Before the Handshake: Four Conversations Every Cross-Border Joint Venture Needs to Have

Picture two companies at a table after several months of good meetings. One is foreign, and the other is Indian; one is bringing the technology and capital; the other brings local market knowledge, relationships, and people on the ground. Everyone is getting along. Then the draft shareholders’ agreement lands, and the mood shifts. The conversation is no longer about “What can we build together?” Now it’s about “What happens if things don’t go to plan?”

Some people read that as pessimism, but I don’t. It’s how you protect the business, and the relationship, before either is under any pressure.

I’ve worked on several cross-border shareholder arrangements, and I’ve come to see that most of the clauses in a Joint Venture (“JV”) agreement boil down to four questions: Who decides? Who puts in the money, and who gets the returns? What could go wrong? And how do we leave if we have to? Almost every negotiation point fits somewhere in that list.

Who decides: control

Control is usually where negotiation heats up, and where it gets personal. A foreign partner entering a new market wants a real say over how its money and technology are used. The local partner knows that market really well, has built the relationships, and doesn’t want to be treated like a junior. Both positions are fair, and the agreement has to accommodate both.

In practice, this comes down to board seats and reserved matters. Board composition will decide who gets a seat at the table. Reserved matters will decide which decisions need someone else’s consent: the annual budget, the business plan, borrowing above a set limit, related-party deals, key managerial positions, or licensing the JV’s intellectual property. The trick is not to overdo it. If the list is too long, even routine decisions can get stuck waiting for approval from someone in another time zone. If it’s too short, a minority investor may have no real say over decisions that put its money at risk. The lists that work are short, specific, and tied to risks that genuinely matter.

The business plan deserves the same attention. People often treat it as a box to tick, and then it turns into the source of a serious argument. The partners should agree on the JV’s scope, target market, and its yearly plan. They should also decide in advance what happens when milestones are missed. Are the targets binding or are they aspirations? If the venture falls short, does that trigger a price adjustment, a buy-out right, or just a conversation about what to change? These are much easier questions to answer before anyone is disappointed.

Who pays, and who gets paid: money

Control is about authority. Money terms are about fairness, and it’s rarely as simple as it looks. Cash is easy to value. Land, a brand, a license, or a promise to open doors through business relationships is much harder. Those less tangible contributions are often the ones people disagree about a few years down the line, when the JV’s value has changed.

Here’s the question nobody particularly enjoys asking: what happens if the JV needs more money and one partner can’t, or simply won’t, put in more? The agreement might provide for dilution, interest on unpaid contributions, shareholder loans, or, in a more serious case, the loss of certain rights. Whichever route you choose, both sides should understand it from day one. Being diluted under a formula you agreed to is one thing. Discovering later that part of your stake has quietly gone is another. Cross-border deals add another layer: currency conversion, central bank rules, and foreign investment requirements can all affect how money moves in and out. In India, the rules on entry, exit, and pricing for foreign investment can determine whether a clause that looked fine in negotiations can actually be implemented.

Tax is part of the money conversation too, even if it tends to get pushed aside. The choice between a company, a partnership or a purely contractual arrangement matters. So do the cost-sharing, pricing of goods and services between the JV and the parent companies, and withholding tax on dividends, royalties and interest. Treaty planning and transfer-pricing documentation can feel like paperwork, but they can determine whether the profit in the accounts is the profit each partner actually receives. Some agreements also set out how the parties will share the impact if a tax authority adjusts the position in one country, rather than leaving one partner to absorb the entire surprise.

What could hurt us: risk

JV risks come in many shapes. Three deserve particular attention: intellectual property, regulation, and whether the agreement will hold up when tested.

IP is often the reason the JV exists at all, which is why it often causes tension. Begin by separating what each partner brings to the table from what the JV develops together. Each partner’s existing IP should normally remain with that partner, licensed to the JV on clear terms covering what it can be used for, where, and for how long. The agreement also has to say who owns new IP created by the JV, and who owns improvements to one partner’s existing technology. That’s where disputes can quietly take root. Data and AI products make the issue even more complicated: who owns the training data, the models, and the outputs, and what happens to them if one partner leaves? The foreign partner may probably seek tight controls and audit rights over its technology. The Indian partner needs a license broad and affordable enough to build a real business on. Both concerns are reasonable, and the compromise should be written in language everyone can follow.

Regulation is the next moving target. Foreign ownership limits, sector caps, competition approvals, and national security reviews can all affect whether and how a deal proceeds. India’s rules on investments from countries that share a land border with it are a useful reminder that the position can change. Some requirements have been eased and timelines shortened for priority manufacturing sectors, but the details, and how it applies to a particular technology partnership, still need to be checked against the latest notifications. The agreement should say who is responsible for each approval, how long the parties will wait, and what happens if an approval is refused or comes with conditions. Anti-bribery rules, sanctions, and customer due diligence matter just as much because one partner’s compliance failure can quickly become a problem for the whole JV.

Then comes the practical test. If the parties end up in a dispute, will the agreement hold? Mandatory rules on employment, competition, and insolvency can’t simply be contracted away. So governing law, the seat and rules of arbitration, the language of the proceedings, and the process for enforcing an award where the assets are located all need real thought. They are not boilerplate. Indian courts have enforced foreign arbitral awards arising from JVs, including awards requiring a buy-out of a partner during a deadlock. That’s reassuring, but it doesn’t replace getting the dispute-resolution clause right at the outset.

How we leave: exit

Exit is the conversation people put off until they have no choice. I think the exit provisions often reveal more about a deal than any other part of the agreement.

Start with deadlock, which is a real risk when partners have equal or near-equal control. A good agreement gives them steps to try before things become irreversible: a discussion between senior managers, a cooling-off period, then mediation or an independent expert. Only when those steps fail should the parties reach for the harder options, such as a buy-sell mechanism, a put or call option, or a casting vote (which is rarely an easy sell). The aim is to give the partners a few chances to fix the problem before they pull the emergency brake.

The agreement should also clearly say how a partner can leave. Lock-in periods stop someone from walking away too early. Rights of first refusal and first offer give the remaining partner some control over who comes in next. Tag-along rights let a minority shareholder sell on the same terms as a majority seller. Drag-along rights can help the majority sell the whole company, usually with price protection for the minority. Valuation needs careful thought too. The parties might use a formula, net asset value, discounted cash flow, or an independent expert. Whichever it is, leaving the price vague is an invitation to a long dispute. In a cross-border JV, it’s also worth asking what happens if one partner is acquired by someone else, especially by a competitor. A change of control at the parent level can alter the relationship overnight, so it may need to trigger an exit right.

And what about after the venture ends? Confidentiality and non-compete obligations during the relationship are familiar enough. Restrictions that continue afterwards are more complicated. Courts in India are cautious about restraints on trade that outlast the relationship. European competition authorities have also questioned whether post-termination non-competes are truly needed to set up a JV. The agreement should be clear about what each partner can do during and after the JV, with sensible limits by business line, geography and time, plus a fallback position in case a court narrows the restriction. It should also deal with the practical loose ends: who can use the IP, what happens to employees, and how customer relationships are handled when the JV winds down. These details are easy to leave vague when everyone is focused on signing. They can become the biggest disputes when the deal ends.

A few closing thoughts

Looking back over these clauses, I don’t think they’re really about distrust. A reserved matter says, “This decision matters to both of us.” A dilution formula says, “We know the business may need more money.” An exit clause says, “We respect the relationship enough to plan for the possibility that it ends.” Lawyers sometimes describe these provisions as weapons. I’d call them a map, and it’s much easier to draw while the road is clear and both sides are still on good terms.

A lawyer’s job is to protect what the client genuinely needs, not to ask for every possible protection just because it can be negotiated. That means explaining the trade-offs clearly, focusing on the points that matter, and remembering that the person across the table may be a partner for years to come. A JV can last for decades; the people in that boardroom will still have to work together long after the drafts are filed away. The strongest agreements I’ve seen weren’t necessarily the ones where one side won every point. They were the ones both sides understood, accepted, and could live with.

Control, money, risk, and exit: those are the four conversations worth having early, honestly, and with a little kindness.