International Joint Ventures &
Agreements

International Joint Ventures, How to draft International Joint Ventures, Legal Aspects of International Joint Ventures, Joint Venture Law, International Joint Venture Agreements

On this page:
What is a Joint Venture
How to Enter into a Joint Venture Agreement?

International Joint Ventures

What is a Joint Venture

A typical International Joint Venture is between:

1. Two international parties, (individuals or companies), incorporate a company. Business of one party is transferred to the company and as consideration for such transfer, shares are issued by the company and subscribed by that party. The other party subscribes for the shares in cash.
2. The above two parties subscribe to the shares of the joint venture company in agreed proportion, in cash, and start a new business.
3. Promoter shareholder of an existing company and a third party, who/which may be individual/company, one of them non-resident or both residents, collaborate to jointly carry on the business of that company and its shares are taken by the said third party through payment in cash.

Some practical aspects of formation of international joint venture companies and the prerequisites which the parties should take into account are enumerated herein after.

In some countries joint ventures are a separate legal entity, whereas in others they could be any of the available corporate entities.

How to Enter into a Joint Venture Agreement?

Selection of a good local partner is the key to the success of any joint venture. Once a partner is selected generally a Memorandum of Understanding or a Letter of Intent is signed by the parties highlighting the basis of the future joint venture agreement.

International joint ventures should be carefully drafted to avoid complications later on. Lawyers from all jurisdictions involved should be consulted early on.

A Memorandum of Understanding and a Joint Venture Agreement must be signed after consulting lawyers well versed in international laws and multi-jurisdictional laws and procedures.

Before signing the joint venture agreement, the terms should be thoroughly discussed and negotiated to avoid any misunderstanding at a later stage. Negotiations require an understanding of the cultural and legal background of the parties.

Before signing a Joint Venture Agreement the following must be properly addressed:

• Dispute resolution agreements
• Applicable law
• Force Majeure
• Holding shares
• Transfer of shares
• Board of Directors
• General meeting
• CEO/MD
• Management Committee
• Important decisions with consent of partners
• Dividend policy
• Funding
• Access
• Change of control
• Non-Compete
• Confidentiality
• Indemnity
• Assignment.
• Break of deadlock
• Termination

The Joint Venture agreement should be subject to obtaining all necessary governmental approvals and licenses within specified period.

• Drafting Joint Venture Agreements
• Drafting International Joint Venture Agreements
• Joint Venture Registry : Searching  Joint Venture Partners
• Joint Venture Consultants
• Joint Venture Successfully
• Joint Ventures in India

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