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mansi (fresher)     20 August 2008

Sample Draft OF MOU

Dear All,

Can any one help by sending a sample draft of MOU between two construction companies.




 9 Replies

siddu (Advocate)     20 August 2008

there is nothing but memorandum of understanding

Srinivas.B.S.S.T ( Advocate)     20 August 2008

What are the points you want to incorporate in that MOU and the MOU
is for what purpose? if you can provide some more details, may be i can
send you a draft.

mansi (fresher)     25 August 2008

Hi Srinivas,

It is a joint venture between two construction companies where one is a foreign company who is going to invest entirely and an Indian company who is going to look after all other work i.e. redevelopment or construction of blgd., to take all the licences or approvals from government, etc.......

The equity of the company will be shared in the ratio of  60:40. The profit will also be shared in the same ratio.

60% ---Foreign company

40% ---Indian company

If you need any additional information please let me know.

Also I need your advice on whether there is any point on which the foreign company can take over entirely the Indian company. If so, what are the ways we should adopt to avoid such situation?



Srinivas.B.S.S.T ( Advocate)     28 August 2008

Does the companies share the expenses also in the same ratio?? what
about the approvals and permission? what bout if a worker dies or some
accident happens in the work site? Please furnish me fuller details.
You can contact me at s_bsst@yahoo.com

MILIND SHITOLE (ACCOUTANT)     16 October 2010








What are the legai points for take over of compnies in India ?

Roy George (Manager)     27 April 2011

Hi Everybody,

We are trying to get into a joint venture between two companies where one is a foreign company who is going to get the investment and subcontract their construction jobs entirely to us in India and we as an Indian company who is going to outsource the construction jobs to an Indian/Foreign company to look after all other work ( i.e.) redevelopment or construction of blgds., to take all the licences or approvals from government, etc........ Payments will be given at stages with a initial mobilization advance as per International Standards. Could you send us ( a format ) how we could make an MOU with the foreign company

The equity of the company will be shared in the ratio of  50:50. from the terms that we discuss with the construction company whom we would like to give the contract. The profit will also be shared in the same ratio.

50% ---Foreign company

50% ---Indian company

If you need any additional information please let me know.

Also I need your advice on whether there is any point on which the foreign company can take over entirely the Indian company. If so, what are the ways we should adopt to avoid such situations? Kindly advice the pros and cons of such MOU’s and contracts. The Executive Summary of  the Housing Development Scheme is enclosed below for your reference.







This Contract was awarded to XXXXXXXX, by West African  State Government for the construction of 250Housing Units under the State Housing Development Scheme. XXXXXX is expected to construct 150 units of 3 – bed room Bungalows, and 100 Units of 4 – bed room Bungalow.




West African State Government;




XXXXXX Limited.








N1, 657,781,000.00 (One Billion Six Hundred and Fifty Seven Million, Seven Hundred and Eighty One Thousand Naira only) USD $11.1million.




It is for the construction of 250 Housing Units under the State Housing Development Scheme.




-         Government Purchasing Guarantee

-         Memorandum of Understanding

-         Development lease

-         Letter of Intent / Award Letter

-         Layout Approval (Site Plan)

-         Technical Drawing Plans / Bill of Quantities

-         Transfer Consent from the State Government of West Africa

-         Right of Occupancy for the Land as (Title Documents)




-         Power of Attorney on Contract Transfer

-         Legal Agreement on sale of Contract




Payment is to be affected on delivery, of which Government need us to introduce a PMI who would work hand to hand with the Government and FMB to secure the Mortgage Loan for the interested Civil Servants of the State, the list of the off takers are already with the Government.




Maximum of fifteen (15) months.




One Unit of 3 Bedroom Bungalow to cost N5million, -$34,000.00

One Unit of 4 Bedroom Bungalow to cost N6million, -$40,000.00

150 Units of 3 Bedroom Bungalow to cost N750million, - $5.1million.

100 Units of 4 Bedroom Bungalow to cost N600million, - $4.0million.

Total Estimated Construction cost N1, 350,000,000.00 (One Billion Three Hundred and Fifty Million Naira only) – USD$ 9.2million.




100% of the estimated construction cost of N1, 350,000,000.00 – USD $9.2Million.




The Credit Facility is required for two years from the date of disbursement.




Repayment of the Credit facility is expected to be made from proceeds of the contract.




-         Right of Occupancy ( Title Documents of the Land)

-         Government Purchasing Guarantee

-         Performance Guarantee from the Construction Company




Disbursement should be made directly into our bank account with First Bank Nig Plc, West African State

Shailendra prasad singh (Lawyer)     03 May 2011

dear mansi

                          if u want any thing more please follow this link: https://www.lawyersclubindia.com/share_files/files_display_list_by_member.asp?member_id=14685



1.             Information of Joint  venture Company


1.             Local  and foreign (or  else Local along) shall  take all necessary steps for   the incorporation of a (type of corporation to be formed ) corporation under the laws of (jurisdiction of incorporation ), which said corporation  shall be   hereinafter referred to as the “Joint Company’


2.             Local  and foreign  (or  else Local  alone) shall cause  the Joint Company to be duly organized in  accordance with the terms of this  Agreement, with (name for the documents of incorporation, under the law of the jurisdiction of incorporation, such as “Statutes”  “Letters Patent of Incorporation”, “Memorandum and Articles of Association” etc.), which  in the English  translation shall read in substantially the form schedule attached hereto.


3.             The costs  of incorporating  the Joint Company shall be brone equally (or accordingly to some other formula) by foreign  and Local.


4.             If any of the provisions contained in the said Schedule should not be approved by the appropriate authority for inclusion in the documents of incorporation of the Joint Company, then the parties agree to   make such amendments  thereto  as shall be acceptable  to the said  appropriate  authority without altering their  purpose or intention, or failing such amendment, to take all such other steps and do  such other things, including the execution  of any other agreements as may be necessary, to achieve the interest  and purpose of  such of the provisions as may not  have been found acceptable by the said   appropriate  authority.


2.             Payment for equity participation


In payment for the shares of the Joint Company  to be acquired  by Foreign (Local ) at the time  of incorporation  of the Joint Company (or, within-days after the incorporation  of the Joint Company), Foreign (Local) shall assign and transfer to the Joint Company), Foreign (Local) shall assign  and transfer  to the  Joint  company.


1.             Cash : (amount ) in cash.

2.             Machinery and Equipment : All the machinery and equipment  set forth in Schedule-annexed hereto, which  said machinery shall become the sole property  of the Joint company, free and clear of all liens, charges and claims of any king whatsoever.

3.             Land : The absolute title, free and clear of  all liens, charges and claims  of any kind whatsoever, to the real property and all  buildings   and  other  structures  thereon, including all fixtures, equipment and machinery located therein situated  at (municipal address) which said real property, buildings structures, fixtures,  equipment and machinery are more specifically described  in the  schedule annexed hereto.


4.             Industrial Property :


(a)           Assignment

(i)            PATENTS :           Foreign’s  entire right, title and interest in and to all unexpired  patents and patent applications theretofore  issued  or assigned  to or filed by Foreign  anywhere in the  world to the Licensed Products or to the production, manufacture or  use thereof (a list of such patents and patent  applications heretofore issued or  assigned to or filed  by Foreign being set   out in the attached Schedule), together with all rights which Foreign then has to apply for  patents in the territory on inventions relating to the  Licensed  Products or to their production,  manufacture  or  use, and  including  all of  Foreign’s  rights  with respect to patents  which may thereafter   issue  anywhere  in the territory   or any  such patent applications and with respect of divisions, patents  of addition, continuations, renewals, reissues and extensions of all  such patents, patent applications and patents which may  issue on such patent applications ;


(ii)           TRADE MARK AND TRADE NAME : Foreign’s  entire right, title  and interest in and  to all rights in the territory which it  then has to all of the following  trade marks and trade names, namely : (to all the trade marks and trade names set out  in the attached Schedule);


(b)           Licenses : 

Foreign shall enter  into a Licence Agreement with the Joint company in the form as set out  in Schedule-hereto annexed, under  which  said Licence Agreement  the Joint Company shall  become  the exclusive licensee for the world for all unexpired patents  and patent applications of foreign for the Licensed Products or to the production, manufacture  or use thereof, together with all  rights  which Foreign  then  has to apply for patents  in the territory on inventions relating to the Licensed  Products or to their  production,  manufacture or use, and including  all of Foreign’s  rights  with respect  to patents which may thereafter  issue anywhere in the territory or  any such patent applications  and with respect  to divisions, patents to addition, continuations, renewals, re-issue and extensions of all such patents, patent applications and  patents  which may issue on such  patent applications ;


(c)           Sub-licenses :

Foreign’s  entire right , title and interest in and to all rights in the territory which it then  has under patents owned by others relating to the Licensed products or to their production manufacture or use , a list of Foreign’s  present right under such patents  being set out in the attached  Schedule.


5.             Technical Date : 

Foreign’s entire  right, title and interest in and to the sue in the territory of all Technical Date which Foreign  is then entitled  to use anywhere in the world ; and thereafter during  the term of this Agreement, Foreign  shall   assign  and transfer   promptly   to the Joint company any and all rights in the territory  with respect  to Technical Date  relating  to the Licensed Products and all other products being manufactured  by the Joint  Company, which  Foreign  shall acquire during  such term incidental  or relating to  such  products;   foreign  shall take all such action and shall execute all  such documents as the Joint Company referred to above, including, without limitation, the full and complete disclosure to the Joint Company of Foreign’s  Technical  Data, and lists of Foreign’s  distributors and customers for all  of the  Licensed products and other products  produced or sold by foreign which may be similar to the products manufactured  or sold from time to  time by the Joint Company.


In the above Section, the term “Technical Data” shall mean formula, inventions, whether or not patentable, secret processes and technical  information relating  to the products  and to the  production, manufacturing,  engineering and test data, specifications, application, instructions,  information, regarding uses, raw materials and methods for controlling and  analysing quality  and sample copies  of advertising  and publicity materials,  except that information received in confidence from others or information forbidden to be disclosed  by virtue of any  law  or governmental  regulation  restricting  the dissemination of such  information shall not be included.


Note:      Indian government does not normally  allow adjustment of share Capital against equipment or know-how fee transferred  by the foreign  party to Indian Joint Venture Company.


3.             Decision by Board of Directors


A.            Simple majority :  All decisions of the Board of Directors shall require  an affirmative  vote of at least (number-it should be half  of the total  number of  directorship plus one ) directors.


B.            Special  majority :               All decisions of the Board of Directors shall require an  affirmative vote of at least (number it should be half of the  total  number of  nominees of the partner with the largest number  of nominees on the Board, plus one for each of the other partners) directors.




C.            No casting vote :  The chairman shall not have a casing or second vote in the event  of a deadlock.


4.             Distribution of profits


A.            The parties hereto recognize  that their  own and the best interest of the joint Company will be best  served by taking all reasonable steps  to ensure  the expansion of the production facilities of the Joint  Company as rapidly as market conditions permit, and to this end, agree to retain sufficient earnings in the Joint Company before  distributing  profits to the shareholders, as shall be  reasonably  required  in the circumstances to provide for such expansion and  for  the other requirements of conducting the affairs of the Joint Company according to sound business practices.



B.            Before  any profits of the Joint Company shall be distributed as dividends to the shareholders thereof…………per cent of each year’s net profits after tax shall be set aside to meet the capital and other requirements of the Joint Company.


5.             Grant of Licence


1.             The licensor shall make available to the Licensee without charge and as required  by the Licensee all such technical data and information as shall be necessary for the Licensee to manufacture, sell and service the licensed products and all products related thereto.


2.             If the Licensee shall desire technical assistance in  connection  with the manufacture, sale, application or servicing of the licensed products  and all products related thereto, the Licensor shall make available to the Licensee the services of trained  personnel  for and  during  such period  as the Licensee  shall reasonable require.


3.             Representative of the Licensor and the Licensee shall from time to time consult  with each other regarding research, production, sales, servicing, advertising and  promotion  pertaining to the manufacture of the licensed products, and  including  all developments and  improvements in  respect thereof, and the Licensor shall do all such things as shall be necessary to supply all the technical data and  information and technical  assistance in  respect thereof as the Licensee shall  request in accordance with the terms of the two preceding paragraphs.


6.             Grant of sub-licence


                The Joint Company shall have the right to assign the benefits  to this  Agreement, and to sub-licence the rights to the trade names and trade marks, to such  other parties and upon such terms and conditions as it shall  in its absolute discretion determine, provided, however, that it  remains  responsible to Foreign for its obligations hereunder and provided  that such assignment or sub-licence shall apply only to the  designated territory.


7.             Trade mark


1.             Foreign hereby grants to the Joint Company the right during the continuance and subject to the provisions of this Agreement to use each and every of the trade arks and trade names upon or in connection  with the authorised products   manufactured  and/or  assembled by or on behalf of the Joint Company within  the territory  and which comply with the relative standards, and the Joint Company agrees that it will use the trade marks and trade names  upon or in connection  with al authorised  products so manufactured  and/or assembled.


2.             The right of the Joint Company to use the trademarks and trade names as aforesaid  is an exclusive right for the whole of the territory.


8.             Grant of Technical Assistance


1.             Foreign shall furnish to the Joint Company detailed plans, specifications, blueprints and other date and information sufficient to enable a qualified  contractor or contractors  to construct production  facilities at (address of site in host country) capable of producing (quantity) per year of ( list  products),  which said production facilities  shall be capable to being altered, added to or expended in an economical fashion so as to  increase the production of the  above  said products or to adopt  the facilities  for the production of  other  related or similar products as the business exigencies of the  Joint Company may from time to time require, and shall be of the latest, most  modern and  most  economical design, and shall be capable of  producing  the said products  in the most efficient and economical fashion.


2.             Foreign hereby warrants and   guarantees  that the said production  facilities shall satisfy all the above requirements.


9.             Installation  of Plant & Machinery


                Foreign shall furnish to the Joint Company all the necessary technical  assistance to  assemble  and install the equipment and machinery in the  plant  so that it will function in the matter required  in the specifications.


10.          Maintenance Facilities


                Foreign shall furnish to the Joint Company all the technical data, information and assistance necessary to ensure the effective operation and maintenance   of the machinery and equipment, including :


(a)           A list of recommended  plant spares;

(b)           Lubrication and maintenance manuals’;

(c)           Detailed  operating  instructions ;

(d)           Detailed manuals indicating the construction and assembly of each  model and typed  of machinery and equipment ;


11.          Operation of Facilities


                Foreign  shall furnish to the joint Company technical assistance and advice  on all aspects of plant operation including, but without  limiting, the   generality of the foregoing :


(a)           Scheduling, material specifications and  ordering, and production techniques  relating to the  manufacture  of the products.


(b)           Quality control and production planning;


(c)           Methods,  studies and other  industrials  engineering  activities in connection with the organizing, planning , training or personnel, and development  of operating  practices and procedures to obtain the most  efficient use of the production facilities;

(d)           Recommended  safety procedures.


12.          Testing Facilities


1.             The Joint Company shall not be required to accept the plant or production  facilities until, such time as it shall be wholly satisfied  that the said  production facilities  are  capable of producing the required  products in the required quantities.


2.             Accordingly, before such acceptance, representative samples of each type of product  to be produced by the Joint Company shall be sent to (name of independent testing agency or firm ; or to Foreign’s  main production  plant)  for testing to ensure their compliance with the  required   standards  and specifications and that  they have been constructed  in a good and workmanlike manner, and the Joint Company shall have been furnished with a guarantee and warranty of the satisfaction of such conditions.


13.          Research and Development

                Foreign shall during the term of this Agreement, provide to the Joint Company all technical information and assistance as shall  be necessary to keep the Joint Company aware of, current with, and  able effectively to use, the  latest developments in technology applicable or relating to the  manufacture, sale  or use of the  products  to be  produced by the  Joint  Company.


14.  Training


Foreign  hereby  undertakes to provide training and technical assistance to the Joint Company upon the following terms and conditions :


1 .            (a)           Prior to the start-up  of production, Foreign agrees to accept for training up to (maximum  number)  operating  employees  of the  Joint Company as its  plant located (site of Foreign’s  plant) for periods  of at least-months each.


(b)           It is understood  that the maximum number of such employees to be  trained  by Foreign at  any one time shall be and that they shall be   made familiar  with all  operational and technical aspects of production as relate to or are  similar to the production operation to be undertaken  by the Joint Company.


(c)           The Joint Company shall have no  obligation to pay for the costs  of such  training, other than to pay  for  their travelling expenses to and from (Foreign’s Country) and their salaries, if any.


(d)           Foreign will use  its best efforts to assist in arranging for immigration visas for such  trainees  and in finding suitable living accommodation at    reasonable  prices  for such  trainees while they shall be  in (Foreign’s  Country).


2.             For a period prior to the start-up of production and during  the initial operating period, which initial operating period  shall not  last longer than-days, Foreign agrees to provide to  the  Joint Company :


(a)           One  qualified  production supervisor, and –assistants, all of whom shall be graduate engineers, who, besides their responsibilities in respect of readying the plant and operating facilities for the start-up of production and the initial operating period, shall  assume responsibility for training all the operating employees of the Joint Company  in their operating functions.


(b)           One  qualified  individual  who will assist in the recruitment  and hiring of the necessary employees and  in the development of personnel and labour relations skills in the Joint Company.


(c)           The Joint Company agrees to reimburse to Foreign all expenses in respect of such individuals, including their salaries, travel  expenses and living expenses while in (host country), provided  that such expenses inclusive of all taxes but exclusive  or travel  to and from (host country), shall not  exceed-per man per month.


(d)           Local agrees to use its best  efforts to arrange  for their immigration visas into (host county) and suitable accommodation while they should be in (host country).


3.             (a)           The Joint Company shall be entitled, from time to time and as it shall consider necessary, to require Foreign to send to (host country) such personnel or individuals as it shall consider necessary to assist the Joint Company in finding solutions to any of its problems and in training employees of the joint Company to cope with such problems.


(b)           The Joint Company shall reimburse to Foreign the expenses of  such employees for the period during which they shall be absent  from their regular business duties  with Foreign, including their travel to and from  the (host country) by economy  fare air  passage, their salaries and their living expenses, provided that the total of such expenses including all taxes but excluding the said air  passage, shall  not exceed-per  man per month.


4.             During such time as said personnel supplied by Foreign shall be rendering technical  assistance and training to the Joint Company, they  shall not be regarded  as employees of the Joint   Company, for any purposes  nor shall Foreign  make any claim on  behalf as such personnel arising from accident or any other cause.


1.5          Restriction on sale of  shares


Foreign  and Local agree that neither  will sell, transfer, assign, mortgage, pledge or otherwise  encumber  or deal with any or all shares of the capital stock of the Joint Company without the prior  written  consent of  the other except  as is hereinafter  provided and provided that this provision shall  not apply to transfer of directors’ qualification share so long as the beneficial  ownership of such shares  is retained  by Foreign or Local as the case may be.


16. Buy-sell arrangement

A.            Complex agreement


1.             Either  Foreign  or Local (hereinafter in this  clause called the “offer-or”) shall have the right at any time-after years from the  execution of this Agreement by notice in written (hereinafter called the “original notice”) to the other  to offer to sell to   the  other (hereinafter in this clause called the “offeree”) all but  not less than  all of the outstanding shares of the Joint Company then owned by the  offeror  at a price and terms to be specified  in the original notice,  provided, however, that  the price shall be payable on the “closing date”,  as  hereinafter defined, and  the  balance shall be payable  in  not more than (number) annual installments  and provided further  that the original  notice shall provide that the offeree shall  have the right  to elect to sell to the offeror all of the shares of the Joint  Company then owned  by the offeree  at the price and then on the terms  set forth in the original  notice.


2.             Within 90 days after receipt of the original notice  the offeree shall  advice the offeror by “notice in writing (hereinafter called the “notice of election”) whether the offeree accepts the offer of the offeror to sell  all  but not less than all of the outstanding shares of the Joint Company owned by the offeror  or elects  to sell to the  offeror all of the outstanding shares of the Joint Company owned by the offeree.


3.             If the offeree does not advice the offeror by  notice in writing within the said period of  90 days as hereinbefore provided then the offeree  shall be deemed to have accepted the offer of the offeror to sell all  but not less than all of the shares of the Joint Company owned  by the offeror in  accordance with the terms of the original notice.


4.             The purchase  and sale  of the shares of the Joint Company any resulting  from acceptance or deemed acceptance by the offeree of the offer of the offeror to sell contained  in the original notice as  aforesaid or the  election by the offeree to sell  to the  offeror all but  not less than all of the shares  of the Joint Company owned by the  offeree or the offeror, as  the case  may be as aforesaid, shall  be completed on a date (hereinafter called the “closing date”)  not later than ………days after receipt  by the offeror of the notice of election, or if the offeree does not  deliver  a notice  of election  as  aforesaid …………..days  after receipt  of the original  notice  by the offeree,  at which time the nominees of the party whose shares  are to be sold (hereinafter called  the “vendor”) shall resign as directors, officers and  employees  of the Company and the other  party who is purchasing the vendor’s  shares (hereinafter called the “purchaser”) shall and will pay to the vendor the price or the portion thereof set  forth  in the original notice by cash or certified cheque.


If, on the closing date, the vendor shall fail or refuse to complete the transaction, the purchaser  shall have the right on payment  of the purchase price (or the portion  thereof then due)  to  credit of the vendor in any  chartered  bank in the city  of (name of city) and on giving notice thereof to the vendor to execute and deliver all such   transfers,  resignations and other documents and instruments which may be  necessary or advisable in order to complete the  transaction  and the  purchaser is hereby  irrevocably  appointed   attorney  of the vendor for and in the name of and on behalf of the vendor to execute  and do any deeds, transfers, conveyances, assignments, assurances and things which the vendor ought to execute and do under the   covenants herein contained.


If, on the closing date, the purchaser shall  fail  or  refuse  to complete  the transaction, the vendor shall have the right to purchase the  purchaser’s  shares and on payment to the purchaser of an amount  equal to 75 per cent of the purchase price, to execute and deliver all  such transfers, resignations and other documents and instruments which may be  necessary or advisable in order  to complete the  transaction and the vendor is hereby irrevocably  appointed  the attorney of the purchaser for and in the name  of  and  on  behalf  of the purchaser to execute and do any deeds, transfers, conveyances,  assignments, assurances and things  which the purchaser ought to execute and do under the  covenants herein contained.


It is  understood and agreed  that neither party hereto shall make or assist in making any application to wind up the Joint Company after an original notice shall have been delivered pursuant to the provisions of  this  section.


ARUN SEHGAL (REAL ESTATE)     28 February 2015

Try to add value to the discussion, with your each post.

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