Support of transactions on the entry of investors into a development project
Development is an investment and construction sector aimed at creating a new building or reconstructing an existing building. Like any commercial activity, development is aimed at making a profit. Legal support for transactions involving investors in a development project is required to minimize risks.
Parties to the transaction are not always able to independently identify potential risks. Therefore, it is advisable to involve in this transaction the lawyers of the DTK Partners Law Agency.
Types of investors entering the development project
You can become an investor in a development project in the following ways:
- Investor’s contribution to the authorized capital of the enterprise of a certain amount of cash. At the same time, the size of the contribution and the size of the share in the company do not coincide. Even if the invested enterprise is an LLC with an authorized capital of 10,000 rubles, and the investor contributes 1,000,000 rubles, then its share will be equal to that indicated in the documents. For example, he will buy back 5% of the company. Information about the contribution and share in the enterprise is indicated in the charter documentation.
- The purchase of shares in the company. There are two possible buyback options. In the first case, investor money goes to the development of the enterprise (cash-in). In the second, one of the founders sells his share in full and takes the money for the share without investing in the project (cache-out).
- Investing under a joint venture agreement. Under the agreement, the investor and the company jointly implement the project. Parties to the contract can only be commercial enterprises or individual entrepreneurs.
- The loan. The investor is not interested in the development of this business and does not have rights to it. He just wants to get his money back, plus interest on the loan. A loan is rarely allocated as an independent type of investment, since the investor is not interested in the development of the project.
When an investor joins a development project, the following legal services are required:
- assistance in choosing a development project (green field or brown field).
- legal risk assessment;
- coordination of investment conditions;
- legal support in drawing up an investment contract;
- legal analysis of investment documentation;
- counseling on contentious issues;
- contesting violations of the terms of the contract in court.
Assistance of DTK Partners
When investing in a development project in Moscow, throughout the Russian Federation or outside the country, it is advisable to involve qualified lawyers. They will help reduce risks in relation to the investee.
As practice shows, the most popular problems are the availability of third-party rights to a land or real estate. The lawyers of DTK Partners will help to identify burdens and restrictions in relation to the investment object before the conclusion of the transaction.
Specialists can support a deal from the very beginning until it is closed. And at the request of the client, the provision of individual services is possible.