The laws of Joint ventures all around the world or in all states and among all businesses isn’t exactly the same, but these are the basics you should know and that you will need to keep in mind when getting in to a joint venture agreement.
A joint venture agreement form has 12 articles in it. First know that you will be following the laws of the state it falls under, just like all other legal things go. Article 1 is basically the definitions of who is in the venture, definition of profits and losses, tax, regulations etc. Article 2 is about the formation of the venture, the name it will fall under and the principal place of the business. Article 3 is all about ‘why’, the purpose of the joint venture. Article 5 is about the percentage of participation, so in case of losses, liabilities, bonds etc, who does what, how involved will who be, how are things taken care of and those sort of things. Article 6 is about the policies, the representatives etc.
Next half of the articles, continuing with article 7, the delegation of authority. This is basically who does what etc. Article 8 is about the bank accounts side, article 9 is the accounting and auditing, article 10 deals with resolution of disputes and the rest is any extras you need to add. All these things need to be agreed on and clear to both parties in order to avoid legal action against each other and big big problem.
When we talk about International Joint Ventures then these are the things that need to be taken in to consideration and you must be very clear on all decisions.
1 Dispute resolution agreements
2 Applicable law
3 Force Majeure
4 Holding shares
5 Transfer of shares
6 Board of Directors
7 General meeting
9 Management Committee
10 Important decisions with consent of partners
11 Dividend policy
14 Change of control
19 Break of deadlock
When things are clear to both parties, then it’s all left to team work.
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