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Exiting a joint venture—checklist

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...

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Russian roulette—flowchart

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

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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Tier 1 (Investor): key practical considerations [Archived]

Tier 1 (Investor): key practical considerations [Archived] ARCHIVED: The Tier 1 (Investor) category was closed to initial applications, without warning, from 16:00 on 17 February 2022 through Statement of Changes in Immigration Rules CP 632. Those with existing leave in the route are still be able to extend their stay, including making an application for entry clearance outside the UK if they have held leave as a Tier 1 (Investor) migrant in the 12-month period preceding the date of application, and apply for settlement. Extension applications made inside or outside the UK must be submitted by 17 February 2026. Applications for settlement must be made before 17 February 2028. For further information, see: LNB News 17/02/2022 76. This Practice Note, which was last updated prior to the introduction of post-Brexit work and study routes in December 2020, further to Statement of Changes in Immigration rules HC 617, has been retained in archived form for historical interest. Anti-money laundering requirements and other client due diligence procedures Matters...

Slovak Telekom (and Deutsche Telekom)—broadband in Slovakia (COMP/39.523) [Archived]

Slovak Telekom (and Deutsche Telekom)—broadband in Slovakia (COMP/39.523) [Archived] CASE HUB (NOTE–appeals lodged) ARCHIVED–this archived case hub reflects the position at the date of the decision of 15 October 2014; it is no longer maintained. See further, timeline, commentary and related cases. Case facts Outline European Commission Article 102 TFEU investigation into allegations of an abuse of dominant position in broadband services in Slovakia. The Commission issued its infringement decision and imposed fines totalling €69.9m on 15/10/2014. The abusive behaviour involved a refusal to supply and a margin squeeze. Latest developments On 15 October 2014, the Commission issued its infringement decision. The Commission has imposed a fine of €38,838,000 on Slovak Telekom and Deutsche Telekom for breaching Article 102 TFEU. Deutsche Telekom is jointly liable for the fine because it has decisive influence over the actions of its subsidiary, Slovak Telekom. The Commission has imposed an additional fine of €31,070,000 on Deutsche Telekom. This reflects:• an increase of 50% to reflect repeated abusive...

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What remedies would be available to a minority shareholder where a majority shareholder breaches the provisions of the joint venture shareholders' agreement and/or articles of association?

What remedies would be available to a minority shareholder where a majority shareholder breaches the provisions of the joint venture shareholders' agreement and/or articles of association? If a majority shareholder acts in breach of a shareholders' agreement, the remedies available to the minority shareholder will be the usual contractual remedies, namely: • damages (requiring the claimant both to prove its loss and to mitigate it), or • possibly injunctions against breach (where damages would not be an adequate remedy) where the claimant has advance notice of an intended breach or to compel compliance with some obligation The conduct of shareholders in their capacity as such is not an 'affair of the company' such as to engage relief for unfairly prejudicial conduct under section 994 of the Companies Act 2006 (CA 2006). However, if the majority shareholder's conduct extends to some aspect of the company's affairs then relief may be available. For example, if the breach is the exclusion of the minority shareholder from the company's management, that...

Could you please direct me to drag-along and tag-along provisions for use in a private equity or venture capital context?

Could you please direct me to drag-along and tag-along provisions for use in a private equity or venture capital context? A 'drag along' is the process by which a majority shareholder or shareholders, eg a private equity (or a venture capital) fund investor, can achieve a sale of all of the shares in the company (including those shares held by other shareholders) to facilitate a full exit. It is also sometimes referred to as a 'come along'. In practice, the use of drag-along provisions by an investor in a private equity context is complicated. If management is critical to the business but against the sale, it may be difficult to find a buyer willing to buy in those circumstances and at the desired price. The provisions are of more use where the majority of parties are in agreement but certain dissenting shareholders, eg former managers or employees, do not wish to sell. Tag-along provisions assure that if the majority shareholder or shareholders sell their shares, minority...

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Hong Kong Court upholds arbitration agreement and grants anti-suit injunction against Russian Bank (Bank A v Bank B)

Arbitration analysis: In Bank A v Bank B, the Hong Kong Court of First Instance granted an anti-suit injunction and related relief to prevent a Russian bank from pursuing court proceedings in Russia in breach of an arbitration clause contained in the agreement concerned. In so holding, the court rejected the Russian bank’s submission that the case involved acts of state and foreign affairs and that the court had no jurisdiction in the absence of a certificate required by Article 19 of the Basic Law of Hong Kong (‘Certificate’). Further, the court rejected the Russian bank’s argument that the arbitration in Hong Kong would be futile, pointing out that any award made by the arbitral tribunal would be valid and binding on the parties, even if its performance was impossible. Written by Min Li, partner and Patrick Chong, associate at Reed Smith Richards Butler LLP.

Market Standards Trend Report—Trends in UK public M&A in Q3 2024

Market Standards analysis: Market Standards has conducted research to examine the current trends in UK public M&A for the period 1 July 2024 to 30 September 2024.