What To Look For In A Joint Venture Agreement

A joint venture is usually formed to make money to partners or shareholders. Therefore, it goes without saying that one of the key terms of the joint venture agreement must clearly state how the company`s profits and/or any sale of the company will be distributed among the parties. If the joint venture is its own separate business unit, it pays its own income taxes based on the form of business – e.B. a partnership – when it was created. If it is an unregistered joint venture, all profits must be binding on the companies that signed the joint venture agreement. There are key features of a joint venture agreement and points that you need to consider and/or include to ensure that your agreement leads to success and prosperity. As I said earlier, we are in the process of entering into a joint venture agreement for a repair and turnaround project with another company. We have stipulated in the agreement that our partner will determine the correct price of the finished property and, if necessary, will be responsible for the appropriate time of the price reduction. Our joint venture partner knows the local market much better than we do, so why would we micro-manage these decisions? The key to the success of a joint venture is to be clear about the value each partner brings to the table and not get involved in areas where they can`t get involved. How you start a joint venture depends on what you want to achieve.

For example, if the joint venture is a corporation and both founding companies have equal control over it, they would generally structure the joint venture in such a way that each founding company has an equal number of shares in the company, as well as equal management responsibility and representation on the board of directors. From financing to termination, here`s what you need to consider when creating a joint venture agreement. Most agreements stipulate that all stakeholders must be adequately publicized on all matters to be heard before the board of directors and stipulate that at least one representative of minority shareholders must be present at each meeting. Whether you are a new investor or a more experienced investor, the chances of entering (or being approached) into a joint venture relationship are quite high. .