SWITZERLAND Law and Practice Contributed by: Alexander Vogel, Marc Baumberger and Selina Bruderer, MLL Legal
predictability, parties often agree on a fixed term with automatic renewal, unless the agreement is termi - nated before the end of the term. The JV agreement may also provide for specific termination events (eg, breach, insolvency) or termination for good cause. General Termination Matters Regardless of the JV structure, key matters to be addressed upon termination include: • allocation or disposal of JV assets and liabilities; • unwinding of shared contracts or licences; • settlement of outstanding obligations; • handling of employees and ongoing operations; • protection and continued use of IP; and • exit arrangements and post-termination non-com - pete or confidentiality obligations. It is advisable to address these issues comprehen - sively in the JV agreement to avoid disputes and ensure a smooth wind-down of the JV relationship. 9.2 Asset Redistribution and Transfers JV arrangements typically come to an end upon the completion of the underlying project or the expiry of the JV term, or based on termination provisions set out in the JV agreement. On termination, the handling of assets and liabilities becomes a central issue. A direct transfer of assets between JV participants is generally not affected by the JV arrangement unless the asset in question is of material relevance to the JV itself. For example, IP licensed to the JV by one party and subsequently transferred to another party may require that the new owner continue to license the IP to the JV – ideally on the same terms as the original licensor. The situation is different where assets were initially transferred to the JV and are then transferred from
the JV to one of its participants. In such cases, the parties involved in the transfer differ (ie, the JV com - pany and a JV participant, rather than participants among themselves), and any proceeds from the trans - fer belong to the JV. As a result, all JV participants are indirectly affected and may share in the financial consequences. To avoid disputes, the JV agreement should ideally address the valuation of such assets, potential conflicts of interest and the implications for the JV’s ongoing operations (eg, continued access or use of the asset). When assets originating from the JV itself are trans - ferred to a participant, the key concern is that the other JV parties will no longer benefit from any future income these assets may generate – such as divi - dends. Here again, accurate valuation is critical, and any tax implications for the JV company should also be taken into account. In practice, JV structures often require that the transfer of significant assets be sub - ject to approval by all participants, or at least those holding a substantial interest. 9.3 Exit Strategy In Switzerland, there are generally no statutory provi - sions specifically regulating the exit of members from a JV. Exit strategies, such as share transfer restrictions or buy-back clauses, are largely a matter of contrac - tual freedom and can be freely negotiated and defined in the JV agreement. In practice, the most common exit scenario arises upon completion of the underlying project, particularly in contractual JVs established for a limited purpose. In corporate JVs that are not tied to a specific project, it is common to include call or put options that allow the dominant party to acquire the other party’s shares upon the occurrence of certain predefined conditions, such as the achievement of financial targets or the lapse of a specific time period.
177 CHAMBERS.COM
Powered by FlippingBook