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Exiting a joint venture—checklist This Checklist identifies the different routes to termination or exit from a joint venture (JV) and the considerations which apply depending on the exit path chosen. For guidance on responding to a JV dispute, see Practice Note: Joint venture disputes—how to respond. For further detailed guidance on terminating joint ventures in the context of a specially created or nominated joint venture company (JVC), see Practice Notes: • Termination—corporate joint ventures • Tax implications of operating and terminating a joint venture company • Corporate joint venture dispute—dealing with deadlock: initial considerations • Majority-minority joint venture dispute—a practical illustration Embarking on a JV relationship in the first instance usually involves considerable planning and effort on the part of the JV parties who have decided to partner one another for mutual gain (usually by sharing cost, resource and experience). You will need to consider the full implications of ending or exiting the JV, as to whether there are sufficiently good reasons for being prepared to see that investment lost...
Corporate real estate joint venture shareholders’ agreement—checklist Purpose of checklist The purpose of this checklist is to illustrate the sorts of considerations which need to be borne in mind, and on which client instructions will need to be obtained, when drafting a joint venture agreement (JVA) and articles of association for a corporate real estate transaction. For additional key issues to consider generally when drafting a JVA, see Checklists: Joint venture preliminary issues—checklist and Joint venture shareholders’ agreement—checklist. See also Practice Note: Property Joint Ventures—general issues for a list of commercial issues that the joint venture parties will need to consider when forming a property joint venture (JV). Typically corporate real estate JVs involve a JV between parties that have the ability to source real estate (one party possibly owning and contributing to the joint venture company (JVC) the property which is to be developed), the ability to provide material capital to the JVC, the ability to provide or procure debt financing (in order to finance the development of the...
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Russian roulette—flowchart The Russian roulette procedure is frequently used to resolve deadlock because, even though drastic, it should be fair as between the shareholders and prevent one shareholder from unfairly manipulating the price payable for the shares. However, it may not be appropriate if there is significant financial disparity between the shareholders as one shareholder may be unable to buy the other shareholder’s shares at the price specified by that other shareholder. The procedure is started by one shareholder (the Server) offering to buy the other shareholder’s (the Recipient’s) shares or to sell its shares to the Recipient at a price per share specified by the Server. In a majority/minority joint venture, the minority shareholder will want either shareholder
Texas shoot out (sealed bids)—flowchart The Texas shoot out (sometimes called a Mexican shoot out, Tex Mex shoot out or sealed bids) procedure may be started by either shareholder (or the shareholder which did not cause the deadlock) serving notice on the other shareholder, requiring both shareholders to submit sealed bids for the shares of the other shareholder within a specified timescale. The shareholders will be obliged to complete a share transfer on the terms of the bid with the highest price per share. There are a number of variants to this procedure, including that the joint venture shareholders’ agreement may provide for bidding by auction. It would be more usual in a deadlock or 50:50 joint venture for either shareholder to be able to serve the notice starting the Texas shoot out procedure. In a majority/minority joint venture, the majority shareholder may prefer for only
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Witness evidence—inferences about absent witnesses Proving an assertion The proof of an assertion made in a statement of case is usually done by accepted or unchallenged documentary evidence disclosed in the course of the case, or by oral evidence given at trial that withstands cross-examination, or a combination of these. Unless direct evidence in one of these ways is led at trial, the assertion will remain unproved. To prove less significant allegations, hearsay evidence may be put forward. Being untested by cross-examination, the weight given to hearsay statements tends to be limited; this is always a matter for the trial judge’s evaluation. Judges are conscious of the degree to which witnesses’ recollections can fade or be affected by their involvement in litigation. That explains why a judge will place such store by contemporaneous documentary evidence. In Re Mumtaz Properties Arden LJ said: ‘In my judgment, contemporaneous written documentation is of the very greatest importance in assessing credibility [of a witness of fact]. Moreover, it can be significant not only...
Stay of proceedings in favour of arbitration in Singapore Singapore’s dual arbitration regime Singapore has a dual arbitration regime (as discussed in Dalian Hualiang Enterprise Group Co Ltd v Louis Dreyfus Asia Pte Ltd [2015] 4 SLR 646 at [32] (not reported by ÀÏ˾»úÎçÒ¹¸£Àû® UK)).). The Singapore Arbitration Act 2001 (2020 Rev Ed) governs domestic arbitration while the Singapore International Arbitration Act 1994 (2020 Rev Ed.) governs international arbitration, whether seated in Singapore or abroad. Section 5(2) of the IAA sets out when an arbitration is international. Under both section 6 of the AA and section 6 of the IAA, Singapore courts have the power to stay court proceedings when a party to an arbitration agreement commences court proceedings against any other party to the agreement. The exercise of such a power is premised on the fact that an arbitration agreement exists between the two parties and that there is a dispute between the parties which falls within the remit of that arbitration agreement. AA,...
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Declaration of interest form—procurement—general commercial organisation Part 1 To be completed by any member of staff involved in any form of procurement for or on behalf of [Insert organisation’s name], including Executive Directors, interims, secondees, temporary staff and contractors—whether or not they have an interest to declare. 1 Your details Name (print): [Insert name] Job Title: [Insert job title] 2 Details of the procurement: Goods/services to be procured [Insert details] Potential suppliers/bidders/tenderers [Insert details] Estimated total contract value [Insert details] Budget holder [Insert details] Project initiation document (PID) number [Insert details] 3 Declaration and signature All staff must complete one of the following statements and return the form to: [insert person or department to receive forms, eg Finance Director or Legal Department]. Please tick to indicate which statement applies. EITHER 3.1 □ I have reviewed the Declaration of Interest Form in Part 2 and have no interests to declare. I will inform [Insert organisation’s name]’s [insert person or department] of any changes to the information...
Heads of terms—corporate joint venture Date: [insert date] Subject to contract 1 Introduction 1.1 These heads of terms set out the principal terms and conditions upon, and subject to, which [insert name of first shareholder] (Party A) and [insert name of second shareholder] (Party B) are proposing to enter into a joint venture to [insert purpose of joint venture] (the Proposed Joint Venture). Each of Party A and Party B is a party and together they are the parties. 1.2 The terms in this document are not exhaustive and[, with the exception of paragraphs 7.2, 8, 9, 10, 11 and 12,] are subject to contract and not intended to be legally binding on the parties. Neither party to this document shall be legally bound to proceed with the Proposed Joint Venture unless and until a formal written joint venture agreement is entered into. 2 The joint venture Party A and Party B wish to enter into the Proposed Joint Venture to [insert purpose of joint venture and...
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Can a private company limited by shares carry out a rights issue? A rights issue is an offer of shares to existing shareholders of a company, which gives them the right to subscribe for additional shares in proportion to their existing shareholding in the shares of the company, eg, a right for each shareholder to subscribe for one new share for every five shares that they hold. The shares are usually offered to the existing shareholders by means of renounceable letters or other negotiable instruments. If a company wants to raise new capital through an issue of its ordinary shares for cash, it is prima facie obliged by section 561 of the Companies Act 2006 (CA 2006) to do so by means of a rights issue in favour of its existing shareholders. CA 2006, s 561 sets out statutory pre-emption rights and states that a company must not allot equity securities to a person on any terms unless: • it has made an offer to each holder of...
Can a majority shareholder force a minority shareholder to transfer their shares (whether to that majority shareholder or a third party)? A majority shareholder in a company has limited options under English law to force a minority shareholder to transfer their shares: they must rely on the statutory mechanism of squeeze-out or a scheme of arrangement to effect the transfer or, in a worst-case scenario, resort to liquidating the company. For this reason, a majority shareholder in a company will typically contract with any minority shareholders to gain these rights, using suitably drafted shareholders’ agreements and/or bespoke articles of association. This Q&A assumes that no shares in the company in question are publicly traded. Squeeze-out: compulsory acquisition of shares under the Companies Act 2006 Where a proposed buyer makes a takeover offer (as defined in sections 974–976 of the Companies Act 2006 (CA 2006)) for shares in a company, CA 2006 provides the buyer with a right to acquire the shares held by those minority shareholders...
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Restructuring & Insolvency analysis: The court granted an administration application made by the majority shareholder of a company (in its capacity as a creditor of the company), having been satisfied that the company was insolvent and that a proposed pre-pack sale of the company’s business and assets to a new company set up by the beneficial owners of the applicant was likely to achieve the best outcome for the company’s creditors. This case illustrates the need for a proper marketing exercise to be carried out and evidenced in a case where an administration order is sought to facilitate a proposed pre-pack sale. Written by Simon Passfield KC, barrister at Guildhall Chambers and Deputy Insolvency and Companies Court Judge.
This week’s edition of Private Client highlights includes: (1) JTC Employer Solutions Trustee Ltd v Garnett, in which the High Court granted rescission of deeds of appointment executed for EBTs on grounds of mistake; (2) Oldham MBC v KZ, in which the Court of Protection authorised a care plan for a deaf man with fluctuating capacity; (3) Rupert Grint v HMRC, where the FTT held that sales of occupation income provisions applied to a capital sum received by the taxpayer on the incorporation of his business; (4) Tianrui IHC v China Shanshui Cement Group Ltd (Cayman Islands), a Privy Council decision on a shareholder’s personal standing to challenge the dilution of its shareholding; (5) Aabar Holdings S.A.R.L v Glencore plc, a decision which casts doubt on a shareholder’s entitlement to see a company’s privileged documents; and (6) HMRC publishes minutes of the November meeting of joint HMRC/industry working group on the non-dom changes.
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