AOA of JV Company

[subodh zare]

Hi, all.

 

Does a JV company/ SPV Company need to incorporate the JV Agreement in its Articles?
Is it a practice or requierd by statute?

 

Subodh.

[CS. Dattatri]

Dear Mr Subodh,

 

Yes. They will have to incorporate operative clauses into the articles.

 

Logic is as follows.

 

Companies have to administer themselves strictly in accordance with the articles of association. In case of JVs, both the parties agree upon certain practices to be adopted in managing specific affairs of the company. If these clauses are not incorporated into the articles, how will you bind the company to act accordingly? Further how will an external interested party know the methodology adopted by the company for managing its affairs?

 

Please let me know, if you need further explanation...

Regards,

 

Dattatri

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From: csmy...@googlegroups.com [mailto:csmy...@googlegroups.com] On Behalf Of subodh zare
Sent: Wednesday, 25 February, 2009 11:53 AM
To: csmy...@googlegroups.com
Subject: [CSMysore] AOA of JV Company

[subodh zare]

Dear Dattatri,

 

Thanks for your reply.

 

I would like to know whether the inclusion of JV agreement in AOA is required by statute or just a practice? I've to argue before the opposition's counsel who is taking the stand similar to yours.

 

 

Subodh.

[CS. Dattatri]

Dear Subodh,

 

So far I have not come across any statutory provisions directly related to this. I hope you might have already checked the provisions related to mergers, acquisitions, takeovers etc.

 

I request our eParivariyans to help, if any one is having any idea regarding this.

 

For the sake of arguments, you make take a stand that, it is just a practice and not mandatory. However, unless you beat the logic by your counter logic, the argument may not stand. Please take care.

 

Regards,

 

Dattatri

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From: csmy...@googlegroups.com [mailto:csmy...@googlegroups.com] On Behalf Of subodh zare

Sent: Wednesday, 25 February, 2009 1:41 PM
To: csmy...@googlegroups.com
Subject: [CSMysore] Re: AOA of JV Company

[Natesh Kalidevapur]

It depends upon the parties to the Agreement. if they insist, then we need to incorporate the same in the Articles. Neither a Practice nor required by Statute. It is only to safeguard their interest and put a Boundary to a Governing body.

--
with regards

Natesh K
Bsc., LL.B., A.C.S.
Company Secretary

No.287,26th Cross, 9th Main,B.S.K 2nd  Stage, Bangalore-560 070
Phone No. 080-26714318
Mobile No.9740955771

[madhwesh acharya]

Dear members,

 

I agree with Mr. Natesh Kalidevapur.

 

If the AOA doesnot incorporate the JV agreement, then the parties to the JV agreement will not be able to enforce provisions of the agreement - against the company - under company law. Company Law does not recognize any such agreement unless it is incorporated in the Charter of the company. Parties will be left with civil action which is comparitively a longer process.

--
Regards,
Madhwesh K
Company Secretary
Bangalore
9945399584

[Vijay Devadiga]

JV agreement is Agreement between specific shareholders. Company is also made a party to the Agreement. If the Company is yet to be incorporated on date of Agreement, it will be bound by it if it ratifies Agreement after its incorporation.

 

In my opinion, if the Company is bound by Agreement, it is enforceable by signing shareholders as well as the Company irrespective of whether the same is made part of the Articles.

 

thanks and regards,

 

Vijay