3. JVs, Mergers Acquisition

• Legal Issues In Joint Ventures, Mergers and Acquisitions - Presentation Transcript

• Legal & Regulatory Issues in Cross Border Investments: What Corporate Legal Counsel Should Know?

 

Law & Economic Policies

All Laws have their roots in Economic Policies, the Social Structures and Economic Background of a Country Laws & Economic Policies are not Divorced from each other Laws are enacted to implement Economic Policies & Economy is managed by the instrumentality of law Law codifies social values Business has to function within the ambit of Economic Policies & Laws enacted to give effect to these What should be done?

Have a background check on the economic & political scenario of a country – chances are you will get a fair idea about the prevalent investment & business laws & where they are headed Check ‘whether the laws are more of a restrictors rather than facilitators of trade & business?

Check for past trends in changes in regulatory policies & laws Cross Border Investments: 2 Fold Analysis. To Analyze the Cross-Border Investment Feasibility the following two aspects need to be considered:

• Legal & Regulatory Parameters of the Investor’s Country

• Legal & Regulatory Feasibility For a Cross Border Investment Project Legal Framework in Investor’s Country Legal Framework

• Investee’s Country Cross Border Investments: 2 Fold Analysis

• Tax Laws & DTAA implications

• Market Practices on Commercial, Corporate Transactional & Trans-national documentation

 

Regulatory approvals Post Investment compliances Inbound & Outbound FDI laws Securities & Stock Exchange laws M&A laws &Takeover Codes Company laws/statutes Foreign Exchange Management/Remittance laws Yardstick to Analyze the Previous Mentioned Considerations Repatriation of Profits – Key to FDI Repatriation of Profits No one wants to invest in a country from where they cannot take their profits back home.

 

The domestic rates of taxation as well as rates of taxation in the invested country need to be considered Structures that can let the company derive the benefit of DTAA’s need to be considered Making Joint Ventures ‘a Mission Possible’ Choosing Right Work Partners Joint Ventures – Key Concepts .

 

A joint venture is a business relationship between two or more parties, who undertake an economic activity together Different Forms of JVs Equity Joint Ventures Contractual/ Unincorporated JVs Special Purpose Vehicles Pre-requisites of a Joint Venture Agreement Identification and screening of a prospective partner Development of a detailed business plan & short listing a set of prospective partners.

 

Due Diligence of the Project & the JV Partner Ascertainment of the value of assets being contributed to the joint venture Negotiations about the Acquisition Price & Terms, including Capital Structure, plus Management Plan after take over Points to be Discussed & Added in JV Agreement The project or object of the JV Capital structure of the company Compensation to the members that provide services Allocation of revenues & expenses from the project . The contribution, role & involvement of each co-venturer The provisions for management & performance of JV obligations Chief Executive Officer Determination of financial policy of the company Marketing arrangements The term for which the JV will exist Change in capital structure & exit options.

 

The Cross Border Acquisition Process A Summary of Discussions So Far Negotiations On Final Agreement & Execution Of A Formal Agreement Along With Formation of a J.V. Company Or Share Acquisition & Other Transaction Closing Formalities Formal Due -Diligence Signing of LOI Term Sheet Approaching.

 

The Most Suitable JV Partner & Informal Negotiations Informal Due - Diligence Identification of Prospective Business Partners Identification of Business Opportunities in a Country.