![]() This is one of the most important clauses in a joint venture agreement as it outlines the law which will govern the agreement. Likewise, it is also important to outline how the distribution in terms of profits and proportionate liability in terms of loss will be made, if any. Since a joint venture is a business entity, it is important to specify the profits and losses that the entity would make. It should also describe the proportion of ownership of each party in the joint venture. Therefore, any joint venture agreement must contain provisions which specify the amount of capital put in by each party to the agreement. In any joint venture, each party contributes a certain amount in the working capital for the operation of the joint venture. This can be a brief description which is included in the joint venture agreement as a separate clause. The joint venture agreement must also outline the purpose for which the parties have entered into a joint venture. The parties would have to decide on a name which the joint venture entity would be known by for the purposes of conducting business. The provision which specifies the name of the joint venture is of paramount importance. The Agreement may also specify the term till which the joint venture would last, unless terminated before as per the terms of the Agreement. ![]() The commencement date is important to decide when the legal relationship between the parties to the joint venture agreement is deemed to start. In case a legal entity is a party to the joint venture agreement, their trade or commercial license number should be included instead of the passport number. There may be cases where one of the party or all the parties to the agreement is a legal entity rather than a natural person. ![]() This provision usually contains personal information of the parties to the agreement such as their full names, passport number, email addresses, and registered address. However, more common than not, any joint venture agreement would have the following terms:ĭescription of the details of each party is an essential provision in any agreement, and the same can be said for a joint venture agreement as well. Since a joint venture is more in the nature of collaboration between two or more parties to the agreement, it may contain any or all clauses that the parties may mutually agree upon. What does a joint venture agreement cover? This allows the parties to limit their exposure and liability that may exist in the joint venture entity. While a joint venture allows parties to combine their expertise and resources to take part in a new business activity or enter a new market, a unique feature of a joint venture is that it may be limited to specific work or business and allows the parties to retain their separate legal entity with respect to other work or business that they may be currently undertaking. This could be to make sure that the resources available to both the local companies are combined and the output that this combination could produce can be maximised. Parties across jurisdictions find it easier to enter a different country or jurisdiction by forming a joint venture with a local business person of that particular country or jurisdiction.Ī joint venture can also be between two local companies as well. A joint venture thus helps businesses grow their market share and offer a new service.Ī joint venture can also lend credibility to their existing name because of involvement of a respected local business person, and it may also allow them to undertake bigger projects which an individual party would not be able to execute on its own. What is the need to enter into a Joint Venture?Ī joint venture is a special legal entity that allows two or more natural persons or corporate entities to combine their resources to enter into a new market, offer new services, or take on a specific project. This also helps the local business person to collaborate with a foreign entity and expand their market share and overall business. It is common for parties from another jurisdiction to enter into a joint venture with a local business person in order to allow them to enter that particular local market. The profits and losses associated with the shares of each party belongs to the respective parties itself, while the joint venture maintains its separate legal identity. A joint venture will have its own shareholding structure with each party holding its respective shares. A joint venture is a business arrangement in which two or more parties agree to join forces and invest their resources to accomplish a certain project or a task. A joint venture agreement is a document that allows two or more parties to collaborate and work under a new entity. ![]()
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