Before deciding on which Joint Venture document to use, one should consider the following:
1. Purpose. What is the purpose of the JV? What are the commercial objectives of the parties? Is a JV the right type of relationship? Consider any alternatives arrangement:
2. Scope. What is the scope of the JV? Consider implications of such scope in connection with:
1. Parties. The joint venture agreement should identify the full legal name and address of the parties.
It is important to establish in legal terms any territorial or other limitations on the intended scope of the JV's activities in order that this is commercially clear between the parties and to prevent the JV subsequently competing (e.g. in relation to distribution of products) with one of the party elsewhere in the world.
2. Capital contributions. The agreement should clearly specify any obligations of the parties to transfer to the joint venture any know how, rights to land or buildings (or to procure the grant of land use rights), business or equipment to the JV. Any agreed mechanism for valuing these contributions should be clearly spelt out. The timing of (and any cash limit on) the respective contributions of the parties should be clear.
3. Capital structure. What will be the parties' respective equity share in the JV? How will the parties finance the JV on an ongoing basis? Will financing need to be secured from third parties? What will be the JV's "registered " or "charter" or "authorised" capital? How will contributions in kind be valued - and made?
4. Guarantees. It is important to establish what obligation (if any) the "parent" entity will have to enter into guarantees, bonds or indemnities to support the provision of finance to the JV. In this situation, the joint venture agreement should be careful to establish the principle of sharing of any liability incurred under any such guarantees, bonds or indemnities.
1. Forms of Joint Venture. JV comes in various forms, the following are the most common ones:
The choice of structure will depend on a variety of factors which will have different weight according to the circumstances of the particular venture. It will be important to identify the main criteria in a particular case. Some key considerations are:
The current agreements under the Joint Venture categories are contractual joint ventures. For other types of joint ventures such as partnership or JVC, please refer to partnership agreements and shareholders agreement.
2. Joint Venture / Consortium Agreement to Provide Service - Unincorporated Project
A joint venture / consortium agreement with a JV leader and participants to provide service to a client in a particular jurisdiction. The association is for services required for a specific project, rather than for a more permanent type of arrangement. This agreement is drafted for 2-5 parties and available in the following forms: Neutral, Full Indemnity or No Indemnity between the Participants.
3. Joint Venture / Consortium Agreement to Supply Products - Unincorporated Project
A joint venture / consortium agreement with a JV leader and participants to contribute to the manufacturing of products in a particular jurisdiction. The association is for products required for a specific local project, rather than for a more permanent type of arrangement. This agreement is drafted for 2-5 parties and available in the following forms: Neutral, Full Indemnity or No Indemnity between the Participants.
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