Assisting a long-standing client in Commercial Agreements and setting up a Joint Venture Company

Guiding Commercial Agreements and Setting up a Joint Venture Company

Sector: Packaging Manufacturing

The Legal Need:

This long-standing client of the firm are a UK-based packaging company who required assistance with both Corporate and Commercial matters. The clients initially needed our Corporate expertise in setting up a Joint Venture Company in the UK for the manufacturing of tin cans. They then went on to require multiple Commercial Agreements, including a Distribution Agreement, Agency Agreement, Supply of Raw Component and Materials Agreement, and Management Services Agreement.

Our Expertise:

Our client was assisted by James Macdonald, Senior Associate, and Catherine O’Riordan, Associate, from our Corporate & Commercial Department. Our team took the time to understand the needs of the client, then provided pragmatic, expert advice for their next steps. This included structural and commercial advice, as well as advising on shareholders and share transfers. The Joint Venture Company was owned 70% by an Italian company, 20% by our clients, and 10% by a separate Italian entity. Catherine assisted in the Joint Venture Shareholder Agreement and other necessary arrangements for our client, ensuring that they were protected throughout. We worked closely alongside Ellacotts Accountants to ensure the clients also received tax and accountancy advice.

The subsequent commercial agreements were put in place for our clients with both the newly formed UK Joint Venture Company and the Italian Company. Although it is not common to create both an Agency and Distribution Agreement, we advised our client that this was the best outcome as it would provide the maximum flexibility for  the commercial arrangements between the parties. Both agreements specified sole exclusivity for our clients in being the distributor and agents of the products in the UK and Republic of Ireland.

One key issue which arose in the negotiations was the issue of pre-existing customers of the Italian Company, whom they wished to maintain. Our experienced team resolved this by specifying that the Company could continue to supply their existing customers in the jurisdiction, but that any new customers would need to be sold to exclusively by our client.

The Management Services Agreement saw our client contracted to provide services to the UK Joint Venture Company for its business development, as our clients were already experienced in running their own similar business. We advised on the agreement, adding specifics for the management services which our clients were to provide, such as accounting and financial, IT, payroll and other HR services. The agreement was highly complex due to the wide range of services and the specific tailoring required for each, so our dedicated commercial team took particular care in drafting these agreements, using their experience and expertise to safeguard our clients.

The Outcome:

The clients were very pleased with the outcome of their matter and are considering pursuing a similar arrangement with an American company with the help of our expert Corporate & Commercial Department.