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Chapter 7: Unfolding the JV Core

Topics Covered

  1. JVs and the 1991 Economic Liberalization in India
  2. Structuring Joint Ventures

As a corporate lawyer, structuring IVS and foreign collaborations has been my passion all along, a trait I inherit from my senior, R. A. Shah (More about him in the next chapter), and whilst working on several TVs over the years. This is truly fascinating work, if you enjoy meeting businessmen, decision makers, founders, and CEOs from diverse sectors to hear them unfold their vision, aspirations, thought processes, points of view, sharing experiences on other JVs, holding marathon discussions, zeroing in on key issues, strategizing the way forward, drafting, negotiating, and eventually seeing them kick off their new arrangements before embarking on yet another voyage of discovery and deliberation.

In my journey of over 30 years, I have designed the structure of over 150JVs and alliances in various forms across diverse industries. I fondly recollect classic examples of large Indian pharmaceutical and retail clients for whom I had the privilege and pride of structuring a series of JVs which have today made them giants in their own sectors. In the process, I have learnt and understood the intricacies and peculiarities of diverse businesses, including pharmaceuticals, retail, manufacturing (auto, cement), and services (IT, education, engineering, healthcare).

Joint ventures, to my mind, are nothing but quasi-partnerships structured in the form of an incorporated company (what is today known as LLP in India). Why company? Because it was the sole earliest known form in India which could have limited liability. In India, therefore, an incorporated company with limited liability offers a well-defined format ably supported by the various provisions of the Indian Companies Act, 2013 (erstwhile Companies Act, 1956). The Joint Venture Agreement provisions are also incorporated in the Memorandum of Objectives and Articles of Association to reflect the share ownership (51:49. 50:50, 74:26, 90:10), management (board of directors, process for holding meetings including special quorum and veto or affirmative rights), roles & responsibilities of partners (including transferring or licensing of brands, technology, manufacturing, research or local administration), transfer restrictions on shares (preemptive rights or right of first refusal, put and call options), process for deadlock resolution, exit provisions including termination & non-compete, representation, warranties and indemnities, and arbitration.

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