USA Law and Practice Contributed by: Olesya Bakar, William “Bill” Jackson, Daniel E. Levisohn and Steven D. Lear, Holland & Knight LLP
5. Negotiating the Terms 5.1 Preliminary Negotiation Instruments and Practices NDA A confidentiality or nondisclosure agreement (NDA) is critical any time that prospective venturers are sharing confidential information. It should be entered into prior to negotiating the terms of the JV and a venturer pro - viding sensitive information regarding any other ven - turer. A customary NDA will typically restrict a party or its representatives from disclosing the existence of the JV negotiations and the confidential information of the other party, and from using the other party’s confiden - tial information other than in furtherance of the evalua - tion and negotiation of the potential transaction. Term Sheet Most JVs must be contractually tailored to the needs of the venturers. Negotiating a detailed term sheet, let - ter of intent or memorandum of understanding (each a “term sheet”) is often advisable at the outset of negotiations to facilitate alignment between the ven - turers. A term sheet is much shorter, with less detail, than a JV agreement. Accordingly, a term sheet set - ting the material terms of the JV will save substantial time and resources in negotiating and preparing the JV agreement, as well as setting the parties’ expec - tations. Most term sheets will address equity own - ership, capital funding requirements, distributions, governance, and transfer and exit provisions. Term sheets are usually legally non-binding, except for certain binding provisions such as the allocation of expenses to negotiate and prepare the term sheet and other deal documents, confidentiality, governing law and, if applicable, an exclusivity period during which the prospective venturers are obligated to negotiate exclusively with each other. The scope of each term sheet and which material issues are included (versus negotiating them in the JV agreement) is a question of strategy and negotiation leverage. In some cases, it may be better to save a problematic issue for the JV agreement after the venturers have signed the term sheet and are more invested in the JV rather than risk- ing killing the deal at the term sheet stage. In other cases, bringing these difficult issues up at the term sheet stage may ensure that the parties are in fact aligned on these issues.
owners of foreign reporting companies. Accordingly, only foreign entities are now reporting companies, and only non-US persons must report as beneficial own - ers. FinCEN stated that it will consider post-issuance comments on the interim final rule before it issues the rule. The interim final rule exempts more than 32 million existing domestic entities, and the CTA now only applies to foreign JVs (of which there are approxi - mately 20,000). State Transparency Acts States beneficial ownership reporting laws are in a state of flux after the promulgation of the CTA interim final rule. The New York LLC Transparency Act, as amended on 1 March 2024, goes into effect on 1 January 2026 and is based on the CTA (as originally enacted) but only applies to LLCs. Unlike the CTA, it requires a filing to claim an exemption. It applies to both domestic and foreign LLCs that are formed or registered to do busi - ness in New York, and unlike the interim final rule, it includes domestic entities. Whether other states, such California and Maryland, that previously were considering adopting their own transparency legislation will do so after the promulga - tion of the interim final rule is unclear. 4. Legal Developments 4.1 Notable Recent Decisions or Statutory Developments Since its adoption, the CTA has been fraught with interpretive issues. FinCEN promulgated regulations, FAQs and other guidance and offers a virtual portal to submit inquiries. JVs and their counsel, however, struggled with numerous questions that have were not addressed by FinCEN. FinCEN’s adoption of the inter - im final rule on 21 March 2025, exempting domestic entities and US persons from CTA reporting, greatly reduced the number of JVs that have filing require - ments, but issues still remain for foreign JVs that must file CTA reports.
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