(This article appears courtesy of International Financial Law Review, sign up for a free trial on their site) When structuring minority investments in Russian companies, there are many dangers for the unwary investor. A few points should help to identify how to distinguish between a weak and strong structure, and how to build a structure that will protect your rights. A fable that emphasises the importance of this structure is The Three Little Pigs.
For those of you who are not familiar with the tale of The Three Little Pigs, here is a brief summary. Three little pigs build houses to protect themselves from the Big Bad Wolf. The first builds his home out of straw because that is the easiest thing to do. The second constructs his from sticks of wood, believing it will be strong enough. The third puts the most time and effort into his house, building it from bricks and mortar. We all know how the story ends. The wolf huffs and puffs and blows in the houses made of straw and wood and eats the first two little pigs. However, try as he might, the wolf cannot blow in the brick house.