Law A Catalyst Of Economic Change

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Information about Law A Catalyst Of Economic Change
Business & Mgmt

Published on February 28, 2014

Author: HemantBatra1



The presentation basically addresses three topics - one how law guides the course of economic development; two what business managers ought to know while engaging in cross-border acquisitions; and finally the essence of joint venture formulation.

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: &

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