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International corporate legal agreements

These type of agreements relate to the business as a whole and not only the product/services offered by the enterprise. Please find below some examples

  • Letter of Intent
  • Heads of Agreement/Memorandum of Understanding
  • Exclusivity agreement/Confidentiality agreement
  • Due diligence report
  • Long-term agreements/Fixed term agreements
  • Joint-Venture agreements
  • Sale and purchase of a business or part of a business
  • Asset Purchase agreement
  • Shares Purchase agreement

A large chunk of the corporate legal documents are covered by mergers & acquisition of a company or certain assets of that company. This whole process goes through many stages, from pre-contractual to post-contractual. The whole process is generally started with an Letter of Intent, Memorandum of Understanding or Term sheet. Then there is generally an intensive investigation of the company from a legal point of view and financial point of view, called the Due Diligence phase. All data is collected from the target company and assembled into a data room. The experts then have a limited amount of time to analyse the data. A report is drawn up setting out i.a. all the risks. Then the negotiations start regarding the Sale Purchase agreement or joint-venture agreements where the risks and discoveries found in the Due Diligence are translated into the guarantees and disclosures. After that closing takes place where all the final steps are taken in order to effect the sale.

Heads of Agreement/Memorandum of Understanding

This is also a one off agreement and generally can relate to the terms and conditions of sale/purchase of products/services and it can also relate to a situation where parties are wishing to concentrate certain activities of the company, for example by way of a fixed term contract or a joint-venture agreement.

The Heads of Agreement/Memorandum of Understanding is a binding agreement unlike a Letter of Intent, which is generally speaking not a binding agreement. Both type of agreements are there to write down and quantify the agreements that the parties have reached to a certain date and what both parties need to do going forward in order to reach a common goal. The common goal can be type of commercial agreement.

Exclusivity Agreement/Confidentiality agreement

Then there are a range of other types of legal agreements that cover exclusivity or confidentiality for example. An Exclusivity Agreement could be appropriate if both parties wish to exclusively negotiate with each other or where both parties are disclosing confidential information, in which case a Confidentiality agreement is the right type of legal agreement.

Due diligence report

Under Dutch law there is an extensive information and investigation duty on parties and a due diligence is a way to facilitate this process and contribute to the information and investigation duty on the client.

In the event that your company wishes to purchase certain assets or shares in another company, the target company will need to investigated from a legal point of view in addition to a financial point of view. This entails a full legal investigations into inter alia the following:

  1. legal corporate structure
  2. all contracts entered into with staff
  3. all contracts entered into with suppliers and buyers
  4. property and environmental issues
  5. Intellectual property rights etc.

Also in the event that your company wishes to sell certain assets or shares of its own, it is quite common for the seller, in this case, also called the Vendor, to have a due diligence on its own company, to facilitate the selling process. This enables the Vendor to accurately draft the relating agreements based on the outcome of the due diligence report and which gives him more control over the process. Also it is a good way to screen the company and deal with potential hick ups before the sale process has started.

The report sets out all the (potential) liabilities and exposures of the company, and this report can be used in the sale and purchase agreement with respect to the disclosures made and also the guarantees provided for example.

Joint Venture agreements

Is the agreement to realize a certain long-term co-operation between parties whereby each party contributes something like assets or cash to the co-operation? A Joint Venture agreement may be the appropriate agreement to enter into. Both parties to the joint venture agreement share a risk generally being a financial risk. Should the joint venture not be profitable then the parties can decide to liquidate the joint-venture company. A joint venture agreement may give the parties more market share or may give close the sales chain. The joint venture agreement should stipulate the purpose of the joint venture company. The resources of the joint venture agreement should be defined as well as who is responsible for the day to day management.

Sale and Purchase agreement of assets or shares

This is where a company wants to dispose of certain of its assets or shares under certain conditions. This process generally takes place within a short time frame within which the work need needs to be done from the moment a potential interested party is found until signature of the contracts whereby the sale and purchase is effected.

Generally speaking this process can include the following documentation, which are, in part, covered elsewhere on the website:

  • After locating a potential party, you may enter into a confidentiality agreement or even an exclusivity agreement during which parties can negotiate exclusively and with the comfort that the information exchanged is kept confidential.
  • A letter of intent can be the next step where parties set out their intention to go down the path with the ultimate goal to conclude the transaction. This document is generally non-binding but is much more specific in what needs to be done and how it is to be done than the above-mentioned agreement.
  • A Memorandum of Understanding or a Heads of Agreement is another type of agreement which does have a legally binding element. This is where parties have agreed on certain issues and are now wanting to set out the path to completion.
  • Normally the due diligence follows the Letter of Intent or Memorandum of Understanding. This is where the company is investigated from a legal and financial point of view.
  • As a result of what is found in the due diligence report, the parties start drafting the sale and purchase agreement. In this agreement the reps and warranties and disclosures are influenced by, inter alia, with what is found in the due diligence report. The sale and purchase agreement can be drafted either by the seller or by the buyer. However, there is an expression within the legal world, that the party who drafts remains in the lead.
  • Upon signature of the sale and purchase agreement, there will be  formal closing process whereby all surrounding agreements and actions flowing from the signature of the sale and purchase agreement. This is generally speaking followed by a closing dinner.

This whole process is very intensive for all parties concerned because there is a lot of pressure on all parties to come to a conclusion within a certain period of time. So all parties get to know each other really well.

Please contact Madelon van Breemen on (+31) (0) 10 2092756 or at vanbreemen@lvh-advocaten.nl or Peter Verheijden on (+31) 10 2092743 or at verheijden@lvh-advocaten.nl for further information.

Bouwe Bos

litigation

+31 (0)10 209 27 63 bos@lvh-advocaten.nl
Madelon van Breemen

International business to business contracting

+31 (0)10 209 27 65 vanbreemen@lvh-advocaten.nl
Daniël van Genderen

litigation, tender, business and government

+31(0)10 209 27 45 vangenderen@lvh-advocaten.nl
Peter de Graaf

insolvencies and reorganisation

+31 (0)10 209 27 52 degraaf@lvh-advocaten.nl
Yvonne Jansen

rental (contract and eviction), business and shareholders, property

+31 (0)10 209 27 75 jansen@lvh-advocaten.nl
David Harreman

Enterprise and government, Enterprise and shareholders, National and International Tax Law

+31 (0)10 209 27 77 harreman@lvh-advocaten.nl
Lisa Kloot

employment Law and employer representation

+31(0)10 209 27 61 kloot@lvh-advocaten.nl
Ben van Nieuwaal

business and government

+31 (0)10 209 27 45 vannieuwaal@lvh-advocaten.nl
Michelle Reevers

aviation, commercial contracts, business and shareholders

+31 (0)10 209 27 75 reevers@lvh-advocaten.nl
Hans Rijntjes

litigation, rental (contract and eviction), collection, business and shareholders

+31 (0)10 209 27 55 rijntjes@lvh-advocaten.nl
Rob Steenhoek

insolvencies and reorganisation, business and shareholders

+31 (0)10 209 27 52 steenhoek@lvh-advocaten.nl
Peter Verheijden

commercial cooperations, mergers and acquisitions, employment law and employer representation 

+31 (0)10 209 27 75 verheijden@lvh-advocaten.nl
Justin de Vries

insolvencies and reorganisation, business and shareholders

+31 (0)10 209 27 52 devries@lvh-advocaten.nl

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