8.23 A sale of an equity interest will alter the ownership structure of the JV, but the JV and its business will continue. In some cases this may result in a change in the classification of the JV.
8.24 Where a participant sells its participation in the JV and exits the JV agreement, parties will need to consider:
● what will happen to any assets or shared assets contributed to the JV by the outgoing participant (including future use of IPR rights);
● how a price for the participation will be determined;
● what process will be used for approval of new participants;
● what will happen to any loans provided to the JV by the outgoing participant;
● how to deal with any guarantees or indemnities provided by the outgoing participant;
● ONS classification and other regulatory approvals, e.g., licences, permits, etc.;
● the extent to which the outgoing participant should be bound by obligations of confidentiality or restrictive covenants;
● what will happen to any staff who have been seconded to the JV from the outgoing participant; and
● what will happen to any subsidiary contracts between the outgoing participant and the JV.
8.25 In circumstances where the JV is wound up (voluntarily or compulsorily), different considerations need to be addressed, in particular, what will happen to the assets owned by the JV and staff issues (see also Chapter 6). How the assets are to be distributed will depend upon the reason for the winding up. Under a default or deadlock scenario, the JV agreement should stipulate how assets are to be dealt with.
8.26 Specific mechanisms related to the sale of JV shares are set out in Annex I.