Introduction to Co-operation, Joint Venture and Shareholders Agreements

The document titled 'Introduction to Co-operation, Joint Venture and Shareholders Agreements' provides a comprehensive overview of various agreements related to co-operation, joint ventures, and shareholders. It is important to understand the significance of this document as it serves as a guide for individuals and businesses involved in such agreements. The document begins with a general summary of co-operation, joint venture, and shareholders agreements, emphasizing that it does not constitute legal advice and that individuals should consult their local lawyer due to jurisdictional differences.

 

The document is structured into several sections, each providing detailed information on different aspects of co-operation, joint venture, and shareholders agreements. The first section focuses on the purpose of the joint venture, discussing the commercial objectives and considering alternative arrangements such as co-operation agreements, research and development agreements, licenses or franchise agreements, distribution or agency agreements, and mergers or acquisitions. The scope of the joint venture is also discussed, including the intended activities, potential conflicts with non-joint venture businesses, and intercorporate arrangements.

 

The subsequent section covers preliminary matters that need to be addressed before establishing the joint venture. It includes considerations such as the name of the joint venture, valuation and protection of existing brands, due diligence requirements, premises for carrying out business operations, confidentiality agreements, exclusive negotiation periods, and the expected duration of the joint venture.

 

The parties and contributions section provides guidance on identifying the parties involved in the joint venture, conducting searches on each party, and ensuring the authority of state-owned enterprises. It also discusses capital contributions, specifying obligations to transfer know-how, land rights, business, or equipment to the joint venture. The section further addresses the capital structure, equity shares, financing options, guarantees, and feasibility studies or business plans.

 

The structure of the joint venture section explores different forms of joint ventures, including joint venture companies, partnerships, limited liability partnerships, and contractual joint ventures. It highlights the factors influencing the choice of structure, such as tax implications, limitation of liability, competition law, accounting treatment, management or employment structure, and ease of unwind.

 

The management of the joint venture section emphasizes the importance of establishing a clear management structure and decision-making procedures. It discusses the nomination and election of directors and officers, appointment entitlements, operational control, and exit strategies to mitigate management or business failure risks.

 

The contribution of business/asset section addresses issues related to contributed business/assets/shares, due diligence, valuation mechanisms, warranties, indemnities, intellectual property/technology transfer, and the sharing of environmental costs and liabilities.

 

Jurisdictional issues are covered in a separate section, focusing on tax considerations, restrictions on foreign participation, licensing/regulation requirements, exchange control restrictions, real property/land rights, environmental laws, capital requirements, technology transfer, employment laws, intellectual property rights, and dispute resolution. The importance of consulting local lawyers is emphasized due to the relevance of foreign law issues in emerging markets.

 

The document also highlights the need for third-party consents, such as competition/anti-trust approvals, industry-specific approvals, shareholder approvals, financing/borrowing consents, and major contract/customer consents. It addresses practical issues like confidentiality agreements, exclusivity undertakings, the use of letters of intent or memoranda of understanding, due diligence or pre-contract investigations, and the identification of specific third-party consents and regulatory clearances.

 

Accounting policies, governing law, and dispute resolution are discussed in separate sections. The accounting policies section emphasizes the need to determine control or significant influence over the joint venture and adopt appropriate accounting principles and policies. The governing law and dispute resolution section highlights the importance of specifying the dispute resolution process and the governing law applicable to the joint venture.

 

The document concludes with a section on other practical issues, including confidentiality agreements, exclusivity undertakings, the use of letters of intent or memoranda of understanding, due diligence or pre-contract investigations, identification of specific third-party consents and regulatory clearances, and the drafting of various legal documents such as transfer agreements, contribution agreements, shareholders' agreements, intellectual property/technology agreements, and ancillary contracts.

 

Overall, this document provides a comprehensive and detailed guide for individuals and businesses involved in co-operation, joint venture, and shareholders agreements, covering various aspects from the purpose and scope of the joint venture to management, contributions, jurisdictional issues, and practical considerations.

How to use this document?

1. Understand the purpose of the joint venture (JV) and consider alternative arrangements such as co-operation agreements, research and development agreements, licenses or franchise agreements, distribution or agency agreements, and mergers or acquisitions.

2. Define the scope of the JV, including intended activities, potential conflicts with non-JV businesses, and intercorporate arrangements.

3. Address preliminary matters such as the name of the JV, valuation and protection of existing brands, due diligence requirements, premises for carrying out business operations, confidentiality agreements, exclusive negotiation periods, and the expected duration of the JV.

4. Identify the parties involved in the JV and conduct searches on each party, including state-owned enterprises. Specify capital contributions, transfer obligations, equity shares, financing options, guarantees, and feasibility studies or business plans.

5. Choose the appropriate structure for the JV, considering factors such as tax implications, limitation of liability, competition law, accounting treatment, management or employment structure, and ease of unwind.

6. Establish a clear management structure and decision-making procedures, including the nomination and election of directors and officers, appointment entitlements, operational control, and exit strategies.

7. Address the contribution of business/assets/shares, including due diligence, valuation mechanisms, warranties, indemnities, intellectual property/technology transfer, and the sharing of environmental costs and liabilities.

8. Consider jurisdictional issues such as tax considerations, restrictions on foreign participation, licensing/regulation requirements, exchange control restrictions, real property/land rights, environmental laws, capital requirements, technology transfer, employment laws, intellectual property rights, and dispute resolution. Consult local lawyers for foreign law issues.

9. Obtain necessary third-party consents, including competition/anti-trust approvals, industry-specific approvals, shareholder approvals, financing/borrowing consents, and major contract/customer consents.

10. Determine appropriate accounting policies and adopt accounting principles and policies for the JV. Specify the governing law and dispute resolution process applicable to the JV.

11. Address other practical issues such as confidentiality agreements, exclusivity undertakings, due diligence or pre-contract investigations, and the drafting of various legal documents.

Note: This guidance provides a concise overview of the steps involved in using the document. It is important to refer to the detailed description for a comprehensive understanding of the document's content.