Exploring Joint Ventures and Strategic Alliances in Cyprus
Delve into the world of joint ventures and strategic alliances in Cyprus, where venture capital thrives under a supportive legal framework. Learn about the benefits of forming a Cypriot limited liability company for business development, growth, and accessing international capital markets. Discover how entrepreneurs and industry players come together to create value in challenging times.
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Cyprus Joint Ventures Strategic Alliance of Venture Capital at its finest Stavros Pavlou Senior & Managing Partner Cyprus M&A Insights: Creating Value for Clients in Difficult Times | 8 December 2020
knowhow venture capital Joint Ventures Defined ambition risk analysis Joint Venture is a term with no specific legal connotation under strategic Cyprus Law. planning In essence, the definition of the Joint Venture includes all reasons which entrepreneurs and industry players alike, join forces for business development. Cyprus adds tangible value to the participants of Joint Ventures by providing an excellent legal framework, a fully supportive network of resources and professionals and most importantly an easy and immediate access to international capital markets, the EU and high growth markets. PATRIKIOS PAVLOU & ASSOCIATES LLC
Cyprus Legal Framework Cyprus has rightfully been established as one of the most attractive jurisdictions for aspiring entrepreneurs within the European Union offering a vast array of benefits and support for business development and growth. Cyprus legal system is: Fully compliant with the EU legal and regulatory framework Common law jurisdiction based on the English common law principles Traditional and well respected jurisdiction for entrepreneurs Fully transparent and compliant in terms of Money Laundering regulations Available Joint Venture Vehicles: Incorporation of a limited liability company Creation of partnership Entry by the ventures of a contractual co-operation agreement or a European Economic Interest Grouping (EEIG) The incorporation of a limited liability company is considered by far the most commonly used corporate vehicle by aspiring joint ventures for achieving their business projections. PATRIKIOS PAVLOU & ASSOCIATES LLC
Why a Cypriot Limited Liability Company? Coherent legal frameworks for: Incorporating and running a Joint Venture Based on the doctrine of separate corporate personality that provides comfort and insulates the joint venture participants from its liabilities Granting of securities for the purpose of financing its business affairs and easy listing of the same in the international capital markets Securing the interests of the Joint Venture in accordance to the wishes of the joint venture participants Restructuring, re-organizing, winding up and dissolving the joint vehicle is straight forward and in line with EU regulations Practical considerations: Ability of the joint venture participants to limit their exposure up to the amount of their participation Easy financing for financing and capitalization (Banks trust more companies rather than partnerships and mere contractual arrangements) Tax and accounting benefits Easy incorporation of the underlying wishes of the joint venture participants into the constitutional documents of the company PATRIKIOS PAVLOU & ASSOCIATES LLC
A unique corporate governance Tailormade shareholders agreement designed for the specific needs of the joint ventures. The legal framework applicable in Cyprus allows great flexibility for the joint ventures to construct their own unique corporate governance and include within their shareholder agreement unique provisions regulating: Relationship of the joint ventures and the income distribution Transferability controls on the shares of the Joint Venture Operation, management, control and structuring of the board of directors Acceptable Financing and Capitalization Schemes Intellectual Property Rights Employees Share Participation Schemes Transformation of the private Joint Venture into a public Joint Venture and listing Innovative mechanisms for deadlock resolutions: Put and call options Russian Roulette (or shot-gun) provisions Texas shout out provisions Commonly agreed termination provisions of the Joint Venture PATRIKIOS PAVLOU & ASSOCIATES LLC
Can minority shareholders be protected? Minority protection devices include the following: Reserved matters requiring the unanimous approval by all shareholders Weighted voting rights for certain shareholder matters Creation of golden shares on certain shareholders matters Customized clauses regarding the transferability of shares (e.g. pre-emption rights, tag along, drag along rights) Court protection - Foss v Harbottle principles and an array of injunctive relief measures can be employed to support such proceedings Alternative dispute resolution protection and referral of the dispute to Arbitration. Careful drafting of the shareholders agreement should always provide that a deadlock should always be approached in one of the following manners: 1. Alternative Dispute resolution and provide that such decision shall be final on the parties 2. Mandatory transfer of shares 3. Court proceedings winding up/dissolution of the Joint Venture PATRIKIOS PAVLOU & ASSOCIATES LLC
Cyprus provides the ultimate ecosystem for Joint Ventures Cyprus can be rightfully considered as leading jurisdiction for the establishment of Joint Ventures. Joint Ventures established in Cyprus enjoy a completive advantage and can easily thrive due to: Excellent and flexible legal and regulatory framework Experienced, well trained professionals for every aspect of the Joint Venture Easy access to EU and international markets Low maintenance and professional fees Efficient tax optimization of the Joint Venture structure for increase of the revenues and the profit margins Cyprus is in a steady, dynamic and holistic transformation into a well-respected business center as it constantly evolves and adds further torque to its appeal as prospective destination for entrepreneurs. PATRIKIOS PAVLOU & ASSOCIATES LLC
Thank you! Patrician Chambers 332 Agiou Andreou str., 3035 Limassol, Cyprus T. +357 25871599 | F. +357 25344548 | E. info@pavlaw.com www.pavlaw.com