CORPORATE LEGAL ADVISORY SERVICES

In the event a company has more than one shareholder, the relationship between the shareholders has to be based on an unbreakable bond of trust and friendship (in an ideal universe). For every other natural relationship, there is a shareholders’ agreement. These agreements are often more important than the company MOA, especially since the future of the company is based on the relationship between the shareholders. Inrigo specializes in drafting customized shareholder agreements which cover the decision making process, funding mechanisms, dispute resolution, liquidation and most importantly each shareholder’s obligations towards their partners. While these terms appear standard, and a derivative of pure logic, it is often the most overlooked aspect in any company documentation. This occurs due to the assumption that all parties wish to only grow the company and maximize profits. Sadly, people tend to forget that each individual may have different aspirations and expectations from the business. While one shareholder may wish to use the company as an investment for future sales, the other shareholder may aspire to expand the company globally. Similarly, while one shareholder may wish to liquidate the company when there is a consistent loss over a period of 3 years, the other shareholder may wish to sell the entity to a bigger enterprise. The lack of clear cut documentation often times leads to disputes, and in the absence of a clear dispute resolution clause also leads to unnecessary expenditure. Inrigo, therefore, ensures that a watertight shareholders’ agreement is formulated between the parties, to prevent any such future disputes. We work with the parties involved, understand the proposed business, conduct research on the various issues that may arise during the course of the business and prepare documentation that would be the best possible solution to any dispute. Though we cannot rationally predict all possible disagreements, our extensive experience permits us to predict numerous disputes, which in turn permits us to prepare a detailed shareholder manifesto, preparing the shareholders for almost all eventualities. Our final and most important involvement in this process is to convince all parties involved of the reasonability and fairness of the proposed solutions.

The UAE, being an entrepreneur’s hub is a lucrative territory for investors seeking to expand their portfolios and support/ initiate ventures locally. We routinely advise investors and shareholders on the best manner of conducting their business operations, and such advise begins primarily with company structuring and company formation.

• Identification of the correct territory, activity code, license requirements to set up the company etc.
• Drafting documentation such as memorandum of association, resolutions (in case the business owner is a company by itself), power of attorneys to the manager and authorized signatories etc.
• Co-ordination with the relevant authorities to set up the company and
• Completion of procedural formalities through the registered agents or PROs chosen by Inrigo

Based on the client’s business plans as well as the type of company being formed, we assist the client in creating an ideal structure for the company or establishment. This is usually done for shareholders having multiple arms of business operations, such as subsidiaries and branches or similar companies. Such structuring is not only done to assist expatriate shareholders holding beneficial interests in companies, but also for those shareholders who wish to organize their estate for the benefit of their heirs. The company structuring exercise also permits shareholders to receive and retain maximum profits from the company operations. In case of an existing entity, this exercise requires an in-depth review of the company’s MOA, any existing POAs and side agreements executed with any nominee sponsors, the business of the company and the organization’s structure itself. Depending upon the number of companies involved, we would highlight any lacuna in the existing structure and operations and advise the correct course of action to be followed. This exercise may also go hand in hand with the estate planning exercise, and requires the drafting and/or review of documents such as the Memorandum of Association of each company, side agreements, POAs, shareholder’s loan agreements, real estate agreements, trademark license agreement (if required), shareholder’s agreements, inter-company loan agreements, resolutions for dividend distribution, banking resolutions, MOUs with any silent partners, gift deeds etc.

Shareholders may or may not be in absolute control of day-to-day operations of their companies. Our services in this section are applicable to shareholders who have entrusted company operations in the hands of management who are either minority shareholders themselves or who are employees of the company. In such cases, Inrigo provides the following services:

• Drafting of shareholder agreements, corporate governance policies, decision making matrices, resolutions etc. which define the role and limitations of the shareholders and management in conduct of company business,
• Drafting of internal policies on conduct of management, shareholder loan agreements, employment agreements with the management, non-competition agreements, non-disclosure agreements etc.
• Meetings with the management and shareholders on a quarterly basis to ascertain whether the aforesaid policies are being followed
• Discussions with the financial team on a monthly basis on the inflow and outflow of funds, company expenses, state of business affairs and other matters
• Company audits and interviews with senior officials of the company to ascertain any wrongdoings
• Recommendation reports to shareholders and management on findings of corporate investigations to address any underlying issues
• Shareholder briefings to indicate the status of company affairs, request for additional funds, presentation of company performance in the previous financial year, forecasts for the successive years etc.

All in all, our services under this section cater to those shareholders who require maximum transparency from the board of directors, and minimum involvement in day to day operations. In case the findings of the investigation yield any undesirable results, we also advise shareholders on the best course of action to be followed and to devise an appropriate pre-litigation strategy.

While one arm of our advisory safeguards the shareholder, the other arm protects the management from unwanted interference from the shareholder. These services extend to those managers who are either employed by the shareholder or who are minority shareholders themselves. It is a well known fact that the soldier is better suited to ascertain the terrain than the general, for the soldier treads the site regularly. Even in the case of company operations, it is essential to provide the management with enough flexibility to conduct the business of the company in a smooth and risk-free manner. As long as the correct corporate practices are being followed, the management should be permitted to exercise their authority without interference. Towards this motive, our services in this area are as follows:

• Drafting of shareholder agreements, corporate governance policies, decision making matrices, resolutions etc. which define the role and limitations of the shareholders and management in conduct of company business,
• Drafting of internal policies on conduct of management, shareholder loan agreements, employment agreements with the management, non-competition agreements, non-disclosure agreements etc.
• Meetings with the management and shareholders on a quarterly basis to ascertain whether the aforesaid policies are being followed
• Discussions with the financial team on a monthly basis on the inflow and outflow of funds, company expenses, state of business affairs and other matters
• Recommendation reports to shareholders and management on findings of corporate investigations to address any underlying issues
• Shareholder briefings to indicate the status of company affairs, request for additional funds, presentation of company performance in the previous financial year, forecasts for the successive years etc.

While these services overlap with the services provided on behalf of the shareholder, in this case, the focus is on protecting the management as opposed to highlighting their flaws. Here, we assist the management in preparing adequate documentation and communication to facilitate transparency, reduce individual risk and achieve maximum results for the ultimate benefit of the shareholders. In the event of any discrepancy in management in these assignments, we also assist the management in disclosing these discrepancies to the shareholders and taking corrective measures.

Shareholders who wish to invest in an existing company, acquire a new asset from another company or enter into joint ventures, are not usually aware of the legal implications of not executing the correct documentation. The same is in the case of any shareholder who wishes to sell their company or asset. Though payment terms would always be the primary focus, it is often the intricacies of the transaction that need attention. We advise our clients on the best manner of undertaking the transaction, right from the stage of drafting the primary term sheet, conducting the due diligence, liaising with financial experts to verify the valuation methodology and conducting independent assesment of the company/ asset etc. all the way to executing the sale purchase agreement or joint venture agreement, completing procedural formalities and finally ensuring that the handover is risk-free, seamless and has minimal client involvment. Examples of documentation we have drafted include:

• Asset purchase agreements
• Investment agreements
• Term sheets and MOUs
• Due diligence worksheets
• Joint Venture agreements
• Share purchase agreements
• Share transfer agreements
• Communication for purchase including letters of intent, statement of pricing, offer letters, rejection of offers, pricing negotiations, asset verification documentation etc.

The due diligence exercise may also include site visits and inspections conducted in collaboration with consultants.

As no mother can ever say that her child is ugly, the same is the case with a shareholder and managing director in terms of their operating policies. Due to this, it is our job to highlight the shortfalls in the conduct of business operations. This involves preventing the abuse of power by dividing decision making authority amongst different management personnel, segmenting the use of company funds across channels through convenient approval mechanisms, creating processes for frequent review of financials and projections, documenting all authorities issued to the management and different company personnel, formulating employment policies, grievance redressal mechanisms and whistleblowing policies, ensuring employee health, discipline and safety is managed in a legally accurate manner, creating project intake and workflow systems to ensure that the project is correctly managed etc. This is a speciliazed offering that is restricted to a maximum of 5 clients in a given month. The KYC process for clients subscribing to this service is more stringent than regular clients due to the complexity and risks involved in the services. The firm also employs the assistance of external experts depending upon the size and status of the business operations.

Often times the company grows at an alarming rate due to which nascent business owners are unable to focus on the overall legal structure of the company, externally as well as internally. This is where Inrigo contributes the maximum towards identifying the correct company structure best suited to the overall growth strategy, formulating correct documentation such as corporate governance policies, employee policies, management contracts, management buy ins and buy outs, powers of authority, resolutions and other internal documents. We also assist in building different company layers so as to quarantine losses from the profit centres. This is done in collaboration with the company’s management and is an exclusive service which is provided to only highly volatile or fast growing companies on an urgent basis.

We pride ourselves on our ability to draft contracts from scratch by first understanding the transaction and the intent of the parties. This service includes a preliminary discussion with the client to ascertain a) the business of the client, b) the transaction per se, c) the credentials of the other party and d) the client’s prior experience in similar transactions. Further to this consultation, we conduct our own research on the transaction to predict any possible disputes, and combine the aforesaid with our own prior experience. The result is the creation of a water-tight contract which accounts for almost every doomsday scenario, and is yet flexible to ensure that both parties walk away with a win. Again, we want the deal to go through. For this reason alone, even at the stage of negotiating such transactional contracts, both parties believe in our advisory and our opinions. We have drafted hundreds of contracts and are proud to state that each contract is different from the other:

• Distributorship Agreements for the principal and agent
• Sale and Purchase Agreements for the seller and the buyer
• Escrow Agreements
• Purchase Orders
• Licensing Agreements
• Intellectual Property agreements
• Technology Transfer Agreements
• Joint venture agreements
• Vendor and supplier contracts
• Agency and facilitator agreements
• Delivery partner contracts
• Warehousing contracts
• Consultancy and freelance agreements