FC & JV in WTO

FOREIGN COLLABORATION & JOINT VENTURE (FC & JV)

 

            Collaboration is a generic term, which pre-supposes a joint commercial enterprise or a consortium.   JV presupposes the joint participation by foreigner & an Indian to capitalise on the opportunities in the market by forging the mutual strength for common advantage.

           

"JV differs from a Partnership as JV is WITH the business whereas the partners are IN the business".

 

            Domestic partners may have skills but experienced in local market, existing business whereas they may be lacking physical capital or technology, which may be supplied by foreign parties, commonly there are four types of FC/JV,

1.       Equity JV/Financial Collaboration: Foreign partners & Indian party collectively hold an Indian company at an agreed % of shareholding & pursue the objects of JV. There is no technology transfer involved.   Typically, JV of these types takes place in FMCG, distribution, etc…

2.       Technical JV/Collaboration: Foreign party supplies technology to JV & JV does not need capital.  For instance, Technical JV for upgrading production, efficiency, processes, rejection, etc…

3.       Techno-Equity JV or Tie-up agreement: Here there is both equity & technical participation.  A foreign equity holder enjoys both share in the profit & payment towards technology transfer.   These types of JV are typically in manufacturing & service sector where technology transfer is continuous & retention of ownership control is critical from the confidentiality of IPR.

4.       Contractual JV: Through contracts.

 

 

RESTRICTIVE CLAUSES IN JV AGREEMENT:

1.       Restriction on IPR (Intellectual Property Rights):  This deals about restriction in supply for confidentiality.

2.       Restriction after expiry of agreement:  These are basically provisions ensuring confidentiality.

3.       Restriction on Research & Development (R&D).

4.       Non-Compete:  This clause may typically require a JV partner or key employees not to unfairly compete after termination or resignation.

5.       Tying arrangement:  These arrangement typically tie-up one consideration for another.

6.       Price fixing.

7.       Restrictions on territory.

8.       Grant back provision: This clause requires any improvement to be granted back.

9.       Exclusive sales or Representation agreement.

10.   Restriction on quality control, like, use of personnel or other prescriptions.

11.   Restriction on publicity.

 

More on Foreign Collaborations can be better read while doing FEMA for Economic Laws; Concentrate more on Press Note 1 & 5.

 

Also, read a sample FC agreement.

--
Vj
Trezrrr every pulsss
http://yehseeyes.blogspot.com/