Our industrials practice represents major Chinese and other Asian industrial and manufacturing companies in a broad range of business sectors, including steel, aluminium and other metals, manfacturing, shipbuilding, chemicals and diversified industrial products and services companies.
We provide high impact advice to industrial products and services clients on a wide range of issues across all of our main practice areas. Our industrials team is composed of multilingual lawyers with extensive experience in capital markets, corporate finance, mergers and acquisitions, as well as sector specific experience. We provide an insightful and highly personalised service to clients, relying on our commercial awareness and industry understanding to provide smart and practical legal solutions to industrial clients.
For transactions with an international dimension, Charltons works with a network of law firms worldwide and frequently instructs local counsel and coordinates multi-jurisdictional legal advice, offering a single point of contact and integrated legal advice to the client. This network allow us to coordinate with experienced lawyers worldwide, to deliver timely and cost-effective solutions.
Joint Venture Agreements in the mining industry
It is common for two or more parties to use joint venture agreement in connection with the exploration and development of mining sites.
Joint venture agreements usually include, inter alia, general provisions on the formation of the joint venture, the objects and scope and development of the joint venture, the respective rights, obligations and liabilities of the joint venture partners, covenants, warranties, the ownership of the property and assets, and the use of the property of the joint venture (for example whether is restriction on partition or encumbering of the property of the joint venture).
We have experience of advising on mining industry joint venture agreements, including termination or amendment of joint venture arrangements in connection with pre-IPO restructurings. We set out below some of the key issues when negotiating joint venture agreements:
Typically, a manager (the “Manager“) would be appointed by the joint venture partners to manage the joint venture and act as agent of the joint venture parties.
As such, the joint venture agreement should include provisions addressing the function, powers and duties of the Manager, the term of appointment, remuneration, the subsequent appointment of a new manager, liability, any indemnity by the Manager in favour of the joint venture partners, any indemnity by the joint venture parties in favour of the Manager, delegation by the Manager, agreements between the Manager and third parties and the Manager’s role in any litigation.
A management committee will usually be established and be responsible for the supervision of the Manager in the management of the joint venture and strategic decisions making relating to the joint venture.
Like a normal shareholders agreement, the joint venture partners generally will appoint representatives to the management committee in proportion to their respective interests in the joint venture. Normally, the chairman of the management committee would be appointed by the partner with the greatest interest in the joint venture. The representatives may be granted full powers and authority to represent and bind the joint venture partner which appointed them, so that a joint venture partner is bound by all votes cast by its representative.
It is important that there should be clear agreement in the joint venture agreement as to the functions and powers with which the management committee is to be empowered. The joint venture agreement should include, among other things, provisions relating to the establishment of the management committee, the conduct and required quorum for meetings, particulars in regards to voting and decision making, the creation of sub-committees and loss of joint venture rights.
Programmes, Budgets and Called Sums
It is common practice for the Manager to provide the joint venture partners with annual proposed programme (the “Programme“) with relevant budget prepared in accordance with the prescribed accounting procedures of the joint venture. The budget should detail proposed capital works (and related contracts) and should also include an itemised budget specifying estimated monthly expenses.
The joint venture agreement should include provisions relating to the approval of the Programme and budget by the management committee of the joint venture, the formalities and logistics relating to the payment and billing of sums called from the joint venture partners. If appropriate, a statement to the effect that called sums (or other expenditure monies) falling due by the joint venture partners should be paid by them severally in proportion to their respective shares in the joint venture should be included.
Dilution, withdrawal, assignment, default and termination
The joint venture agreement should also include provisions relating to possible default withdrawal, dilution or assignment of interest of joint venture partners and dissolution, winding-up and / or termination of the joint venture.
Charltons industrials practice represents major Chinese and other Asian industrial and manufacturing companies in a broad range of business sectors including industrial products and services and the mining industry.