A quick reference guide on which template to use in relation to Co-operation, Joint Venture and Shareholders Agreements and other related documents. Also include a checklist of local / international jurisdictional issues to consider.
Please note that this is a general summary of our Co-operation, Joint Venture and Shareholders Agreements and other related documents and does not constitute legal advice. As each jurisdiction may be different, you may want to speak to your local lawyer.
Members are often confused on which document to use in relation to Co-operation, Joint Venture and Shareholders Agreements. The following table is a quick reference guide:
1. Memorandum of understanding (MOU) in a joint venture situation - this represents the good faith intentions of the parties to proceed but is not legally binding. This document is available in the following forms: Neutral, in favour of JV Leader, or in favour of the Participants.
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.
4. Joint Venture Agreement - Equal Shares in Company - A joint venture agreement suitable for the set up of a relatively simple joint venture - a 50:50 joint venture company. This agreement is drafted for 2-5 parties and available in the following forms: Neutral, Loose or Strict obligations on the Participants.
5. Shareholders Agreement - Shareholders' Agreement to be entered into upon completion or establishment of the Joint Venture Company with standard clauses for minority protection. This agreement is drafted for 2-5 parties and available in the following forms: Neutral, Full Indemnity or No Indemnity between the Shareholders.
Other questions to consider:
1. Purpose of the Joint Venture ("JV"):
What is the purpose of the JV? What are the commercial objectives of the parties? Is a JV the right type of relationship?
Scope. What is the scope of the JV? Consider implications of such scope in connection with:
Any activities does the JV expressly intend to do or refrain from doing
Corporate opportunity and potential conflicts with each party’s non-JV businesses
Any core technology or other intellectual property to be transferred or granted
Other inter-corporate arrangements that either will be required for the JV to operate
2. Preliminary matters:
What will be the name of the JV? Are there any restrictions on the use of the name?
How will any existing brands be valued / protected? How will any new IP be dealt with?
Any due diligence to be completed before the JV is effective? Are there any restrictions in existing agreements? Who will need to consent/provide their approval? Check the existing firm constitutions
Where will the JV carry on business? Whose premises? New premises? Who will own the premises? Will landlord consent be required?
Will confidential information be disclosed during negotiations? Has a confidentiality agreement or information exchange agreement been put in place?
Do the parties want to have a period of exclusive negotiation? Is each party still free, pending its signature, to negotiate with third parties?
How long is the JV likely to take?
Will it be necessary for the JV to continue to use any facilities of the existing entities? Any contractual arrangements in place?
Sharing of risk - will indemnities/warranties be given? Should they be capped?
Has a feasibility study or business plan been prepared?
Is a letter of intent or memorandum of understanding appropriate to establish points of principle?
What material authorisations, consents, licences or other conditions precedent will be required for the joint venture to commence?
What governing law should apply?
Memorandum of Understanding,