A cross-border transaction is basically any remove of property, goods or services between individuals or business entities who reside in unlike jurisdictions. The transaction itself may be something deoxyadenosine monophosphate simple as buying widgets over the internet from China or equally complex as multi-tier joint venture investment structures in another nation with complex avail and distribution agreements .
Cross-Border Deals Examples
The follow includes other types of cross-border transactions from my own practice :
A U.S. and German company form a joint venture.
A U.S. distributor of devices entered into a joint speculation with a german manufacturer. The joint venture became the exclusive distributor for the manufacturer ’ randomness products in the U.S. We structured the joint venture as a corporation and I worked close with german tax advocate to structure the cover indeed no tax problems would come up down the road. The stockholder and the distribution agreement required careful drafting regarding control rights product description, territory, and non-compete .
German individuals transfer intellectual property to a U.S. company in return for shares.
Two german software engineers transferred IP rights to an algorithm to their U.S. startup company. The caller was formed in Delaware and the parties chose Delaware law as governing jurisprudence and agreed on binding arbitration in Hamburg, Germany .
A U.S. company negotiates a distribution agreement with a German manufacturer.
The U.S. company had distributed world leading products of a german manufacturer for years without a written distribution agreement. now the U.S. distributor was to be acquired by a large U.S. ship’s company which wanted to see a written distribution agreement. The U.S. distributor turned to me to negotiate a written distribution agreement with the german manufacturer. unfortunately, we found out that the U.S. distributor had no distribution rights at all, merely a right to sell as an empower principal. The german manufacturer did not want to enter into a ski binding distribution agreement and the deal fell through .
A German company seeks to acquire or buyout a U.S. company.
A german manufacturer of special devices wanted to buy its U.S. distributor. The U.S. distributor owed the german manufacturer a considerable come of money for order products. The german manufacturer asked for aid and we tried to turn debt into fairness and acquire the U.S. distributor. I drafted a letter of captive and contribution purchase agreement and conducted the preliminary due application. unfortunately, the U.S. distributor filed for chapter 11 and we had to register the claims in the comply bankruptcy proceeding .
A U.S. company buys real estate in Germany.
A U.S. veridical estate developer party buys a big property in Germany. I was called to assist in the deal together with U.S. and german co-counsel to avoid tax traps and to ensure a smooth transition of the project and the sale of the property once the project is finished .
What Makes Cross Border Transactions Tricky?
Any of these types of cross bound deals can raise a host of legal issues on both sides. first and foremost, there are tax considerations. This requires not lone consideration of the tax laws of the individual countries involved, but besides any tax-related treaties between the two governments. next, the cross-border transaction may face broader regulative examination. In the case of a amalgamation or acquisition, antimonopoly authorities in both the United States and the European Union may need to review the manage. This can lead to a site where one regulator approves the transaction while the other may require certain conditions, or tied oppose the batch outright via a legal continue.
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And even in dim-witted, non-merger transactions, there are inactive legal and cultural differences. particularly in the United States, where each state ( and even each municipality ) has its own laws that may affect a particular business deal, it is imperative to work with know guidance who can help the parties navigate unfamiliar terrain. One of the most critical decisions that the parties to a cross-border transaction will make is the choice of governing law applicable to the deal. Most courts in most countries will respect the parties ’ right to decide which country ’ randomness jurisprudence to apply. But the choice itself will depend on a number of factors. And again, within the United States the choice of law will often come down to a finical state, as that is where most compress and business law matters are handled .
Get Help with Your Cross-Border Transaction
If you are contemplating a cross-border transaction, it is in your best interest to contact a qualify international business lawyer sooner rather than later. Call me nowadays to schedule an initial consultation .
Timo Becker works with U.S. business owners throughout America and abroad, and he besides assists people from german-speaking countries looking to invest or start a business in the United States .
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