How to structure a joint venture

What are joint venture structures? What is needed to form a joint venture? How do you set up a joint venture?

There are a variety of ways to structure a joint venture: Collaboration agreement or contractual joint venture. Depending on the capital structure of the joint venture entity , consideration needs to be given as to whether there is a deadlock risk. If so, deadlocks can be resolved through a tie-breaking vote. Joint venture structures 1. Company limited by shares.

Familiar, universally recognised structure with a clear corporate identity and established. Contractual venture. Flexible option – can be quick to set up and easy to dismantle as no separate entity is created. There are endless variations on how to structure a joint venture, but there are two broad categories: profit share , and fixed interest.

Over time you’ll discover the way that is the most fair for you and your partners given what each party is bringing to the table (Also see – Real Estate Investors Checklist for Working with JVs). How the joint venture will be funded is a key consideration to how it should be structured. If the JV in the formation of a new entity, it may be structured as a corporation, limited liability company, or partnership. Define the structure of the joint venture.

This will be the section of the contract that identifies the format you have selected. The parties to the joint venture need to discuss whether they will be creating some new business entity or remaining as independent agents working together. The joint venture agreement should describe the purpose of the joint venture and what action or agreement is required to change the fundamental scope of the joint venture.

The converse to this is of course that larger, more complex developments often need a meatier type of JV structure. Or compare this to JVs like Merck-Schering, Starbucks-Pepsico, Airbus, and Kashagan – ventures that, at different times, have depended extensively on their parent companies for technology, services, and infrastructure along the. In particular, while not conclusive, it is common for the agreement to expressly state that the joint venture is not intended to create. Hi, I run a website that dominates a niche employment market.

Each joint venture party will need to carefully structure their side of the arrangement to maximise their respective commercial and tax positions where possible, having regard to any potential structuring costs that may be incurred. For instance, if the landowner transfers a property from one entity to another, income tax (including capital gains tax) and stamp duty may be payable. A joint venture concept is only effective when there is a true willingness to move forward together. Not even signed contracts have value if mutual trust and acceptance of the terms are not present. It is actually better not to consider a joint venture project if motives from either side are questioned by the other side.

A graceful exit before any legal obligation takes effect will most likely. Every deal is difficult but if you can understand the JV Value Triangle, you can figure out the duty split and. Evidently, the meaning of joint venture is sino-foreign joint venture , it is not like a partnership wholly owned by foreign enterprises or wholly owned by domestic citizens. The major difference is that the structure of company is wholly owned by Chinese partners and foreign companies with or more shareholders with a joint business agreement and set up a board of directors appointed by. Real estate joint ventures are essentially a way to match capital needed or desired for a real estate acquisition or development by an operating party – LexisNexis.

The most common form is a company limited by shares. It is usually a private company, or its equivalent in the. In the fast-paced world of deal making, joint ventures (JVs) are a conundrum. Slow in the making, often with complicated structures and shared management teams, they seem out of place in a volatile era marked by buzzwords that hype agility and nimble strategic moves. Yet there they are, more than 5JV deals completed annually over the past ten years, including around percent of them.

The QA gives a high level overview of joint ventures law, including regulation of joint ventures , types of joint ventures permitted in the jurisdiction, whether corporate joint ventures are subject to the corporate law, formalities for formation and registration of joint ventures , statutory limits on duration, anti-trust rules, termination, rules relating to joint ventures with foreign.