It is only natural that the changes in the procedure of pension savings investment established for Уthe silent onesФ must not in any way restrict the presently existing opportunities for insured persons to select an investment strategy. They must still have an opportunity to choose an appropriate investment strategy (that is, the right to make a choice between asset managers and the investment portfolios offered by them) and to transfer their savings into a non-government pension fund.
The yields resulting from the investment of pension savings of Уthe silent onesФ by various asset managers are to be aggregated, that is, the investment incomes generated by all the asset managers, including the State Asset Managing Company, are to be pooled in the accounting documents. And it is this averaged yield that is to be entered in the special part of an insured personТs individual account within the personified record system at the Pension Fund of the Russian Federation. The disclosure of information concerning the results of investing must also be done in respect to the aggregated investment portfolio, and not to each separate portfolio.
Mikhailov L. V., Sychiova L. I.
The regulation of the corporate control market The present paper focuses on the problems of the legislative regulation of the corporate control market in the context of innovations suggested in the draft Concept of the Development of Corporate Legislation for the Period Until the Year 2008. Apart from a number of undoubtedly positive initiatives, some contentious issues are also analyzed, whose legislative formalization may have ambiguous consequences.
In 2005, the Panel of Experts in the Sphere of Corporate Governance of the RF Ministry of Economic Development and Trade mapped out a Concept of the Development of Corporate Legislation for the Period Until the Year 2008. The authors of the Concept have singled out several issues dealing with the upgrading of corporate legislation, including the assurance of the protection of property rights in the corporate sphere, the development of the stock market, including by stimulating the application of the joint-stock form of transacting business, and the creation of adequate legal instruments to promote the concentration and diversification of business. In the event of the realization of the key provisions of the Concept, some substantial positive changes can take place with regard to legislation on economic agents (registration, the transferal of property rights, etc.), the disclosure of information, and the regulation of corporate conflicts. The innovations considered below deal mainly with the regulation of hostile takeovers.
One of the most important innovations is the legislative consolidation of the mechanisms securing the rights of property owners and investors in the event of a possible change of control over a company in question. The Concept suggests that certain procedures be legally established in the following areas:
1) the establishment of a procedure for informing stockholders and investors, timely and fully, on the intentions and actions of a buyer company. This norm, which is being widely applied in the USA and in the EU countries, represents, beyond doubt, an important innovation, because it permits the minority stockholder to take a decision as to leaving the ranks of owners of a company if the new principal owner and his strategy do not suit him or her. When developing a concrete legislative act concerning this issue, it is advisable to make use of the US experience (the Williams Law), when the buyer company discloses the information on a tender offer by filling a standard form, which includes a section on the plans of the buyer company with regard to the company being bought (plans as to the sale of any assets, the companyТs reorganization, any changes to be made in the composition of the board of directors, its dividend policy, etc.). This form is then sent to all the shareholders of the company, and is also made available at the stock-exchanges trading in the target companyТs stocks.
2) the creation of a mechanism for the realization of the right of minority stockholders to sell their stocks at a just price in the event of any change having been made in the key conditions, on the basis of which the stockholder has taken his investment decision. This provision is a continuation of the previous one, and secures the rights of the minority stockholder if the latter considers as negative the ongoing changes in the ranks of company owners and/or the views held by the new owners.
3) the establishment of a sophisticated procedure for taking a decision concerning protective measures in the event of a takeover, so as to provide the stockholders with the right to choose a more effective owner and to prevent the withdrawal of capital by the managers. At present, this provision does not seem to be very urgent for Russia, because it is necessary for the observing of the legal economic interests of the owners of companies with a scattered structure of ownership, when no owner holds a controlling block of stocks, and therefore, there is no one who might have the possibility to rapidly and operatively control the activity of the managers. In Russia, the overwhelming majority of companies (both small and large-scale ones) have one principal actual owner. The aforesaid situation seems to represent RussiaТs future - to be taken for granted, judging from the experience of Western countries. Thus, we are not going to offer any detailed comments concerning this area of change because, among other things, the Concept does not envisage any mechanism for its actual realization.
4) the consolidation of the mechanisms securing the balance of interests of the largest corporate owner (90 or 95 percent of authorized capital) and minority stockholders in the process of the socalled Уforcing outФ, when the stocks of minority stockholders are being bought out at a just price.
This proposal has a rather long history. In order to preserve the balance of interests of minority and majority stockholders, it is necessary to adequately establish the principles for assessing the value of the buyout of the stocks owned by minority stockholders. Several years ago, it was suggested that this price should be determined on the basis of an independent market estimate, and that the order for such an evaluation should be made by the majority owner, which is quite logical and understandable from the economic point of view. Unfortunately, the situation that can be observed in actual practice is totally reverse. The Russian market of evaluation services can hardly be called independent, due to which the estimation can result in a distortion of the real value of the stocks under estimation. We can offer a somewhat different method for estimating the value of stocks being bought out: if the stocks in a company are circulated at the stock-exchange, their market value is to be determined as an average weighted value for a certain period (for example, one month), but no less than the price at which the new majority stockholder has bought the stocks from their previous owner. In the event when the stocks are not circulated at the stock-exchange, it is possible to use only the price of the latest transaction. This method also has a number of flaws because, in present-day Russia, the УofficialФ price of a transaction between the new majority stockholder and the previous one may differ from the actual price. Also, bearing in mind the possible risk of various abuses, it is essential to stipulate that such a buyout must not be obligatory in the event when the buyer and the seller are affiliated persons, because in this case the selling of a majority block of stocks can be used as a mechanism for buying out the stocks of minority stockholders at a low price.
Another essential innovation is be the establishment of a procedure for preliminary court investigation concerning the legality of the refusal of a companyТs board of directors to call an extraordinary general meeting of stockholders at a request of stockholders owing more than 10 percent of the companyТs stocks. This initiative is motivated by the fact that both the calling and the conduct of an extraordinary general meeting of stockholders by a stockholder who initiates this meeting results in the creation of parallel control bodies - boards of directors and general directors, and can be used by dishonest persons in corporate disputes. On the one hand, the consideration of this issue is both timely and necessary, because the creation of parallel control bodies represents a widespread practice of hostile takeovers, but the proposed measure, in our opinion, is not the only possible way out from the existing situation, because the calling and the conduct of an extraordinary general meeting of stockholders will be difficult to implement in actual practice: the court proceedings, after which the shareholder can become entitled to independently conduct such a meeting, usually last a long time - between four and eight months (taking into account also the possibility of an appeal against the court decision). During this period, the issues which the stockholder has intended to be considered at the extraordinary general meeting may no longer have any importance. Thus, in practice, if this provision is adopted, the stockholders who own more than 10 percent of stocks (or stakes) in a company can lose one of their legal rights - the right to call and conduct an extraordinary general meeting of stockholders. It seems both necessary and possible, while preserving the existing procedure for calling an extraordinary meeting of stockholders, to delegate the implementation of such control to some specialized self-regulating organization, which will be more operative in taking decisions concerning the possibility to conduct general meetings of stockholders than the much more busy and less specialized courts of arbitration.
Undoubtedly positive is the suggested upgrading of procedural legislation and the improvement of the material legal regulation of the procedures for the resolution of corporate disputes, namely:
- the establishment of a list of categories of corporate disputes under the special jurisdiction of the court of arbitration;
- the establishment of a provision specifying that all cases concerning disputes between the participants in organizations dealing with participation in business partnerships and societies are to be in the exclusive jurisdiction of courts of arbitration (at the location of a given legal person); the establishment of a rule, in accordance with which all the measures providing security for claims and appeals concerning the above requirements are to be introduced only by the court of arbitration at the location of the juridical person.
- the introduction of a rule concerning the mandatory incorporation, in a single proceeding, of all closely related claims originating from one corporate dispute;
- the restriction of a possibility to introduce security measures (the introduction of mandatory crosssecurity concerning non-property claims, or the introduction of individual measures exclusively during a court session);
- the disclosure of the information concerning the preparation or initiation of a court examination dealing with the corporate dispute.
If this proposals are to become realized, it will become much more difficult to apply the tactics of hostile takeover.
Also, it should be noted that these proposals have already been reflected in the Draft Federal Law УOn the Introduction of Alterations in the Code of Arbitration Procedure of the Russian Federation and Some other Legislative Acts of the Russian Federation for Purposes of Improving the Procedure for the Resolution of Corporate DisputesФ (hereinafter - the Draft Law), prepared with the participation of the Team of Experts of the RF Ministry of Economic Development and Trade. Moreover, the Draft Law envisages the introduction, in the RF Code of Arbitration Procedure, of the measures of responsibility for violating the aforesaid provisions, which guarantees the effectiveness of the given norms. In particular, it should be noted that the Draft Law strictly regulates the issue concerning the informational transparency of the economic disputes being considered in courts of arbitration, to all the persons participating in these disputes. It is the absence of this transparency that represents the cornerstone of УblackФ and УgreyФ takeover schemes, and the regulation of this issue at the legislative level will considerably strengthen the position of legal owners in their struggle against the raiders, because it frequently so happens in actual practice that the existing owner of valuable assets comes to know, one day, that he no longer possesses a certain asset, which follows from a court decision demonstrated to him.
Another important innovation, designed to restrict the possibility of using the existing tactics of hostile takeover and to improve the practice of realizing the rights of legal owners, is the proposed measures for upgrading the regulation of the securities marketТs accounting system, namely, the introduction of the joint responsibility, of the registar and the issuer, for any damage incurred by the owner of securities as a result of illegal actions of the registar. This measure seems to be both timely and effective, because it consolidates the material responsibility of the registar for the actions taken by him. In our opinion, the adoption of this measure will considerably increase the УcostФ of implementing the hostile tactics of asset takeover, and thus will reduce the possibility of its realization. The other proposed measures aimed at improving the regulation of the activity of depositaries and registars are formulated in general, which makes impossible any critical assessment of them.
The list of proposed innovations includes a provision for strengthening the responsibility of the members of corporate managerial bodies - the boards of directors and general directors, by not applying the Labor CodeТs provisions in the event of a claim being lodged with regard to the compensation of the damages caused by the actions of these bodies. So far, the Concept does not contain any concrete mechanisms in the form of conceptual formulas for corresponding alterations in the Labor Code.
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