If you want to start your own business or invest money, it is not enough to desire and be financially available. Unfortunately, you should take into account a large number of risk factors. And in Ukraine one of investment risks is “raiding”.

Threat for startups

The economic situation in Ukraine is not the best. Notwithstanding for the last few years a large number of new projects have filled out on Ukrainian market. Most of them are “environmental” and “patriotic”, many cosmetics and food brands. And why not, if now it is “in trend” – just catch a wave! Waiting for “better” times can be long…

A huge number of such projects are “start-ups”. In general sense, “startup” is a business, that is built to be sold, and is focused on the search of investment. They are created by young people with the idea, dreamers, who have a general idea of the initial business model and begin to implement it, often without understanding what to do next.

Here the greatest risk is hidden as new interesting and promising projects are “tasty morsel” for raiders!
So, how not to lose money, and how to protect investments?

Dirty investment climate

Why foreign investors are not against investing in Ukraine? A significant resource base, lack of development of certain markets, loyalty to European consumer goods – is not it a ground for the investment? However, the government itself acts against the interests of investors.

In 2014, when war broke out and the economic situation has deteriorated dramatically, government needed to restrain the outflow of money from Ukraine. After all, it would mean a default. Therefore, the Board of the National Bank adopted a resolution which established a moratorium on repayment and income return for foreign investors.

By the way, this ban applies for today. Its last editorial – NBU Resolution №140 dated March 3, 2016. This document came into force on March 5, 2016 and is valid until June 8, 2016. So, part 3 paragraph 19: “prohibit the purchase, transfer of foreign currency in order to conduct such operations – return dividends overseas to a foreign investor.”

Thus, foreign investors, who have invested their money in Ukraine in order to get income, cannot get it for two years. Even despite the fact that their rights are protected by other legislative acts of Ukraine. In particular, according to the Law “On investment activity”, Article 19, Part 1: the State guarantees protection of investment, regardless of ownership, as well as foreign investment. Investors (including foreign ones) are ensured equitable treatment that excludes discriminatory measures that might impede investment management, use and elimination. As well as there is provided for conditions and procedures for the export of invested values and investment results.

In addition, according to the Law “On Protection of Foreign Investments in Ukraine”, Art. 4: foreign investors are guaranteed the transfer abroad of their income and other amounts in rubles and in foreign currency obtained legally. It turns out that the subordinate regulations set above the law…

However, there is the way out. Non-resident investors can receive income, including dividends, in national currency. Besides, they can always invest earned money into other investment objects in Ukraine, which is not prohibited by law. In short, just twist as you want… And why foreign investors do not want to come to Ukraine – is a rhetorical question.

So that’s not all troubles of investment in Ukraine. When a businessman decides where it`s better to invest money, he wants to be sure that it will work and bring him profit. But here we have even more problems: corruption at all levels of government, law enforcement agencies involved in the fight between rivals, and, as a consequence, prosperous raiding. Government agencies recognize that this phenomenon exists, and poses a major threat to the country’s investment climate.

Today, almost any asset can become the subject of raider attack: large objects – commercial and office buildings, industrial plants, as well as cafes, small shops, farms, etc. Potentially raiding threatens anyone. But purposes differ: quick resale of property or capture of business with further removal of former business founders. Consequences of raider attack depend only on owners` ability to repel “offenders”.

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Raiding in practice

In Ukraine raiding has nothing common with civilized methods. It is mostly criminal with use of all sorts of illegal schemes. There are used fairly banal methods: physical seizure of the enterprise, forgery, controlling stake purchase, initiation of bankruptcy, re-registration of the company on men of straw, bribery of law enforcement agencies, government officials and judges. At the same time raiders have significant financial opportunities, attracted administrative, judicial and law enforcement resources.

We can select such business capture methods:

  • Purchase of shares. The company’s shares are bought quite legally, but consequently the aim is to get blocking or controlling stake.
  • Bankruptcy. The credit debts of the enterprise are redeemed of business partners, creditors and later are used for initiating bankruptcy proceedings. The process is lengthy and costly. Fictitious bankruptcy, when all debts are created artificially, is a variation of it.
  • Seizure. It`s the most common and effective way especially for companies with a low level of legal protection. For this purpose security forces and corrupted local authorities are involved, fake judgments are used, etc.

Protection of investment objects

Experience shows that the most effective means of business protection is a proper preparation for it. The owner need to implement necessary measures in order to make raider seizure unprofitable. A good method for it is business restructuring, that is a complex of legal, financial and physical security improve.

Among simple methods of business protection there are:

  • legal protection (alright founding documents, clean history of privatization, no debts);
  • share capital concentration (to make the controlling stake being under investor`s control);
  • continuous monitoring of changes in shareholder’s composition (in order to prevent buying of shares by people “from outside”);
  • avoiding concentration of property within one enterprise (creation of several companies and asset allocation between the them);
  • improving the work of management and staff (preventing conflicts, unlawful dismissal of employees, establishing work both in a team and with customers and partners, creating a positive image of the company);
  • reliable physical security (professional security, effective work of security services, use of competitive intelligence);
  • involvement of public and media in case of raiding.


Ukraine is declared to be open to investors. But until real changes are done, any statements like this will be pork barrel. Because every investor wants to return invested money and make profit, but not become a subject of raider attack.

Friendly advice: entering Ukrainian market, do not skimp on professional lawyers and good legal protection. We must accept the fact that raiding in Ukraine exists, but it`s quite possible to combat by different “anti-raider” activities. “Artius” business protection lawyers can protect your business and investments, regardless of raiders methods.