Option Contracts in Transnational M&A Transactions

The research paper is devoted to analysis of the meaning, legal nature and essential terms of option contracts connected with the transfer of rights to shares (participation interests) in the authorized capitals of business entities concluded within the framework of cross-border M&A transactions. The topic is of high relevance due to widespread use of option mechanisms in agreements on the transfer of corporate control or mergers of businesses between Russian and foreign entities in the absence of consistent legislative regulation and uniform court practice. The first chapter provides a comparative analysis of the substantive regulation of option agreements in England, France and Russian Federation, indicates the characteristics of transnational option contracts, and systematizes approaches to conflict-of-laws regulation of option agreements existing in Russian law. The second chapter provides assessment of effectiveness of Russian regulation of option agreements, analyses current court practice and identifies key problems of law application. In conclusion, the summary of main findings of the research paper is made. The practical importance of this paper lies in the fact that the author identifies the main risks that parties may face when concluding and executing cross-border option contracts regulated by Russian law, systematizes available remedies in case of violation of the rights of one of the parties, and also suggests improvements in Russian civil law regulation, which would make it more flexible for the purposes of transnational contractual relations.