18 corporate finance Navigating minefields
Saionton Basu of Penningtons Solicitors LLP considers how to establish successful cross-border joint ventures
Cross-border joint ventures (JVs), involving two or more entities sharing resources and benefits, have become a common tool to pursue business opportunities in the ever shrinking global marketplace. At the outset, careful planning, financial and legal analysis and due diligence exercises are required to establish key foundations of the joint venture.
Numerous areas require critical attention while structuring JVs:
• Confidentiality agreement – this will protect confidential information disclosed by each party to the other.
• Exclusivity agreement – the parties are bound to incur costs and divert resources to negotiating the terms of the JV agreement. An exclusivity or lock-out agreement ensures that they have a period of time in which to negotiate solely with each other.
• Due diligence exercise – the exercise allows the parties to identify and understand the issues and risks associated with the JV proposal. Appropriate measures can then be taken to address them.
• Entity selection – the business vehicle used for the JV will depend on the benefits and drawbacks of each type of entity, and the local laws, tax and commercial environment in which they operate. Listed companies have a number of additional issues to consider.
law
India Business Group takes shape
Dutton Gregory has launched an India Business Group after a successful trip to India.
Having formed alliances with legal and other contacts in India following the UKIBC delegation, Dutton Gregory is probably the only law firm in the Solent region which is able to offer such a service and facilitate inbound and outbound business opportunities between the UK and India markets.
Solicitor Amarjit Singh, Southampton India Business Network (SIBN) co-founder, and partner Andrew Tilley had the chance to promote relations with key business organisations in three cities and promote the south east region.
They cemented contacts with the legal profession and other business groups, as guests of the UK India Business Council’s trade delegation, which visited leading commercial centre Mumbai and emerging cities Pune and Kolkata during the week-long tour. They received a warm welcome from businesses and dignitaries in the cities and were able to connect with businesses from a range of sectors, particularly in the SME market.
www.businessmag.co.uk
Steele Raymond expands
Bournemouth-based law firm Steele Raymond has acquired Richards & Morgan Solicitors in Southbourne in a strategic move to expand its private client work.
Enhancing the core commercial skills established at the firm’s Richmond Hill head office, the new office responds to Steele Raymond’s growth in private client and tax work. The firm has created a team of top- level specialists, including two chartered tax advisers in the private client arena, and is keen to extend this offering into a secondary office with an existing loyal client base.
Richards & Morgan has provided legal services since 1923 and Steele Raymond is keen to maintain the friendly and dedicated solicitor approach that the firm has always been known for. Members of the existing team will stay at the Southbourne office while solicitors from Richmond Hill will be added.
Alan Turle, partner of Richards & Morgan, will continue as part of the Steele Raymond team, alongside other existing staff members. The firm’s other partner, Jim Salway, is retiring.
Redundancy pays off
Being made redundant has opened the door to new opportunities for a former local government lawyer who has set up his own legal practice.
After 25 years as a local government lawyer, Christchurch Borough Council’s head of legal and democratic services, David Fairbairn, was made redundant when the council joined management teams with neighbouring East Dorset Council.
Two months later, David Fairbairn Solicitors opened for business. Based in Christchurch, the firm will work for local authorities, not-for-profit organisations and private businesses specialising in public law, planning, environmental law and procurement.
”Being made redundant could have been a very distressing and upsetting experience,” said Fairbairn, ”but instead it’s been a positive opportunity to do what I enjoy.”
While the present economic climate makes it difficult for new firms to establish themselves, his firm believes this brings opportunities as prospective clients look for different ways to deliver services.
THE BUSINESS MAGAZINE – SOLENT & SOUTH CENTRAL – JUNE 2011
• Interests and payments – the nature and extent of the interests and resources they will contribute to the JV, and the means by which they will receive financial and other benefits in return, will be of key importance to the parties.
• Completion – normally certain conditions need to be satisfied before the transaction can complete. They commonly include third party consents for key contracts and properties, and corporate and regulatory approvals.
• Dispute resolution and deadlock – this is a complex area, and much depends on whether a party is a minority shareholder. Options to deal with this area include escalation to senior management of the parties, forced sale or purchase of a party’s shares, trade sale and insolvency.
• Governing law – the governing law will depend on a number of factors, not least the suitability of the local laws and legal system.
• Country risk – cross-border JVs situated in emerging markets like India will often need to factor in particular local law requirements and business customs. We have a specialist team with dual qualified lawyers which blends international transactional experience with a track record of working with Indian clients and deals.
Saionton Basu
This article provides a sample of priority areas in structuring a JV. Penningtons would recommend obtaining legal and tax advice at the outset to ensure maximum return on investment.
Details: Saionton Basu
saionton.basu@
penningtons.co.uk www.penningtons.co.uk
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