News

On 17 April 2019, at the Moscow Office of the VEGAS LEX law firm, a seminar on the topic "Investment partnership as an alternative model of a joint venture" was held. Investment Partnership Agreement (IPA) is gaining popularity: the commitments of investors under the concluded agreements have already exceeded 100 billion roubles. Within the framework of the event, the VEGAS LEX experts discussed the currently topical practice of establishment and operation of Investment Partnerships (IP) in Russia, the specifics of this model and its prospects.

Dmitriy Borodin, Senior Attorney of the Technology and Investment group at VEGAS LEX, spoke of the current practice of establishing IPs in Russia, having presented the interesting facts about IPA. Dmitriy provided a brief legal description of IP, explained the principal differences of a general partnership from an investment partnership, considered key issues of investment projects, partners’ contributions and management of an investment partnership. He also analysed the consequences of partners' failure to contribute. The expert especially noted that IPA must not supersede other legal instruments (i.e. general partnership, corporate agreement, equity ownership management agreement), unless it is focused on implementation of an investment project.

Alexander Garmaev, Head of the Corporate projects group at VEGAS LEX, spoke of advantages and disadvantages of an IPA as compared to joint-stock companies and limited liability companies. The expert considered various matters of establishment and operation of IP, provided the IPA’s model terms and conditions regarding the financing of IP, the scope of jurisdiction of an investment committee as compared to foreign LPs and Russian IPs and issues relating to resolution of deadlocks, the managing partner’s fee (management fee, carry fee), the procedure for payment to the partners of income disproportionate to their shares, making payments upon the entry of a new investor into IP.

Mr Garmaev further took note of the specifics of making transactions involving the IP shares, including the structuring and exercise of options.

Denis Kozhevnikov, Attorney of the Tax practice at VEGAS LEX, dedicated his speech to taxation in IPAs, in particular, the fiscal liabilities of a managing partner, specifics of such partner’s registration and tax control. Further, the expert considered issues of bringing to liability for violations of tax legislation, corporate income tax and principal provisions regarding VAT for all partners.

After the seminar, the round-table meeting was held, at which the attendees had the opportunity to discuss in greater detail certain issues, which their companies faced at present when establishing investment partnerships, with VEGAS LEX's experts.

Due to keen interest of the business community to the topic of the seminar, the event will be held again on July 4, 2019. For registration, please go to the VEGAS Lex's website.

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