Law

How to counter raider attacks in business

To avoid becoming a potential victim of raidership, one should take care of seizure prevention, i.e. maximum risk mitigation. In particular, the range of effective preventive measures against the enterprise seizure may be taken by the enterprise’s management, including shareholders and stakeholders. So, what measures should be taken to prevent raidership?

Proactive measures

Several important preventive measures should be taken in advance. Although they don’t guarantee 100% protection, but they can complicate the task for potential raiders or their associates. It is not uncommon thing that when such intruders become aware of the protective measures, it discourages them to even begin the raider attack. And as a result, the possibility to reserve legal rights to own the enterprise and its assets becomes much higher.

Addressing weaknesses

The enterprise must determine its vulnerabilities in advance. Depending on organizational and legal form, it can be dispersion of shares, tensions between top-management and owner (key shareholders), internal conflicts, etc. The raiders can also use some sensitive information on executives or owner, unmanageable accounts payable and accessibility of enterprise’s land plots and other immovables, unregistered trademark, etc. as a leverage.

Establishment of corporate documents and information security system

The enterprise’s main documents must be optimized. This will give the opportunity to prevent the raiders from taking control over the organization. The originals of constituent, financial or other essential instruments must be stored in hard-to-reach places, so the raiders couldn’t obtain or forge documents. Under no circumstances should the enterprises management or owner sign empty papers, treaties or any other documents without reading their content that can be obscure or ambiguous. Otherwise, the company risks to voluntarily lose the right to the ownership and assets.

Duplication of constituent and other essential documents

It can’t hurt to create so-called distress documents package that is prepared in advance in the case of seizure threat and should be kept in safe place. The distress package contains minimum number of documents that are to be submitted to the public and law enforcement bodies in case of sudden attack and property seizure. Such package must be updated when changes are made. It will enable the enterprise to preserve its activity and take necessary legal actions and minimize losses in case of raidership.

Cooperation with counteragents and partners

No matter how long and long relationships are between the enterprise and the partners or counteragents, you can’t have absolute in trust anyone. But periodic review and analysis of the relations is extremely helpful. The partners who have sticky fingers can create debts and then the course of events will follow the raider schemes scenario. Professional transaction support, debt load and accounts payable control will give the opportunity to avoid most of the problems.

External threats monitoring

It is helpful to constantly monitor the external information environment for seizure prevention. It comprises analysis of the enterprise’s place at the market, current tendencies regarding merger and takeover of companies in the specific sector, detection of potential raiders. In addition, the responsible persons should be obliged to monitor the register of ownership rights.

Legal support

The enterprise may need legal help when countering raider attack, especially if involuntary takeover involves armed forces actions (search and suppression of documents). The expert will help to promptly build tactics for countering raiders and law enforcement officers who are with them. It is also worth paying attention to the physical and technical security of the enterprise and its objects of high importance and, if possible, undertake measures for protection and business intelligence within the limits of legislation to be aware of activities of partners, counteragents and rivals.

Transparency of activity

Business activity must comply with business conduct laws and regulations and then it will be easier to counter raiders. The enterprise must be as public as possible. Usually such factors make raider attacks difficult. From the legal perspective, the entrepreneur is exposed to such actions.

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