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What are Joint Venture Agreements?
A joint venture agreement is used in circumstances where two or more companies develop a new entity to their mutual benefit. It is similar to a partnership agreement apart from one significant difference:
A partnership is designed for a long-term relationship;
A joint venture on the other hand is based on one single business transaction.
These entities may take several legal forms, Limited Liability Partnership, Partnerships, Limited Companies, or simply a contractual cooperation agreement.
In the world of joint venture agreements, (JVAs), a quick and informal agreement is insufficient.
Ensure you protect your interests
In order to protect both parties the unique business venture often requires the skill and professional expertise of a solicitor.
There are generally three types of joint venture structures.
- Jointly Owned Corporate Entity;
- Partnership or limited liability partnership (LLP);
- Contractual/Co-operation Agreement.
The structure that is most appropriate for your business will all depend on the size of the joint venture participants and their respective objectives. Depending on this and your particular requirements, we can draft a suitable agreement on your behalf that best meets your needs.
It is important that JVAs clearly set out the purpose of your project and govern the relationship between all involved. It is important that as well as identifying decision-making provisions, financial contributions and exit provisions are also included.
Well-drafted documentation setting out the rights and obligations and careful commercial consideration are required when setting up a JVA.
When the joint venture subsequently becomes successful all parties will want to have their respective positions protected in accordance with what has been agreed between them.
Considerations for JVA's
There are various important things that need to be considered as part of the implementation process including:
- Share capital of the joint venture company
- Shareholder agreement
- Tailored articles of association to deal with the rights of all shareholders in the joint venture company
We appreciate that disputes can arise in the future when JVAs are not successful, however, we will advise you on any potential problems with the venture and ensure a realistic approach is used in order to guarantee that you are prepared to deal, should the need arise.
For further advice, please contact us on 01244 506 444 to speak to one of our commercial lawyers.
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