drafting of joint venture agreements [autosaved] -kiran ... · swot-analysis of the partners...

drafting of

joint venture agreementskiran m. chitale

disclaimers: 1. contents of this presentation reflect my personal views.

2. any intellectual property referred here is owned by respective owners

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• what is joint venture?

• types of joint venture

back to basics

• types of joint venture

• why jv ?

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why jv ?

• combining each

others strengths

• better financials

• best practices and

• co-branding of

enterprises

• technology

• sharing risks in • best practices and

experience

• regulatory reasons

like sectoral caps

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• sharing risks in

business

• larger market share

• eliminating

competition

key considerations

� maintain highest transparency

� if you want one, ask for two

� voice your expectations and concerns

� be honest – concede to others’ views

� reason for a jv

� have a summary of key issues

� assess “give and take”

� identify the single contact point to represent

� make a list of critical dates

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jv process

� swot-analysis of the partners

� identification of area of business

� finding a suitable partner

� defining the purpose for the jv� defining the purpose for the jv

� conducting initial discussions

� feasibility study and market survey

� preparing a draft business plan

� drafting mou

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…jv process

� defining a schedule of action points

� drafting of joint venture agreement (jva)

� drafting of other related agreements/documentsdocuments

� initiate process for jvc incorporation

� nominating directors on the board

� drafting of memorandum and articles andother documents

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mou/ term sheet

� introduction of the parties

� confidentiality

� objective of joint venture

� products and services to be offered by jvc

� basic terms of joint venture� basic terms of joint venture

� modes of funding,

� management personnel

� technology

� project profile

� obligations of parties

� validity period and binding clauses

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jva� contents, preamble

� definitions

� business purpose of jvc

� related agreements

� sales and distribution activities

� conditions and closing of subscription� conditions and closing of subscription

� form and capital structure of jvc

� name of the jvc, brand and logo

� board of directors and their powers

� management of the jvc

� shareholders’ meetings

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…jva� accounts, audit and dividend distribution

� transfer of shares - restrictions

� exclusivity and non-competition conditions

� deadlock and its resolution

� intellectual property rights

� representations and warranties� representations and warranties

� confidentiality

� termination and dissolution

� arbitration and applicable law

� force majeure

� notices and miscellaneous

� annexures9

board/ shareholder issues

� composition

� independent directors

� ceo, cfo, technical director

� voting rights

� dividend

� restrictions on transfer

� meetings

� quorum

� frequency� voting rights

� veto right

� casting vote to Chairman

� affirmative vote

� nominee/ independent director

� frequency

� location

� matters for discussion

� % shareholding

� jva - vis-à-vis – articles

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funding

� business plan – not be annexed to JVA

� Annual operating plan

� funding structure

� guarantees/ letters of comfort

� foreign borrowings

� tie ups with local banks for loans

� consequences of funding defaults by JV

partner

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technology

� technical collaboration agreement

� technical fees

� technical training and assistance

� transfer vs. licensing

� intellectual property rights

� future developments

� technology to be developed by the JVC

� use of partners’ brands/ logos

� trademark license agreement

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governance issues

� information rights

� accounting standards, International accounting

� audit

� insurance and risk management

� health and safety� health and safety

� ethical business practices

� management information/ reports

� employee stock options

� data privacy

� anti-bribery

� applicable laws

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governing law/ dispute resolution

� choice of law

� interim relief and appeal provisions

� court/ dispute resolution

� arbitration

� rules: UNCITRAL/ ICC/ London/ Singapore

� language of arbitration

� venue of arbitration

� costs of arbitration

� nomination by parties

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other issues

• key definitions (products, services, customer, market)

• non-compete (business, products, territory, right to

refuse, NOC, existing ventures)

• exclusivity (definition, what you want)

• non-solicit (employees, management staff, period)

• transfer (lock-in, affiliates/ competitors, valuation, FEMA • transfer (lock-in, affiliates/ competitors, valuation, FEMA

and other laws, put and call options, drag along and tag

along rights for sale of shares)

• ipo (timing, size, stake, valuation)

• valuation (methods)

• merger/ acquisition (either party by a third party)

• other factors (success vs. failure of joint venture)

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recent news item…

16Source : The Hindu

recent news item…

17Source : Economic Times

recent news item…

Source : Economic Times

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failed jv

19Source : International Business Times

some jv examples

company/

brand

jv partners product/

industry

Vistara Airlines Tata Sons Singapore Airlines

Aerospace

Bharati AxaGeneral Insurance

Bharati Entp Axa, France General insurance

Insurance

Tata Starbucks Tata Global Beverages (Tata Sons)

Starbucks, USA Coffee

Mahindra Renault

Mahindra & Mahindra

Renault SA, France

Automobile

Mahindra AgriSolutions

Mahindra & Mahindra

Sumitomo Corporation,

Japan

Crop care

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examples of failed auto jvs

venture models reason for break-up

Hero-BMW F650 Poor consumer response

Suzuki-TVSFiero, Max 100,Shogun, Shaolin

Ownership issues

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Yamaha-Escorts

RD 350, RX 100RX 135,

Falling demand

Kinetic-Honda Zoom, DX, Marvel Kinetic buys partner’s stake

Kinetic-Hyosung

Aquila, Comet Steep pricing

LML-Piaggio Vespa 150 NV LML bought partner’s stake

Source : Business Standard

your role…

takeaways…

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takeaways…

questions …??

experience sharing…

usual questions

� why mou/ is mou mandatory?

� do we need to register jva ?

� jva vs. articles of association

� which laws apply to jva?

� who decides % share in equity?

� is it mandatory to form a jvc ?

� can jv be formed between firms/ llp ?

� do we need to pay stamp duty on jva?

� who can sign the jva ?

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Thank you for your patience !!Thank you for your patience !!

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