Legal and Financial Due Diligence for UK MNC’s Joint Venture with Indian Manufacturer

• Corporate and Statutory Review: We conducted a detailed review of the Indian company’s corporate records, including its certificate of incorporation, charter documents, shareholding structure, board resolutions, and Registrar of Companies (RoC) filings. Particular attention was paid to historical changes in equity, related party arrangements, and any undisclosed shareholder agreements or encumbrances.
• Litigation and Compliance Verification: Our team carried out litigation checks across civil, criminal, labour, tax, and environmental forums. We reviewed pending proceedings before NGTs, High Courts, and regulatory bodies. Notably, litigation relating to alleged violations of local land zoning regulations and a legacy dispute over environmental clearances raised significant red flags.
• Labour and Employment Compliance: We evaluated employment contracts, payroll practices, and adherence to mandatory statutory obligations under Indian labour laws, including the Factories Act, Payment of Gratuity Act, Employees’ Provident Fund, and ESI regulations. Several gaps were identified, including non-disclosure of fixed-term employment contracts and delayed statutory remittances.
• Intellectual Property Rights (IPR) Audit: We assessed the registration status and ownership chain of the Indian company's trademarks, product design rights, and know-how. While core trademarks were registered, issues around co-ownership with a former distributor and non-registration of design patents were flagged for rectification prior to technology licensing.
• Financial and Tax Review: In coordination with financial consultants, we analyzed five years’ worth of audited financial statements to assess the company’s solvency, contingent liabilities, asset encumbrances, and tax exposures. Deferred tax liabilities and unaccounted GST dues from past years were highlighted as material concerns.
• JV Structuring and Documentation Support: Post diligence, our corporate and transactional team supported the drafting and negotiation of the Joint Venture Agreement and Shareholders’ Agreement. Key elements included:
• Capital contribution schedule and valuation alignment.
• Reserved matters and board composition safeguards.
• Indemnities tied to unresolved litigation and tax claims.
• Exit and deadlock mechanisms, including put/call options and drag-along rights.
• Governance Recommendations: We advised on an enhanced governance model tailored to the UK client's internal controls framework, recommending the inclusion of compliance reporting obligations, audit committee oversight, and pre-emptive rights to maintain proportionate control.

The diligence flagged key legal risks, enabling the UK client to renegotiate and defer JV execution until remediation. The exercise protected against exposure and strengthened negotiation leverage.