Joint Venture Agreement In Dubai

Below are the most important provisions of any joint venture agreement (although there are others that are not mentioned below): if shareholders are required to contribute (usually in proportion to their holdings), the agreement should clearly indicate what will happen in the event of the failure of one of them. For example, should the other shareholder be able to finance the deficit and obtain additional shares, further diluting the defaulting shareholder? Or should the other partner have the right to make a shareholder loan corresponding to the deficit and, if so, should that shareholder loan be outpaced by all other shareholder loans and attract a preferential interest rate? As a general rule, failure to comply with a financing obligation would also constitute a default that would trigger the mandatory share transfer provisions, as the non-defaulting shareholder may choose to acquire the shares of the defaulting shareholder at a discount to the market value (it is sometimes possible for the non-defaulting shareholder to sell his shares to the defaulting shareholder at a premium on the market value). Such clauses are intended to provide shareholders with incentives to fulfil their financing obligations and to provide the joint venture with the financing necessary for the success of its activities. In cases where the foreign ownership restriction applies and the business agreement is for the JV`s foreign partner to own a higher percentage of shares than is permitted, the challenge for its lawyers is to effectively structure the JV agreements in order to best protect the interests of the JV`s foreign partner. be enforceable at the same time as the legislation in force. x. entering into a contract, agreement or obligation with a shareholder or associated enterprise or related entity of a shareholder or a person controlled by an individual shareholder, or with a person who does not negotiate with a shareholder on “comparable” terms; To find out more about the steps of setting up a joint venture in Dubai and the necessary documents, do not hesitate to contact our professional CBE team, who will accompany you on their way to the finish line. In addition to our structuring competence, we also have extensive experience in consulting on relevant JV documentation. Depending on the circumstances of the joint venture, different documents will be required, but the main document will usually be the joint venture or shareholders` agreement.