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Contracts & Transactions

Shareholder & Joint Venture Arrangements

Agreements written for the day the shareholders disagree.

The Problem

What Is at Stake

A shareholders’ agreement is easy to agree when everyone is aligned. Its real test comes later: when a shareholder wants to leave, when the business needs more capital, when a founder steps back, or when two equal shareholders cannot agree. If the agreement is silent, the Companies Act, 2013 and the articles of association fill the gap, often in ways no one intended.

Joint ventures carry the same risks with added complexity, because each party brings its own business, its own priorities and often its own competing activities. The documents need to address contribution, control, information, competition and exit from the outset.

KP Juris advises promoters, family businesses and joint venture parties on structuring and documenting these arrangements, and on the options when relationships break down. Support on mergers, acquisitions and corporate restructuring that change the shareholding is provided as part of this work.

Scope

Matters We Advise On

  1. Shareholders' agreements for private companies
  2. Joint venture and collaboration structures
  3. Board composition, reserved matters and information rights
  4. Deadlock resolution mechanisms
  5. Transfer restrictions: ROFR, ROFO, drag-along and tag-along
  6. Exit routes, put and call options
  7. Family business and promoter arrangements
  8. Shareholder disputes and negotiated exits

Approach

How We Approach It

  1. 01

    Map the relationship

    Understand each party's contribution and expectations, and what each would want if the arrangement ended.

  2. 02

    Design the governance

    Set out board rights, reserved matters and information flows in proportion to each party's stake and role.

  3. 03

    Build in the exits

    Agree transfer restrictions, valuation methods and deadlock routes before they are needed.

  4. 04

    Align the constitution

    Make sure the articles of association reflect the agreement, so that its terms can be relied on.

Key Considerations

What to Know Before You Act

Articles and agreement must match

Courts have treated share-transfer restrictions as binding on the company where they appear in the articles. Amending the articles alongside the agreement avoids the question.

Deadlock

Equal shareholdings without a deadlock mechanism can leave a company unable to act. Escalation, casting votes, buy-sell provisions or independent valuation each suit different relationships.

Valuation on exit

Put and call options need a clear valuation method. Where a shareholder is non-resident, FEMA pricing rules also apply to the transfer.

Competing interests

Joint venture parties often run related businesses. Non-compete, confidentiality and opportunity-sharing terms should be drafted with section 27 of the Indian Contract Act in mind.

Related

Related Services and Insights

Commercial Contracts

Supply, service and distribution agreements, reviewed before signing.

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Engagements are scoped to the matter. Please do not send confidential documents with a first enquiry.

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