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This is a two-part joint venture checklist on the setting up of a joint venture entity. Part 1 is in relation to preparing the joint venture, and Part 2 relates to the drafting of the joint venture agreement.
A. Preparing for the Joint Venture
The following are issues to be addressed at the outset of discussions regarding a proposed joint venture.
1. Type of relationship.
2. Initial steps.
3. Structure of the joint venture.
4. Local law issues.
5. Contribution of existing assets.
6. Regulatory matters.
9. Employee issues.
10. Intellectual property.
B. Drafting the Joint Venture Agreement
The remainder of the checklist addresses specific issues to be resolved when drafting the joint venture or shareholders' agreement. It assumes that a limited liability company (joint venture entity) will be used as the joint venture vehicle. Many of the items listed below nevertheless apply, on a similar basis, to other joint venture structures.
11. Conditions precedent.
12. Identity of parties.
13. Business of the joint venture entity.
14. Capital and funding.
15. Constitution of joint venture entity.
16. Board of directors.
17. Shareholder meetings.
18. Matters requiring unanimity or special majority.
19. Administrative or corporate matters.
20. Profit distribution.
21. Intellectual property.
22. Restrictions on shareholders/parents.
23. Change of control of shareholders.
24. Transfer of shares.
25. Ancillary contracts.
28. Standard provisions.
This checklist is a useful reminder of the issues for parties to look out for when entering into a joint venture. It also includes the key terms for negotiation in a joint venture agreement. The party should go through the checklist and carefully discuss all the relevant joint venture issues with the other joint venture parties. It is not necessary to circulate the checklist to all joint venture parties unless requested to do so.