Published on February 28, 2014
Hemant Batra Law & Economic Policies Hand in Hand
What is Law? The law is reason, free from passion Aristotle
Law & Economic Policies Laws differ from nation to nation at Micro level but not really at Macro level. Economic Policies are born out of Laws. Hence, good parenting bears efficient children. Governance practices & Peoples’ approach towards compliances determine development.
Law & Reforms: Siamese Twins Law & Economic Reforms are Inseparable Law a facilitator of Economic Reforms Law like water must change to avoid stink…
Law: A Good or Bad Driver A prosperous society focuses on progressive laws Law can be coercive, restrictive or a facilitator Law must ensure level playing field in the economic sector for growth
Good Law: No Interpretation Laws should not leave any scope for breach due to misinterpretation There should be sync between intent, content and interpretation
Hemant Batra Legal & Paralegal Requisites Cross Border Acquisitions
Cross Border – Legal Preface Legal & regulatory parameters of the origin of the investment Legal & regulatory parameters of the destination of the investment
Cross Border – Legal Preface EP & FDI laws (inbound & outbound). Securities & Stock Exchange laws. M&A laws &Takeover Codes & Competition Laws. Companies laws/statutes. Foreign Exchange Management/Remittances laws. Tax Laws and DTAA implications Market Practices on Commercial, Corporate Transactional & Trans-national documentation. Regulatory approvals. Post Investment compliances.
Concept – Joint Venture JV the most happening buzzword – Capital need + Technology & Knowhow + Market Accessibility JV an unemotional business relationship JV a “distinct form of business organization”
Most Accepted Definition – Joint Venture Hanigan KR. - "operating joint ventures" - a partnership + two or more firms + a separate entity + a productive economic activity + each partner takes an active role in decision making + a substantial contribution of capital and technology, marketing, experience, personnel and physical assets.
Kinds of Joint Venture Equity JV Contractual unincorporated JV
Salient Features: Joint Venture The Joint Venture legally creates a business relationship – the project or object of the joint venture the contribution, role and involvement of each co-venturer the terms or duration of the joint venture management and performance of joint venture obligations Allocation of revenues and expenses from the project
Pre Joint Venture Exercise Identification and screening of a prospective partner MOU Due Diligence Joint business plan Assets review – Appreciated/Depreciated Fiscal understanding
Essentials: JV Agreement Capital structure of the company Management of the Joint Venture Company Chief Executive Officer Decision of financial policy of the company Marketing arrangements Change of partnership arrangements Other provisions
Structuring: JV Agreement The execution and commencement date The names, addresses, and identification of the parties, including the type of business of each member of the JV Definition clause Incorporation of a Company The name under which the JV will do business and the principal place of business of the JV The purpose of the JV and a full description of that project is required to be incorporated in the JV Agreement
Structuring: JV Agreement The JV Agreement shall determine the (a) Authorized capital/Shareholding limit: (b) MOA & AOA of the company (c) Sale of shares Establishment/Contribution of the capital Establishment of a JV bank account, and the appointment of a chartered accountant and lawyer Distribution of Profits Grant of Technical Assistance/Technical knowhow The parties to the JV should agree to sign all necessary documents relating to the contract, bank loans, bonds, indemnity agreements etc.
Structuring: JV Agreement Control management committee may be determined Board of Directors Schedule of General meeting should be considered & a financial and periodic JV and progress reporting procedure The possibility of the death, bankruptcy, or insolvency of a member must be handled A clause dealing with the acquisition of equipment and materials by the JV company and disposal Provide for the acquisition of licenses in the name of the joint venture or each co-venturer as required
Structuring: JV Agreement Specify the type of insurance carried by the JV and clearly define the liabilities that are to be insured Define items that are to be considered as costs to the joint venture for the purpose of determining profit or loss and describe those items that are not reimbursable A clause should be included respecting the confidentiality of trade information passed between the co-venturers Ownership or retention of patents, technology, and consultant reports should be addressed
Structuring: JV Agreement Indemnification and Disputes arbitration clause Termination Clause dealing with the substitution or addition of co-venturers Winding up, final performance and financial statements for the joint venture The applicable jurisdiction of the Agreement
Structuring: JV Agreement Miscellaneous Clause: a. Notice clause b. Amendment c. Applicable law d. Assignment e. Non-waiver f. Separability and Interpretation etc.
Hemant K. Batra Chairman & Founder, Kaden Boriss Secretary General, SAARCLAW Chairperson, IICLAM (Singapore) Advisory Board Member, OIC (USA) Project Consultant, UNDP & UNAIDS Director, South Asia, World NGO Day Initiative (London) Kaden Boriss Building 495, Udyog Vihar, Phase V, NH – 8, National Capital Region (Delhi), Gurgaon-122016, INDIA Phones: +91 124 404 0193 (Hunt Lines) Fax: +91 124 404 0194 Email: firstname.lastname@example.org & email@example.com
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