Part B 2017 ACP17_PS04

ACP17_PS04
JOINT VENTURES

The Singapore government has invited tenders to develop a mixed commercial and residential
development. Your client, Lion City, a real estate developer, is interested in submitting a bid.
However, as the value of the land and the cost of development will be significant, your client has
agreed to enter into a joint venture with another real estate developer, Central Park, to share the
risks (and rewards) of the endeavour. Central Park will hold a 51 per cent. interest in the joint
venture company, and your client will hold the remainder.

1. Your client has not entered into a joint venture in Singapore prior to this, and wants to know the
key differences between a shareholders agreement and the joint venture companys
constitution.

2. Should the joint venture company be a party to the shareholders agreement? In arriving at your
recommendation, (i) consider what are the advantages and disadvantages of the joint venture
company being a party to the shareholders agreement and (ii) discuss the ways to overcome the
disadvantages.

3. Under what circumstances could a deadlock arise in the context of the proposed joint venture?
What are some contractual mechanisms to resolve such deadlocks?

4. Describe how a right of first offer and a right of first refusal would work to restrict your clients
ability to transfer its shares in the joint venture company. What are the key differences between
the two?

Your client wants to be able to sell its shares in the joint venture company if Central Park sells its
stake in the joint venture company. What contractual right would you include in the joint venture
agreement, and how would such a contractual right work?

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SILE Part B 2017 - 1 -| P a g e