible:

on the basis of a transaction (for example, a sale and purchase agreement or donation);
in succession (obtaining inheritance from a participant - an individual or reorganization of a participant - a legal entity);
on another legal basis (withdrawal of the participant from the company, exclusion from the company, escheat property).

A general algorithm for purchase of a stake in an LLC:

Check whether the authorized capital of the Company has been paid. Payment term is set in the memorandum of the Company and can not be more than one year. Participant's stake can be sold only in the part in which it has already been paid (Clause 3, Article 21 of the Federal Law of February 8, 1998 No. 14-FZ).
Very carefully examine the constituent documents of the Company. This is needed for in order to determine how the dispositive rules of the law are reflected. First, what should be paid attention to is implementation of clause 2 of the article in the Charter 21 of the Law on LLC. In accordance with this clause, the sale or the assignment of a stake to non-members of the LLC is allowed only unless expressly prohibited by the Articles of Association of the Company.
Determine whether purchase of stake is subject to antimonopoly regulation legislation.
Sign a contract. As a general rule, the transfer of a stake takes place in a simple written form. This means that the parties have compiled a single document under which they put their signatures.
Notify the LLC on the assignment of stake in writing and presenting documents confirming its transition (paragraph 2, clause 6 of article 21 of the LLC Law).
To hold an extraordinary general meeting of the Company's members with aim to approve the new wording of the memorandum of association. Approval of the new edition is necessary in connection with the replacement of one of participants. Extraordinary meeting convened by the General Director of the Company.
Make changes to the Unified State Register of legal entities and individual entrepreneurs.

Reorganization of a legal entity - mergers and acquisitions of companies in Russia

According to paragraph 1 of Art. 57 of the Civil Code of the Russian Federation, reorganization of a legal entity can be carried out by decision of its founders (participants) or a managing body of a legal entity authorized by constituent documents.

In total, there are 5 forms of reorganization existing: merger, affiliation, division, separation, transformation.

In order to transfer rights for business, only two forms of reorganization of legal entities can be used - merger and affiliation.

In both cases, the procedure for selling a business through reorganization goes through the following stages:

the decision of the general meeting of participants (shareholders) on reorganization;
notification of creditors of a reorganized legal entity;
drawing up a deed of conveyance, which must contain provisions on the succession in relation to the entire property of the company;
state registration of the merger with tax authorities.

As a result of the reorganization of a legal entity in the form of a merger or affiliation, the former business is being introduced into a new structure controlled by the actual business buyer, who receives full control over the organization’s activities.

Whatever mechanism of business sale and purchase you choose, the basis of a successful transaction is a competent analysis of the constituent and financial documents of the company put up for sale. With the help of the analysis, it is possible to determine the strategy of the deal.