One of the main considerations in deciding the structure is tax. Specific structures require different tax obligations. For example, if you structure your joint venture into LLP, each partner will be taxed individually. However, if you form a limited liability company, the company and shareholders are required to tax all profits and dividends. A detailed terminology manager will save a lot of time and money in negotiating and developing the final joint venture agreement, as many of these issues will already be decided. The agreement should mention the parties` initial contributions and any future obligations that they will have to meet. These include, for example, cash, assets, institutions or intellectual property. If, by nature, contributions create legal relationships (for example. B the granting of intellectual property rights licences or the posting of workers), the terms of these relationships should also be clarified, possibly through a separate agreement. Once all parties to the joint venture have agreed on the organisational structure of the joint venture, a joint enterprise agreement will have to be drawn up to clarify the rights and obligations of the parties.
Typically, a joint venture is created to make money for partners or shareholders. Therefore, it goes without saying that one of the key conditions of the joint enterprise agreement must state with the utmost clarity how the profits of the business and/or the eventual sale of the business are distributed among the parties. A number of factors can lead to the termination of a joint enterprise contract, including: power relations are not a matter limited to the shareholder level. The directors will be the directors of the company, so that the parties to the joint venture, without exception, will have the opportunity to appoint a representative to the board of directors and ensure that the quorum of the board meeting and voting rights are structured in such a way as to achieve the agreed balance of decision-making powers at the board level. The right “JV” partner can open up new markets and distribution networks, and the logic is that the combination of different skills and resources from separate but free companies facilitates the achievement of common goals. Compared to a joint venture, a joint venture facilitates the commitment (financial or otherwise) of each joint venture. For your joint venture to be successful, the joint venture agreement that governs all transactions must be clear and concise. All project participants must be 100% sure of their rights, duties and obligations.
For obvious reasons, it is essential to determine the exact nature and extent of the new business`s activities. The duration of the agreement should be fixed – is it ultimately risky to reach a given project within a specified time frame or to support it in the longer term? It is also important to take into account revenue prospects and possible geographical restrictions (for example. B excluding areas where a shareholder is already active). It is important to get advice from a professional consultant to ensure that your joint venture is created in the best way possible to avoid taxes and maximize profits. This is by no means a comprehensive summary of the provisions that a joint venture shareholder contract could cover. Issues such as taxation, dispute resolution mechanisms and employment need to be addressed.