Joint Venture Agreement Checklist

This document provides a joint venture preparation checklist, including the best practices, benefits, and risks involved in creating a joint venture partnership agreement. The document highlights several aspects of the process, including the type of relationship that is appropriate for the parties involved, the initial steps to be taken, and the structure of the joint venture. It also covers legal requirements, local law issues, regulatory matters, contribution of existing assets, and tax considerations.

The first step in joint venture entity setup is to determine whether it is the appropriate relationship for the parties and to consider alternative types of relationships, such as a research and development contract, distribution agreement, or supply of goods or services contract. The document provides a Joint venture formation guide, including the drafting of a joint venture agreement and the consideration of issues such as confidentiality agreements, exclusivity obligations, and material authorisations required for the joint venture to commence.

The document highlights best practices and risks involved in joint ventures, including the need for due diligence investigations, warranties and/or indemnities to be given, and the identification of regulatory issues and filings/consents required. The document stresses the importance of tax considerations and planning, such as the need for capital gain tax, capital allowances, transfer tax losses, stamp duty, consortium or group relief, and the tax implications of an international joint venture.

The joint venture preparation checklist also highlights several legal requirements, local law issues, and regulatory matters that must be considered. These include registration requirements, inward foreign investment reviews, local ownership/control, local governmental consents/licences, employment laws, taxes, repatriation of profits and payment of dividends, recognition of intellectual property rights, joint venture-specific laws, governing language for texts, Merger Regulations, and Antitrust/Competition Laws.

In summary, the joint venture preparation checklist provides a comprehensive guide for setting up a joint venture partnership agreement, including best practices, benefits, and risks. It covers various aspects of the joint venture process, including the type of relationship, initial steps, joint venture structure, contribution of existing assets, regulatory matters, tax considerations, and legal requirements. By following this guide, businesses can ensure that they have considered all relevant factors and have taken the necessary steps to establish a successful joint venture partnership.

How to use this Document?

If you are planning to embark on a joint venture, the Joint Venture Checklist will be your perfect guide. The checklist is divided into eight main categories, with several sub-categories under each to ensure you cover all the necessary steps. Here is a brief guide to using the Joint Venture Checklist:

1. Type of Relationship: Consider the objectives of each party, and determine if a joint venture is the best option. Explore alternatives such as research and development/cooperation contracts, licensing or franchise agreements, distribution or agency agreements, supply of goods or services contracts, and 100% acquisition.

2. Initial Steps: Before negotiations, determine if a feasibility study or business plan has been prepared, sign a confidentiality agreement, establish exclusivity obligations, and consider if a letter of intent or memorandum of understanding is necessary.

3. Structure of the Joint Venture: Determine the appropriate structure (corporate or unincorporated venture, limited or unlimited liability company, etc.) for the joint venture, based on tax considerations.

4. Local Law Issues: Consider issues raised by local laws of the jurisdiction in which the joint venture will be located, such as inward foreign investment review, local ownership/control, taxes, repatriation of profits, and any specific laws relating to joint ventures.

5. Contribution of Existing Assets: Determine the method of valuing contributed assets, any equalisation payment required between parties, warranties and indemnities given, any material contracts/assets/properties requiring third-party approval, and the need for a separate contribution agreement.

6. Regulatory Matters: Identify regulatory issues and filings/consents required, make provision for cooperation between parties in the event of subsequent regulatory action, and seek informal guidance under antitrust/competition law if necessary.

7. Tax: Consider tax considerations, such as capital gain tax, stamp duty/transfer taxes, consortium or group relief, tax transparent structures, controlled foreign company rules, thin capitalisation, transfer pricing, and identify clearances to be obtained.

8. Accounting: Establish how the joint venture will be treated in the accounts of the venturers.

By following this checklist, you will have a complete guide to ensure that you cover all the necessary steps when planning a joint venture.