JV partner identification and due diligence, equity structuring and FDI compliance, governance and deadlock resolution design, JV agreement drafting and exit mechanism planning for foreign companies entering the Indian market through partnerships.
Short, direct, on the record.
FDI in JVs is subject to sectoral caps (e.g. 49% in insurance, 26% in digital media, 100% in most manufacturing). Sectors on the negative list prohibit foreign investment entirely. Press Note 3 (2020) requires government approval for investors from countries sharing a land border with India (including China, Pakistan, Bangladesh). The automatic route allows FDI without prior government approval up to the sectoral cap.
Under FEMA pricing norms, shares issued to foreign investors must be at or above fair market value determined by an internationally accepted pricing methodology (e.g. DCF, comparable company analysis) certified by a SEBI registered merchant banker or a chartered accountant. For exits, the foreign investor must sell at or below the fair market value.
Foreign JV partners should negotiate reserved matters (requiring affirmative vote) for key decisions including capital changes, related party transactions, material contracts, key management appointments, business plan approval and asset disposals. Board nomination rights, information and audit rights, and deadlock resolution mechanisms are equally critical.
Yes, but FEMA pricing norms require that exit by a foreign investor cannot exceed the fair market value of shares at the time of exercise. Guaranteed returns and assured exit prices are not permitted. The put option must reference fair value at the exercise date, not a predetermined fixed price.
Share the sector, proposed equity split and governance expectations for a preliminary assessment.