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Cooperation, joint venture, and shareholders agreements are important legal documents that help define relationships between parties. However, choosing the right agreement for the right purpose can be confusing. This article provides a quick reference guide on which template to use and includes a checklist of local/international jurisdictional issues to consider.
The article identifies five types of agreements that parties can use depending on their specific needs. The first is the Memorandum of Understanding (MOU), which represents the good faith intentions of the parties but is not legally binding. The second and third agreements are Joint Venture/Consortium Agreements to provide services or supply products for a specific project, drafted for 2-5 parties. The fourth agreement is a Joint Venture Agreement with equal shares in the company, suitable for setting up a simple 50:50 joint venture company. The fifth agreement is a Shareholders Agreement, which is entered into upon completion or establishment of the Joint Venture Company and includes standard clauses for minority protection.
The article also includes a checklist of questions to consider when entering into these agreements. This includes identifying the purpose and scope of the joint venture, conducting due diligence, determining the name of the JV, protecting existing brands, and determining where the JV will carry on business. Other considerations include sharing of risk, preparing a feasibility study or business plan, and obtaining material authorisations, consents, licenses, or other conditions precedent to commence the joint venture.
It's important to note that this article is a general summary of cooperation, joint venture, and shareholders agreements and does not constitute legal advice. Each jurisdiction may have different laws and regulations, so parties should consult with a local lawyer for specific legal advice. Additionally, the article stresses the importance of carefully considering the purpose and scope of the joint venture and choosing the appropriate agreement to meet the parties' needs.
1. Understand the purpose and scope of a Joint Venture (JV) by considering alternatives and identifying the commercial objectives and activities the JV intends to undertake.
2. Pay attention to preliminary matters such as branding, intellectual property, due diligence, premises ownership, confidentiality, exclusive negotiations, risk-sharing, feasibility study, and governing law.
3. Identify the parties and their contributions to the JV, conducting searches if necessary, and establish any territorial or other limitations on the intended scope of the JV's activities.
4. Specify capital contributions, timing of contributions, and valuation mechanisms in the agreement.
5. Consider management and control issues such as board composition, appointment of officers, decision-making procedures, and dispute resolution.
6. Address financial matters such as profit and loss sharing, dividend policy, tax liability, and funding arrangements.
7. Include provisions for exit strategies, such as termination, transfer of shares, drag-along and tag-along rights, and non-compete clauses.
8. Draft a Shareholders Agreement with standard clauses for minority protection.
9. Use the right document for the situation, such as a Memorandum of Understanding for a joint venture situation that represents the good faith intentions of the parties, or a Joint Venture Agreement for a simple 50:50 joint venture company.
10. Seek legal advice from a local lawyer as each jurisdiction may be different and require specific legal expertise.
By following these steps, individuals can understand the legal considerations and key elements of Co-operation, Joint Venture and Shareholders Agreements templates. This guide provides an overview of the types of documents available and highlights what to consider when drafting an agreement. It is important to use the right document for the situation and to seek legal advice if necessary.