A Joint Venture typically “works” where the two parties bring very different contributions “to the party” which the other simply cannot or will not do. For example, one party might have great technical expertise, the other more general management expertise but neither one nor the other on its own will be enough. Both parties depend on each other.
Further Focus on Joint Ventures
If one party is producing funding, think carefully whether a Joint Venture is suitable i.e is it possible or appropriate to raise the money through traditional sources e.g. bank, lending- debt/equity, VC funding etc. In this way, you can proceed with the venture on your own, but still rely on third party funding. The important thing is that this would not be a Joint Venture.
A Joint Venture is not for everybody, rhw will give sensible, proactive advice possibly resulting in you not proceeding with a joint venture at all!
Once you have decided that a Joint Venture is indeed the way to go consider the vehicle very carefully. There are two basic options:
- Partnership;
- Limited Company.
It could be a partnership between two individuals or indeed two companies trading together in the Joint Venture. This will create more complications for accounting purposes, but it is possible to proceed in this way.
A separate company formed specifically for the purpose of the Joint Venture is normally the best way to proceed. Both parties would be Shareholders in the company and there should be a separate Shareholder Agreement which sets out the contributions to be made by each party, their management obligations, voting entitlements, remuneration dividend entitlement etc.
We will be very happy to discuss your requirements for a Joint Venture- it might seem straightforward but it probably isn’t but we will cut through the issues and steer you in a safe direction and get the project over the line.
Meet the Corporate Team
Nick Richardson
Brian Shacklady
Jack Lightburn
Julia Finill
