Alienation of corporate rights arising from the acquisition of a share in the authorized capital, is one of the legal ways of acquiring the right to use subsoil in Ukraine, which is certified by a special subsoil use permit.
Please note that there are no corporate rights in relation to individual entrepreneurs, so we will only discuss the alienation of corporate rights of an enterprise below.
Typically: The holders of special permits for subsoil use are joint-stock companies, limited liability companies, and private enterprises.
Less frequently: Additional Liability Companies (ALCs), cooperatives, farms, limited partnerships or other legal forms of legal entities.
In most cases, the holders of special permits are LLCs, which, in our opinion, is due to their flexibility and sufficient legal regulation. Accordingly, the alienation of corporate rights of LLCs is most often the case.
When alienating a share of corporate rights, the right to use subsoil is not directly alienated . A share of the corporate right of an individual or legal entity is alienated to another legal entity that owns the right to use subsoil.
In fact, the owner of a special permit for subsoil use does not change, as only the alienation of corporate rights to the holder of the relevant permit takes place. The subject matter of the transaction is not a special permit for subsoil use, but the corporate rights of the business entity.
They remain unchanged: name, location, identification code and other information about the legal entity.
In other words, this structure allows you to buy or sell a business that owns a permit, which, in turn, gives you the right to use subsoil.
Our company is professionally engaged in comprehensive support of the buyer or seller in the purchase or sale of corporate rights of a subsoil user, resulting in the transfer of the right to use subsoil.
How to sell a stake in a company profitably?
We often hear the question: what is the right way to sell or alienate a share in the charter capital? It should be noted the difference between the terms "sale" and "alienation". Alienation is much broader, as it refers to the transfer of ownership of property that may occur as a result of a sale, gift, exchange, etc.
When selling, the seller's main task is to present all the benefits of the asset to the maximum extent possible. Presentation materials should be prepared, as well as a financial model, if necessary and possible.
It is important to note that corporate rights and assets must be properly valued.
This process should be entrusted to professionals who can properly value the asset, know the market participants and are able to sell it for the highest possible price.
Why should you entrust professionals with finding and negotiating with potential buyers?
Knowing the key players in the subsoil use market, our team searches for potential buyers. Our specialists conduct professional discussions with representatives of potential buyers to achieve the goals set.
The answer to the question of how to sell a share in an LLC to a foreign company is obvious: without appropriate connections and a business reputation that foreigners will trust, it is impossible. These are the qualities that our company has, and this allows us to offer and negotiate the sale of corporate rights of subsoil users to specialized foreign companies.
In order to objectively evaluate an asset before it is sold, it is necessary to carry out its evaluation in the form of a geological, legal and financial audit.
Such an audit will help prepare the asset for sale and eliminate both minor and major deficiencies before it is presented to potential buyers.
Any omissions by the seller, unwillingness to be fully open may lead to undesirable results, as the discovery of certain negative information about the asset at the stage of professional discussion with representatives of potential buyers may lead to a reduction in the desired sale price of the asset or their refusal to purchase the asset at all.
Our team is guided by the rule "forewarned is forearmed". We always do our best to help our clients achieve their goals.
Acquisition of corporate rights
However, risks are not always bad. Therefore, before acquiring corporate rights of a subsoil user, it is necessary to carefully check the asset and determine the risks of its acquisition.
Our company carries out such an assessment in the form of a geological, legal and financial audit of the investment object, which helps determine the real investment attractiveness and value of the desired asset.
Evaluation of corporate rights
What are the main cases when the value of corporate rights is assessed and whether the valuation of corporate rights is required under the new law?
Law of Ukraine "On Limited Liability Companies and Additional Liability Companies" and other legislation does not require the valuation of corporate rights, but their value cannot be less than the nominal amount of the authorized capital of the legal entity that is a subsoil user.
When is corporate rights valuation required?
In our opinion, this should be done under any circumstances. Of course, a reckless investor may skip this stage, but there is a risk that the acquisition of the asset will be a costly mistake, because in this case, after the acquisition, the asset may turn out to be worthless.
What is the purpose of corporate rights valuation?
Acquisition of corporate rights is a process that is similar to buying a used car. There is always a suspicion that the seller has concealed certain flaws. However, the stakes in subsoil use are much higher, and the subject matter of the purchase is very complex, so it cannot be properly assessed by specialists in only one industry. To avoid becoming a victim of a poor-quality purchase in the field of subsoil use, it is worth seeking professional help.
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the history of the asset, the legality of the transfer of ownership of corporate rights in the past, and, accordingly, the degree of risk of challenging the legality of the acquisition of ownership of corporate rights by the new owner.
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being on sanctions lists, criminal proceedings and/or lawsuits against the legal entity, its officers or participants.
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the presence of hidden payables that are disproportionate to the amount of assets owned by the legal entity;
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the presence of legal rights to use the land plot or land plots within which the subsoil plot is located;
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many other equally important issues that may affect the decision to buy an asset.
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the quantity and quality of minerals, as well as geological information that will testify to this, because in fact, minerals may be absent in the subsoil area or their concentration will be too low for industrial development;
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violation of the terms of subsoil use, which may result in the inevitable revocation of permits;
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too short a period to fulfill the purpose or stages of the work program within the framework of a special permit for subsoil use;
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the amount of real investment to launch the project;
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legislative and other restrictions or prohibitions on economic activity in the relevant subsoil area.
As a result of the research, an objective assessment will allow to compare the price of the object with its real value, the investor's financial, material and other capabilities with the challenges that arise after the acquisition of the asset, as well as his expectations with the benefits that the asset can provide.
Professional assistance will help reduce the price of an asset, protect against the acquisition of an asset at a non-market price or the purchase of a distressed asset. Investing in subsoil can be most effective only under the supervision of professionals.
Why valuation of corporate rights in case of alienation of corporate rights is necessary ?
The answer to this question lies in the subject matter of the sale. Because of its complexity, the seller does not always fully realize what it is that he is selling and the condition of what he is selling.
The seller's expectations and the actual value of the asset may be different. No one can properly evaluate an asset without conducting a thorough study of it. It is difficult to defend the price of an asset if you do not understand its real value.
The value of corporate rights should be assessed in accordance with market conditions. Please note that the current legislation does not require the valuation of corporate rights. There is no methodology for such a valuation of corporate rights. And given the specific nature of the object of valuation, it is very difficult and impossible to do so by specialists in only one industry.
That is why this case should be entrusted to professionals who can objectively identify and emphasize the advantages and offset or reduce the role of the disadvantages of the asset acquisition, as well as properly evaluate the corporate rights and the asset in accordance with market conditions.
What is our value when acquiring and alienating corporate rights of a subsoil user?
Our value is objectivity. We do not cooperate with fraudsters.
Our clients, who are buyers, are solvent and ready to purchase the asset under the agreed conditions.
Our clients, who are the sellers, are the real owners of the subsoil assets and are ready to dispose of them under certain conditions.
We do not participate in buyer and seller scams because we value our reputation.
We create conditions under which the buyer can objectively evaluate the asset, realize all the risks and make an informed decision, and the seller can sell his asset as efficiently as possible, in accordance with objective circumstances and market conditions.
Those who wish to cooperate with us can be confident in our professionalism, reliability, openness and honesty.
We invite domestic and foreign investors as well as owners of corporate rights in entities that have the status of subsoil users to cooperate.
