We have extensive experience of advising in relation to all types of joint ventures, including corporate joint ventures, partnerships, contractual joint ventures, collaboration and co-operation agreements and strategic alliances. We advise across a wide range of industries, such as natural resources, technology, health, telecommunications and broadcasting, film and entertainment, travel and tourism, shipping, food and restaurants. Clients receive smart and pragmatic advice from multidisciplinary lawyers with broad transactional experience across joint ventures and foreign direct investment, capital markets, M&A, competition law, intellectual property licensing, employment law and management incentive schemes.
We aim to understand the business drivers and objectives underlying a proposed joint venture, working with other professional advisers to set up joint venture structures that meet clients’ legal, operational, accounting, financing and tax needs. We provide an insightful and highly personalised service to clients, advising on all aspects of joint ventures including initial contributions and on-going funding requirements, board composition and management arrangements, profit extraction, restrictive covenants, minority protections, deadlock resolution (for 50-50 joint ventures), lock-ups, pre-emption rights, tag along and drag along, duration and termination, employee issues and regulatory requirements (including PRC merger clearance if applicable).
We negotiate and draft all joint venture documentation, from preliminary terms sheets, confidentiality and exclusivity agreements, to subscription agreements, constitutional documents, shareholders agreements (for corporate joint ventures), partnership agreements (for partnerships), as well as ancillary documents that may be required, such as employment contracts, asset transfers, intellectual property licences, and marketing, distribution, licensing and supply agreements.
When considering establishing joint ventures the joint venture parties must carefully consider the appropriate structure and vehicle for the joint venture. Where a corporate entity is to be used with operations in Hong Kong, the joint venture parties may consider incorporating the parent entity in Hong Kong, incorporating a Hong Kong subsidiary with an off-shore parent entity or otherwise establish an off-shore entity and establish a branch in Hong Kong.
If the joint venture is to establish, either as the parent company or as a subsidiary, in Hong Kong, if the entity is not established primarily for the raising of equity, it will often be incorporated as a private company limited by shares (cf. public limited company) due to the reason that private companies have less onerous disclosure obligations than public companies.
Under the Hong Kong Companies Ordinance, a private company in Hong Kong, is defined as a company which by its articles of association:
(i) restrict the shareholder’s right to transfer shares;
(ii) limit the number of its shareholders to 50 (which does not take into account (a) those persons who are in the employ of the company and (b) those persons who were formerly in the employ of the company and who were members of the company while they were employed); and
(iii) prohibit the making of any invitation to the public to subscribe for any shares or debenture of the company.
In addition, a private company must not be a company limited by guarantee.
The incorporation process typically takes one week from filing of appropriate documentation which must include details including the articles of association, share capital, company name, directors and company secretary and registered office.
Alternatively if the joint venture is to incorporate as an off-shore entity which has a place of business in Hong Kong, they may prefer to establish a branch office. A place of business will normally exist if premises are occupied in Hong Kong on a relatively permanent basis from which officers or employees carry on business for the non-Hong Kong company. A non-Hong Kong company which appoints an agent in Hong Kong but has no office or other place of business of its own in Hong Kong will not generally be deemed to have an established place of business in Hong Kong. Any non-Hong Kong company with an established place of business in Hong Kong must be registered as a “non-Hong Kong company” under the Companies Ordinance. Registration involves delivering certain documentation and forms to the Hong Kong Registrar of Companies within one month of the establishment of the place of business in Hong Kong.