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A joint venture company is a company set up by 2 or more parties usually for a specific purpose. For example, if 2 companies wanted to work together on a new business opportunity, they may wish to create a separate company to carry out that work.
It is not a requirement to have a joint venture company. If businesses wish to come together for a specific commercial purpose, they could simply agree to do so informally. There are however a number of benefits to having a separate joint venture company (JVC), including:
A consequential benefit of having a JVC is that the parties will have thought about key issues such as ownership, where intellectual property rights should vest, and decision-making issues right at the outset. If the parties proceed with the joint venture on a more informal basis, then it is unlikely that these key aspects will have been thought about or discussed and as a result the parties could find themselves in deadlock or a difficult dispute at a later date.
Fundamentally there is no difference between setting up a JVC and another company. Typically, a JVC will have tailor-made articles of association specifically dealing with issues such as deadlock at decision-making level. The owners of the JVC may also want to have a separate shareholder agreement (also called joint venture agreements) setting out any commercially-sensitive agreements between them that they do not wish to be made public. This could include separate agreements relating to:
If you need any advice on joint venture companies, please contact a member of our corporate and commercial law team in confidence here or on 02920 829 100 for a free initial call to see how they can help.
To speak to one of our experts today, please contact us on 02920 829 100 or by using our Contact Us form for a free initial chat to see how we can help.
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