Doing Business in India PPT _English Version_ - Dinsmore _ Shohl LLP

Document Sample
Doing Business in India PPT _English Version_ - Dinsmore _ Shohl LLP Powered By Docstoc
					          DINSMORE & SHOHL LLP
            National and Regional Law Firm
Offices: Ohio, Kentucky, Pennsylvania and West Virginia
     280 Lawyers (40 in Intellectual Property, 160 in
Litigation, 100 in Business/Tax/Real Estate/Banking, etc.)
      Clients: 60 Foreign (including Indian) clients
                 with offices in the USA
   Clients: 60 Non-U.S. (including Indian) clients
  who do business in the USA without official offices
     Large Automotive and Manufacturing Practice
                 Harvey Jay Cohen, Esq.

                   Telephone 1-513-977-8144
                   Facsimile 1-513-977-8423

          At Dinsmore & Shohl for more than 19 years

         Georgetown University A.B. Cum Laude 1982

       Columbia University, Masters International Affairs,
                  Magna Cum Laude 1984

  University of Cincinnati, Juris Doctor, Order of the Coif 1987

Please do not hesitate to ask questions during our presentation and
                afterward by e-mail or telephone

• Close working Relationship with State Governments

• Corporate/Real Estate/ Tax

• Unions and Employment

• Intellectual Property and Franchising/Distribution/Sales

• Retirement Plans

• Immigration

• Litigation
      Principal Questions for Indian/Non U.S.
       companies doing business in the USA
• Many services provided are faster, easier and cheaper
  in the USA ...
•   Registrations with the Government; No Approvals
•   Regulation of products is less stringent in many areas. This laxity
    varies greatly depending on the type of products and whether they
    are for sale to consumers or businesses
•   Distribution of products, even across and into a vast market
•   Taxes, unemployment insurance
 Principal Questions for Indian/Non U.S. companies
       doing business in the USA (continued)
                   Competition is less regulated

      Use of Distributors and Sales Agents as an entry strategy

Termination of Distribution and Sales Agent contracts without fear of
                           large damages.
                This can vary depending on the state

       Labor less organized into strong unions, less regulated

  Discharge/Termination of employees is less complex and costly

   Private ownership of real estate with no government regulation.
Private buying and selling of companies (manufacturing or services),
and private equity investment in companies, all with no government
                regulation. A proven entry strategy
             Entry into the US, Initial Advice

Always use a top-notch local lawyer, not just a Los Angeles or New
              York lawyer, etc. (2-3 times expense)

             A Delaware Corporation is not necessary

 For example, Procter & Gamble, large oil companies and other
U.S. large companies are Ohio corporations. The vast majority of
        public corporations are not Delaware corporations
     Do not double your expenses and administrative burden
                     First steps
  Hire an Accountant/Tax advisor, register patents
 and trademarks and fulfill immigration formalities

Create an Indian or offshore subsidiary to make U.S.
 sales or to own the U.S. entities, isolate the mother
        company from liability from the USA
     State vs. Federal (Washington, D.C.) Law

       Uniform Commercial Code (state law on sales)
      Each state has its own Corporation/Business Code
Each state is different in some ways, some important and some

Competition/Anti-Trust rules are liberal/lax

No agreement between competitors on price

   It is difficult to recover lent money or accounts
receivable, as federal and state laws favor the debtor,
                especially in bankruptcy
               Protect Yourself
 Retain Security Interests/Collateral in inventory,
                  equipment, etc.

                 Credit Insurance

Use a well-drafted contract with tight payment terms

 You can demand interest up to typically 18%/year,
             depending on state law
                    Product Liability

It is often said that this is a problem in the USA, and it is true

   Lawyers for victims are not paid by the hour, but take
                    33% of all awards

            Product liability insurance is essential

     Again, it is key to operate in an affiliated structure,
                   reducing risk to the parent
                          Sales Laws
 The UN convention on the International Sales of Goods (CISG)
applies in the USA. Pay attention. If a governing law clause in a
    contract designates a State (UCC) or Indian law, without
  specifically opting out of the CISG, the CISG will control and
  apply as the CISG automatically substitutes for state or Indian
law. Pay attention to these clauses and opt out of the CISG if you
               In contracts, it is possible:
                  To be silent on venue
Or to designate an Indian tribunal; but arbitration is best
     Or to choose a State/County court in the U.S.
                Or to choose mediation
                Or to choose arbitration
Or to require business executives escalation between the
          parties before commencing litigation
                   Form of Contracts

Insist that all contracts be complete and signed. Avoid verbal
   contracts or those on “scrap paper”/“cocktail napkins”

        In the USA you can choose the law to apply

Conclusion: Freedom of contract is the rule in the U.S. You
        should use this freedom to your advantage
                        Contract Clauses

  You can limit damages to the value of the products or services sold

   You can limit warranties, e.g., the only warranty is performance to
                      specifications for 90 days

You can limit types of damages, e.g., eliminate consequential, indirect and
                           punitive damages

  You can have an internal statute of limitations, e.g., after one year an
              aggrieved party cannot sue the other party

 It is possible to exclude all other guarantees/warranties, sometimes it is
               even possible to sell “as is” without a warranty
       Distributors/Re-Sellers and Sales Representatives

                    Use a carefully written-contract

                          Keep the term short

                         No automatic renewals
                 Register all marks, URLs, patents, etc.

     Non-competition clauses are essential and may continue after

               Minimum sales levels to retain exclusivity

Use a list of objective standards, which if breached, leads to termination

You can terminate a Distributor or Sales Representative Agreement more
 simply than in other countries with less fear of damages. This result,
                         depends on state law.

  Limited Liability Company (LLC)

   General Partnership (Partnership)

Branch office of foreign entity (Branch)
 Articles of a Company filed with State Government
All forms of entity are granted/governed on receipt by states. No
 application process, approvals, financial statements, feasibility
     studies, etc. In Ohio, this happens on same day service.

 No extra form(s), reporting or approvals for foreign ownership

US state laws in general are more liberal, less regulatory and less
 rigid, especially the LLC (you can almost do anything from a
                      governance standpoint
        Little or no required capitalization. No approval of
         No requirement for an annual audit or filing of
                        financial statements
          The identity of officers and directors is secret
                 Financial results are secret
  In general, it is more simple, fast, easy, less regulated and
              cheaper to do business in the USA

If you need assistance in the USA, please call us early in the
       process to use us to your maximum advantage.


Shared By: