Law & Economic PoliciesHand in Hand

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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

Legal & Paralegal RequisitesCross Border Acquisitions

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Batr

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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 know-how

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. BatraChairman & Founder, Kaden Boriss

Secretary General, SAARCLAWChairperson, 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: hkb@kadenboriss.com & hbatra@saarclaw.org