LUXEMBOURG Law and Practice Contributed by: Anna Gassner, Philipp Mössner, Andrea Carraretto and Etienne Weryha, GSK Stockmann SA
A JV vehicle can also be dissolved by the Luxembourg courts in accordance with the LCC. Contemplating the consequences of the termination of the JV is crucial. The main matters that should be dealt with in this respect concern: • settlement of liabilities; • survival clauses from the JV agreements; and • de-registration from the RCS if the JV is a regis - tered entity. The JV agreement can also stipulate that the termi - nation of the JV does not trigger the termination of the JV vehicle. As a separate legal entity, transfer of shares or liquidation of the JV vehicle should also be contemplated. 9.2 Asset Redistribution and Transfers When contemplating the transfer of the assets owned by the JV to the JV participants, whether they were originally contributed to the JV vehicle by the JV par - ticipants or generated directly by the JV, the following main issues should be addressed. • allocation of assets; • employment issues; • IP issues; • Assets valuation: the valuation of the assets to be transferred is generally determined in accord - ance with the calculation method set out in the JV agreement. • Contractual restrictions over the assets: depending on the nature of the assets, it must be ensured that the asset to be transferred is free from any encum - brances or third-party rights that could prevent the transfer (eg, mortgages, pledges over shares, limitation to the transferability of IP rights).
• Nature of the assets: fulfilment of legal registration requirements may be triggered by the transfer of certain assets (eg, IP rights, real estate). • Corporate interest: the management body of the JV vehicle must ensure that the transfer of assets con - templated is in the best interests of the JV, either from a corporate perspective or from a business perspective, when assessing the impact of such transfer on the modus operandi of the JV. The deci - sion to transfer assets of the JV to its participants can require the prior approval of an ad hoc com - mittee or the shareholders of the JV vehicle. The transfer of assets from the JV to its participants is a scenario that is worth contemplating in advance and including directly in the JV agreement. 9.3 Exit Strategy There are no specific Luxembourg corporate law provisions regulating share transfers, except that the shares of an SARL may be transferred inter vivos to non-shareholders only with the favourable vote of shareholders representing at least 75% of the share capital (which can be decreased to 50%). The exit strategy can be freely determined by the JV agreement and typically includes exit through a sale to a third party or a winding-up (or any similar corporate transactions, such as mergers). A mechanism frequently applied is exit via the redemp - tion of entire classes of shares at a value determined in the JV agreement (and mirrored in the Articles).
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