It is also interesting to note that some questions reserved for a given period may be fashionable and probably in response to trends that predominated at the time, such as the reserved question about initial parts offers. This may not always be a problem and users of typical shareholder agreements will want to try to carefully determine whether the list is correct for them. If the company participates in the joint venture agreement and the regulation of reserve matters also binds the company, it is important to ensure that the reserved cases do not constitute a blockage of the legal powers of the company, since there is jurisprudence in the United Kingdom that would nullify such a restriction. Some of these issues will be discussed in more detail below. In cases where the restriction of foreign ownership applies and where the trade agreement stipulates that the foreign partner of the joint venture will own a larger share of shares than is permitted, the challenge for its lawyers is to effectively structure joint enterprise agreements, which best protect the interests of the foreign partner of the joint venture while being applicable under existing legislation. If shareholders are required to make contributions (usually in proportion to their holdings), the agreement should clearly state what happens if one of them is late in payment. Should the other shareholder, for example, be able to finance the deficit and obtain additional shares, thus further diluting the defaulting shareholder? Or should the other shareholder be allowed to provide a shareholder loan corresponding to the deficit and, if so, should this shareholder loan be first and foremost any other shareholder loan and attract a preferential interest rate? Failure to comply with a financing obligation would generally be a case of delay that triggers the mandatory share transfer provisions, since the non-failing shareholder may acquire the shares of the defaulting shareholder at a discount to market value (sometimes the non-failing shareholder may also sell his shares to the defaulting shareholder for a premium at market value). These types of clauses are intended to encourage shareholders to meet their financing obligations and to provide the joint venture company with the financing it needs to ensure the smooth running of its business. The reserve provisions provide for additional consent beyond the common law.
It provides a form of control or protection to persons who have a minority stake who otherwise cannot veto or influence decisions in this area if the threshold of authorization is only that applicable under the common law. Dividend policy must be clearly outlined in the Joint Enterprise Agreement to reduce the likelihood of a future dispute. One possibility is to provide for the distribution of an annual dividend equal to a certain percentage of the company`s annual profit. A more flexible option is to give the board of directors of the joint venture company the opportunity to set an appropriate dividend each year.