Are there legal possibilities other than a “sponsorship agreement”, to compensate for the controlling stake position of the local partner?
The memorandum and articles of association act as the constitution of the LLC, governing the internal organization pertaining to its partners. Furthermore it regulates the rights and obligations of the partners generally, thus creating rights and obligations between them and the LLC respectively. The rights and obligations provided in the memorandum and articles of association are directly enforceable by one partner against the other. Therefore the position of the minority foreign joint venture partner may be strengthened by a carefully drafted memorandum and articles of association as follows: A distribution of profits and losses that does not correspond with the capital shares of the partner can be agreed in the company contract. Deviations of a ratio of up to 80:20 for the benefit of the foreign partner are permissible. It is not possible to exclude a partner entirely from the appropriation of the financial results, neither with regard to the loss nor the profits. However, a part of
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