Growing interest in IPA: VEGAS LEX to continue sharing experience in setting up investment partnerships
On June 4, 2019, the VEGAS LEX law firm held another seminar devoted to the topic "Investment partnership as an alternative model for a joint venture" owing to great interest of the business community in the issue.
The experts of the firm discussed the latest practice of incorporation and functioning of investment partnerships (IP) in Russia, peculiarities of this model and its prospects during the seminar.
Dmitry Borodin, a senior associate of Technology and Investment group at VEGAS LEX, spoke of current practices in incorporating IPs in Russia and presented key statistical data on the issue. Dmitry clarified the difference between a general partnership and an investment partnership. He considered main issues relating to contributions of partners, types of investments and administration of investment partnerships and dwelt upon implications caused by failure to make contributions.
The expert specifically underlined that an IPA* should not be a substitute for other legal instruments such as a general partnership, a corporate agreement, an agreement on shared ownership property administration in cases where parties intend to implement joint investment projects.
Alexander Garmayev, Head of Corporate projects group at VEGAS LEX, told the audience about advantages and disadvantages of IPAs in comparison with joint-stock companies and limited liability companies. The expert examined different matters of creating and running the investment partnership, spoke of certain provisions of investment partnership agreements associated with financing of the partnerships, scopes of authorities of the investment committee comparing foreign limited partnerships** with Russian investment partnerships.
Alexander revealed the issue of resolution of deadlocks; he spoke of management fees, the procedure for payment of earnings to partners not limited to participation and payment made by a new investor when joining the investment partnership. Besides, the expert drew attention to specific nature of transactions with capital participation in the investment partnership, including structuring and exercise of options.
Denis Kozhevnikov, an associate of Tax practice at VEGAS LEX, delivered a speech on taxation with regard to investment partnerships. Specifically, the expert talked about particularities of calculating and paying corporate income tax, VAT and corporate property tax. Denis also considered main tax responsibilities of a managing partner, peculiarities of his/her tax registration, revealed the main features of tax control and holding liable for tax law violations.
* Investment partnership agreement (IPA).
** Limited partnership.
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