ENTITY

JOINT VENTURE CHECKLIST

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.

A fundamental commercial question is: is a joint venture the right type of relationship? What are the commercial objectives of the parties? Consider whether any alternatives are appropriate:

· Research and development/co-operation contract?

· Licence or franchise agreement?

· Distribution or agency agreement?

· Supply of goods or services contract?

· 100% acquisition?

2. Initial steps.

Basic initial steps or questions to consider include:

· Has a feasibility study or business plan been prepared?

· Will confidential information be disclosed during negotiations? Has a confidentiality agreement or information exchange agreement been put in place?

· Is each party still free, pending its signature, to negotiate with third parties regarding arrangements which may be competitive with the joint venture? Should there be exclusivity obligations, preventing such negotiations, for a specified period?

· Is a letter of intent or memorandum of understanding appropriate to establish principle points?

· Is any of the parties a publicly-quoted company with public announcement obligations or stock exchange requirements for shareholder approval relating to the venture?

· What material authorisations, consents, licences or other conditions precedent will be required for the joint venture to commence?

· If an international joint venture, consider the effect of local laws of the country in which the venture is to be established (see 4 below).

· What governing law should apply?

3. Structure of the joint venture.

Consider the appropriate structure (n.b. tax considerations) for the joint venture:

4. Local law issues.

5. Contribution of existing assets.

6. Regulatory matters.

7. Tax.

8. Accounting.

9. Employee issues.

10. Intellectual property.

B. Drafting the Joint Venture Agreement

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 shareholder.

24. Transfer of shares.

25. Ancillary contracts.

26. Termination.

27. Deadlock.

28. Standard provisions.

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