JV Structuring — The 2025 Playbook for Operators and Investors

By Tahmidur Remura Wahid (TRW) Law Firm

Joint ventures (JVs) are how ambitious companies enter new markets, pool tech and capital, unlock distribution, and win tenders without building everything from scratch. But they can also become slow-motion disputes if you gloss over governance, capital mechanics, regulatory touchpoints, tax/FX, and exit. This guide distills how we structure JVs for clients in and with Bangladesh and across key cross-border hubs—turning strategy into clean paperwork that banks, regulators, auditors, and courts actually accept.

TRW is a global firm anchored in Bangladesh—working at the intersection of corporate, finance/FX, competition, tax, and disputes. Below is our field-tested blueprint. Use it as your pre-term-sheet checklist.

1) What exactly is a “JV” (and which kind do you need)?

Two families:

1. Incorporated JV — a new company (usually a private limited) co-owned by the parties, with its own board, balance sheet, employees, and licences. In Bangladesh, corporate formation and governance run under the Companies Act 1994, supported by sectoral and tax/VAT regimes. (Icab)
2. Contractual JV / Consortium (JVCA) — no separate company; partners contract to deliver a project (common in EPC/public procurement, tech build-outs, or distribution alliances). Bangladesh Bank issued FEID Circular No. 02 (20 Nov 2024) with operating guidance for JVCAs with foreign partners (banking, remittances, documentation) under the Foreign Exchange Regulation Act. If you’ll operate as a JVCA (and not as a company), read that circular first. (BB)

Rule of thumb:

• If you need licences, employees, assets, external financing, and long-term scale → incorporated JV.
• If you’re chasing a discrete project, or bid rules demand a “JV/consortium” form → JVCA (with a robust consortium agreement + bank-compliant cash flows). (BB)

2) Regulatory scaffold (Bangladesh focus, cross-border aware)

• Companies Act 1994 — formation, share capital, directors, meetings, filings. (Your AoA + Shareholders’ Agreement drive most governance.) (Icab)
• BIDA (Bangladesh Investment Development Authority) — the government front door for foreign & joint-venture projects, investor services, and one-stop facilitation (OSS). If any foreign equity is involved, assume you’ll interact with BIDA and allied agencies. (BIDA)
• Bangladesh Bank (BB) — inbound equity reporting, remittances, dividends, foreign loans, and FEID’s JVCA guidance for JV/consortia with foreign partners. Keep your AD bank looped in from day one. (BB)
• Tax & VAT — the Income Tax Act 2023 now anchors corporate/WHT rules; the VAT & SD Act 2012 sets a 15% standard VAT (subject to schedules). Build these into pricing and cash waterfalls. (KPMG Assets, National Board of Revenue)
• Competition — the Competition Act 2012 prohibits anti-competitive combinations, but Bangladesh lacks a fully operational pre-merger notification regime as of 2025; authorities have signalled draft rules are being considered. Plan voluntary outreach if your JV is material in sensitive sectors. (Competition Law Center | GW Law, UN Trade and Development (UNCTAD))
• Disputes/enforcement — for cross-border JVs, arbitration with a neutral seat rides on the New York Convention; Bangladesh enforces foreign awards via the Arbitration Act 2001 with standard Convention defenses. (newyorkconvention.org, Legal 500)

3) Strategy first: the five decisions that shape every JV

1. Purpose & perimeter — What business exactly? What is excluded (side businesses, direct competition)?
2. Capital model — Who contributes cash, assets/IP, people, channel access? How and when do you re-balance (true-ups)?
3. Control & vetoes — Board vs. shareholder control; reserved matters; who hires/fires the CEO/CFO; who signs bank mandates.
4. Monetization — Profit distributions vs. reinvestment; transfer pricing for inter-company flows; management fees/royalties for know-how and brand.
5. Exit — Trade sale, buy-sell options, IPO, or staged wind-down; who has call/put triggers on breach or deadlock.

If you can’t answer all five in a page, you’re not ready to paper the JV.

4) Term sheet anatomy (what we lock before drafting)

A. Structure & licences

• Incorporated HoldCo vs. OpCo; or JVCA with a lead member.
• Sector licences, land/leases, environmental approvals.

B. Cap table & contributions

• Equity split (economic & voting); cash vs. in-kind (IP/plant).
• Independent valuation & bring-down mechanics for in-kind assets.

C. Governance

• Board size; nomination rights; independent director (tie-breaker).
• Reserved matters (see §6).
• Budgeting cadence; “no surprise” covenants.

D. Economics

• Dividend policy; reinvestment rules; leakage caps.
• Intra-group pricing (TP compliant); royalty/management fee policy.

E. Funding

• Equity commitment schedule; debt policy (on-shore vs. offshore; security).
• Foreign loans and BB approvals/registrations if any (align your AD bank early). (BB)

F. Exit & transfers

• Lock-in; ROFR/ROFO; tag/drag; anti-dilution; permitted transfers.
• Put/call events (deadlock, default, change of control, sanctions).

G. Compliance spine

• AML/KYC of partners and UBOs; sanctions reps; anti-bribery; audit rights; data protection & cybersecurity basics.

5) Incorporated JV vs. JVCA (operational consequences)

(Icab, BB)

6) Governance that actually works (and survives bad weather)

Board & management

• Board math: odd numbers reduce deadlock; supermajority for reserved matters.
• Officer grid: CEO from Operator A, CFO from Investor B (or independent), GC/Compliance with dual-reporting.
• Chair vs. MD: clarify who controls agenda vs. day-to-day.

Reserved matters (the “stop list”)
Budget; capex > BDT X; debt > BDT X; security; related-party deals; changing pricing policy; hiring/ firing key officers; dividends; liquidation; IPO; changing auditors; altering AoA; issuing shares/convertibles; granting/ licensing IP; entering new lines/regions; major litigation/settlements.

Deadlock toolkit

• Cooling + escalation (Board → CEOs → principals).
• Expert determination (for narrow financial/technical issues).
• Shotgun / Russian roulette / Texas shoot-out (use sparingly; set valuation rails).
• Buy-sell at fair value (independent valuer; put option with floor).
• Orderly wind-down (pre-agreed waterfall).

7) Capital mechanics (cash, assets, IP) and tax

Contributions

• Cash: paid in line with milestones; keep a capital call protocol.
• Assets/IP: assignment/licence clarity (field-of-use, exclusivity, improvements, reversion on exit).
• Working capital: shareholder loans or bank lines; price them at arm’s length.

Tax & VAT (Bangladesh)

• Corporate income tax and withholding now operate under the Income Tax Act 2023 (rates depend on company type/sector; treaty relief may apply for cross-border payments).
• Most supplies attract 15% VAT unless scheduled otherwise—design your invoice flows and ERP to respect the VAT & SD Act’s mechanics. (KPMG Assets, National Board of Revenue)

Tip: If your JV will pay royalties/management fees cross-border, map withholding and DTT relief procedures up front; your dividend/fee/tax mix can be optimized contractually (subject to substance).

8) Competition & market power (don’t sleep on it)

Bangladesh’s Competition Act 2012 forbids anti-competitive agreements and “combinations.” As of 2025, pre-merger notification rules are not yet operational, though draft M\&A regulations have been discussed. For material JVs—especially in telecoms, energy, or logistics—plan early engagement with the Commission and tailor information rights/do-not-poach/ exclusivity to avoid issues. (JD Supra, UN Trade and Development (UNCTAD))

9) Foreign exchange (FX), banking, and repatriation

• Inbound equity & reporting: coordinate with your AD bank under GFET and contemporary FE circulars to ensure proper reporting of foreign share subscriptions, pricing evidence, and timelines. (BB)
• JVCA operations (with foreign partners): follow FEID Circular No. 02/2024—it spells out how JV/consortium cash should be handled, and what can be remitted and when. Align your consortium agreement and bank mandates to that guidance. (BB)
• Dividends/returns: repatriation follows standard BB rules once taxes are paid; build board and bank-pack processes (resolutions, audited accounts, tax clearance) into your calendar. Do not promise waterfall distributions that conflict with BB/NBR processes. (BB)

10) Compliance spine (AML, sanctions, procurement integrity)

• KYC/UBO on all partners and senior appointees; bank-ready trade and ownership profiles.
• Sanctions reps and an automatic termination/suspension if performance would breach UN-mandated sanctions (Bangladesh implements UN sanctions domestically).
• Anti-bribery undertakings; training and audit rights.
• Data & cyber: baseline controls; incident response alignment (especially for tech/data JVs).

Banks will expect these artefacts; so will counterparties in regulated sectors.

11) People, IP, and operations

• Employment: seconded vs. directly employed teams; who carries payroll and compliance; non-competes and IP assignment language in local contracts.
• IP: carve out background IP; grant the JV the right it actually needs; set clear rules on improvements and post-termination use.
• Tech stack: who pays and owns licences; source-code escrow (if critical); data residency and cross-border transfer posture.
• Brand: licence with quality control and takedown rights.

12) Exit architecture (and what happens to customers, people, and IP)

• Triggers: time-based, deadlock, breach/C.o.C., insolvency, sanctions.
• Mechanics: put/call with valuation rails; tag/drag; IPO path; orderly liquidation.
• Waterfall: debt → fees/arrears → vendor liabilities → shareholder loans → equity; agree who inherits customer contracts and IP.
• Non-compete & non-solicit: proportional, time-limited, and territory-sensible.

13) Model clause starters (Bangladesh-tuned, cross-border aware)

Governing law & forum (corporate JV):
“Governing Law. This Agreement is governed by the laws of Bangladesh. Dispute Resolution. Any dispute shall be finally resolved by arbitration under the [ICC/SIAC] Rules by [1/3] arbitrator(s). Seat: Singapore. Language: English. Judgment on the award may be entered in any court of competent jurisdiction.” (Foreign awards are enforceable in Bangladesh under the New York Convention framework and the Arbitration Act 2001, subject to standard defenses.) (newyorkconvention.org, Legal 500)

Reserved matters (extract):
“No action shall be taken with respect to: (i) approval of annual budget; (ii) incurrence of indebtedness over BDT [•]; (iii) granting security; (iv) related-party transactions; (v) dividends; (vi) issuance or buy-back of shares; (vii) amendments to the AoA/SHA; (viii) change of business or geography; (ix) appointment/removal of CEO/CFO; (x) litigation settlement over BDT [•]; (xi) liquidation.”

Capital calls & default:
“If a Shareholder fails to fund its pro-rata within [•] days of a Capital Call, the non-defaulting Shareholder(s) may (A) fund and receive paid-in-kind preferred with a [•]% coupon, (B) dilute the Defaulting Shareholder at a [•]% discount to fair value, or (C) exercise a call option on the Defaulting Shareholder’s Shares at [•]% of Fair Market Value.”

FX & remittances:
“Capital contributions and distributions shall comply with Bangladesh Bank guidelines and any FEID directives applicable to JV/JVCA operations; Parties shall provide documents reasonably required by the AD bank for reporting and remittance.” (BB)

Sanctions & compliance:
“Each Party represents it is not subject to UN sanctions and will comply with applicable sanctions, AML, and anti-corruption laws. If performance would breach sanctions, the non-affected Party may suspend and, if not cured within [•] days, terminate without liability.”

14) 100-Day Implementation Plan (what great JV integrations do)

Days 1–30 — Paper & permissions

• Sign SHA + AoA (incorporated JV) or JVCA (contractual) and align with tender/bid requirements.
• Reserve name, draft board/authority matrix, and bank mandate forms.
• BIDA touchpoint for foreign equity; engage AD bank on inbound equity reporting (pricing evidence, forms) and any FEID points for JVCA flows. (BIDA, BB)

Days 31–60 — Money & mechanics

• Close first capital call; document asset/IP transfers.
• ERP/tax setup: VAT engine at 15% (unless scheduled), invoicing, WHT tables under Income Tax Act 2023; finance SOPs for dividends and intercompany flows. (National Board of Revenue, KPMG Assets)
• HR & compliance onboarding; AML/KYC pack; supplier codes.

Days 61–100 — Operate & harden

• Lock budget; approve first bank facilities; if foreign loans foreseen, start approvals/registrations. (BB)
• Implement board calendar; audit committee; internal controls.
• Stand-up dispute-prevention (KPI dashboards; escalation ladders); rehearse deadlock protocol.

15) Bangladesh-specific FAQs

Is a JV required to notify the Competition Commission before closing?
There’s no active, binding pre-merger notification regime as of August 2025; however, the Competition Commission treats anti-competitive combinations seriously and has referenced sectoral oversight in telecoms/energy. Plan voluntary engagement where market power is affected. (JD Supra, UN Trade and Development (UNCTAD))

Can a contractual JV (JVCA) open/operate bank accounts and remit money abroad?
Yes—FEID Circular 02/2024 provides an operating framework for JVCAs with foreign partners. Align your banking mandates, cash application, and reporting to this circular and your AD bank’s processes. (BB)

What’s the standard VAT and does it apply to JV services?
The VAT & SD Act 2012 sets a 15% standard rate unless a schedule provides otherwise. Structure your invoicing and contracts accordingly. (National Board of Revenue)

How should we plan for dividend/WHT?
Use the Income Tax Act 2023 framework and your DTT position to map WHT on dividends, services, royalties, and interest; rates vary by category/residency—model them before fixing the fee/dividend mix. (Authoritative professional summaries reflect these mechanics.) (KPMG Assets, PwC Tax Summaries)

Which law and forum should we pick for cross-border JVs?
Often: Bangladesh law for corporate housekeeping, with international arbitration (SIAC/ICC) seated in a neutral venue for disputes. Foreign awards are generally enforceable in Bangladesh under the New York Convention framework. (newyorkconvention.org, Legal 500)

16) Red-flag list (things we fix most often)

• No alignment between JV objectives and permitted activities in the AoA/JVCA.
• Capital vagueness (in-kind asset/IP not fully transferred; valuation fights later).
• Weak reserved matters—control without accountability, or vice versa.
• Dividend promises that ignore BB/NBR gates or solvency tests. (BB)
• Competition blind spots—exclusivity/market-sharing clauses with no antitrust review. (UN Trade and Development (UNCTAD))
• JVCA cash handled off-framework—then stuck at the bank; follow FEID 02/2024. (BB)
• Exit illusions—no practical path to buy/sell; valuation method missing.

17) One-page JV governance scorecard (pin this to your wall)

18) How TRW executes JV mandates

• Design — We run a strategy workshop to lock purpose, perimeter, control, and exit; then draft a crisp term sheet.
• Paper — We build SHA + AoA (or JVCA) aligned with BB/BIDA and sector rules, and write bank-ready resolutions/mandates. (BIDA, BB)
• Calibrate — We model tax/VAT/WHT and treaty outcomes; configure ERP & invoice flows. (KPMG Assets, National Board of Revenue)
• Clear — We coordinate AD bank filings/evidence; for JVCAs with foreign partners, we implement FEID 02/2024 mechanics so money moves. (BB)
• Defend — We draft competition-safe exclusivity and supply constructs; set up arbitration that enforces globally. (UN Trade and Development (UNCTAD), newyorkconvention.org)

Key sources (select)

• Companies Act 1994 (incorporation, governance). (Icab)
• BIDA — Foreign & JV projects; OSS (official investor portal). (BIDA)
• Bangladesh Bank — GFET (foreign exchange rules) and FEID Circular No. 02 (20 Nov 2024) for JVCA operations with foreign partners. (BB)
• Income Tax Act 2023 (overview via current professional handbooks). (KPMG Assets)
• VAT & SD Act 2012 — 15% standard VAT. (National Board of Revenue)
• Competition Act 2012 — status of merger control/notifications. (Competition Law Center | GW Law, UN Trade and Development (UNCTAD))
• New York Convention & Arbitration Act 2001 — enforcement of foreign awards. (newyorkconvention.org, Legal 500)

Tahmidur Remura Wahid (TRW) Law Firm
Dhaka (Head Office): House 410, Road 29, Mohakhali DOHS · Dubai: Rolex Building, L-12 Sheikh Zayed Road
Contact: +8801708000660 · +8801847220062 · +8801708080817 · info@trfirm.com | info@trwbd.com | info@tahmidur.com

This is general information, not legal advice. Regulations and bank practices evolve; we track updates and tune your JV stack as they land.