GLOSSARY

Russian roulette definition

What does Russian roulette mean?

A mechanism used to deal with a deadlock situation, usually after it has been escalated without reaching a resolution. A typical Russian roulette provision works by one party (A) offering to buy the other party’s (B's) interest in the joint venture at a price specified by A. B has a limited period of time to sell its interest at that price or, if it does not want to sell its interest, to purchase A's interest at the same price. If B does not respond within the specified time, B may be deemed to have accepted A's offer to buy its shares. Although such mechanism is drastic, it should be fair as between the shareholders and prevent one shareholder from unfairly manipulating the price payable for the shares. However, it may not be appropriate if there is significant financial disparity between the shareholders as one shareholder may be unable to buy the other shareholder’s shares at the price specified by the offering shareholder, who may therefore unfairly manipulate the offer price.

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