International Joint Ventures

Foreword and acknowledgements Terms and abbreviations List of figures PART I GENERAL ISSUES What is a joint venture? 1 Introduction 2 Structural options for trading Why set up a joint venture? 1 Market expansion 2 Limiting the risk exposure of the parents 3 Sharing the costs and overheads of a long-term development 4 Sharing resources, including technology, know-how, skills and techniques 5 Minority shareholder perspective on the joint venture 6 International aspects Planning the joint venture 1 Structuring the joint venture 2 Scope of the JV business 3 Identifying the right JV partner 4 Territorial coverage of the joint venture Memorandum of Understanding 1 Purposes 2 Contents Due diligence enquiries 1 Overview of legal and financial concerns 2 Detailed investigations Legal advice in the JV territory 1 When should legal advice be sought? 2 Initial proposals and selection of advisers Preparation of the Joint Venture Agreement 1 Drafting the Joint Venture Agreement 2 'Interim' Joint Venture Agreement? 3 Articles of Association 4 Various ancillary agreements The Business Plan 1 Agreeing the commercial objectives 2 Strategic planning issues 3 Financial auditing 4 Format of the Business Plan Case study 1 Contractual JV between UK and French engineering companies Case study 2 Corporate JV between UK and Russian engineering companies PART II REGULATORY ISSUES Competition laws and regulations 1 European Union competition laws 2 United Kingdom competition laws Government investment approvals 1 Foreign investment approvals 2 Foreign exchange controls 3 Capitalisation requirements Taxation issues in joint ventures 1 Introduction 2 Taxation of joint venture corporate profits 3 Taxation of dividends paid by the JV company 4 Asset transfers to the joint venture 5 Interest and royalties Accounting issues in joint ventures 1 Accounting issues affecting the joint venture 2 Accounting issues affecting the parties Case study 3 Media services JV between US and Chinese cable companies Case study 4 Manufacturing JV between UK, Italian and Israeli companies 1 PART III THE JOINT VENTURE AGREEMENT - STRUCTURAL ISSUES Concepts and definitions Conditions to the Shareholders' Agreement 1 Government approvals 2 Contractual matters Directors and management 1 Board structure 2 Board proceedings 3 Directors' fiduciary duties Shareholders and shares 1 Share capital 2 Share transfers 3 Meetings and voting 4 Minority shareholder provisions Duration and termination 1 Automatic termination 2 Termination on notice Financial and accounting provisions 1 Finance for the JV company 2 Accounts and financial information PART IV THE JOINT VENTURE AGREEMENT - COMMERCIAL ISSUES Intellectual property issues 1 Research and development joint ventures 2 Licensing to the joint venture 3 Foreground and Background IP 4 Newly developed IP 5 Issues of liability for IP between the JV parties Non-competition covenants 1 Indications for inclusion 2 Indications for omission 3 Scope of covenants Confidentiality issues 1 Need for disclosure 2 Exceptions Employee issues 1 Transfer of employment contracts 2 Secondment of employees 3 Transfers of undertakings Property issues 1 Providing the joint venture site 2 Valuation of the site 3 Warranties in relation to the site Environmental issues 1 Identification of environmental problems 2 Potential solutions Case study 5 R&D JV between UK and US medical companies Governing law and jurisdiction 1 Governing law 2 Jurisdiction 3 A word on language Dispute resolution and arbitration 1 Disputes in general 2 Arbitration procedure Mediation and alternative dispute resolution mechanisms 1 Alternative dispute resolution procedures 2 Alternative dispute resolution as a solution Avoiding misunderstandings 1 Strategies for co-operation 2 Deadlock provisions Case study 6 Joint venture between UK and Singapore electronic systems companies PART VI ANCILLARY AGREEMENTS Contribution Agreement 1 Valuing assets 2 Valuing intangibles Technology and Trade Mark Licence Agreements 1 Technology Licence 2 Trade Mark Licence 3 Registered User Agreement Distribution and Supply Agreements 1 Distribution Agreement 2 Supply and Purchasing Agreement Contracts between the parties and the joint venture company 1 The joint venture parties as contractors 2 Should the joint venture company be a party to the Joint Venture Agreement? PART VII APPENDICES A Memorandum of Understanding B Confidentiality Agreement C Information request - proposed joint venture D Business Plan - summary E Shareholders' Agreement F Technology Licence Agreement G Article from The Economist, 6 April 1996 H Signatories to the New York Convention