How to Prepare a Joint Venture Agreement

When deciding to create a joint venture, the terms and conditions should be set out in a written agreement.  This agreement may help prevent any misunderstandings once the venture is in place and up and running.  A written joint venture agreement should outline the issues surrounding the formation of the joint venture, and the legal rights and obligations between the parties (NIBusinessInfo, NIBusinessInfo.co.uk, n.d.).

The joint venture agreement should cover information about each of the participant organisations and the resulting organisation:

Place and Date: (Place of signature and the date the agreement is effective from)

Between: …. And: …   (First and second member of the joint venture – or more in the case of additional participant organisations: Names, law within the country that the firms exist, complete addresses of their head offices, names of legal representatives, resolutions of the management boards.)

Description of the project for which this agreement is entered into by the venturers. Purposes of performing this joint venture.

Anyone who wishes to join such a corporate alliance should consult an experienced solicitor. The proposed terms and conditions of a joint venture agreement should include:

1. NAME, PLACE, PURPOSE AND TERM OF BUSINESS

1.1. Name of the joint venture (country whose laws the joint venture will be pursuant to and where all certificates as may be required will be executed.)

1.2. Place of business (complete address of the main offices)

1.3. Purpose of the contract (Description of the business the joint venture will perform, number of the contract, amount in Euros.)

1.4. The term of the joint venture agreement shall start from the date of signature and will end on …(date)

Possible extensions to the duration can be subject to unanimous agreement of the venturers.

2. PERCENTANCE OF PARTICIPATION

This section describes:

• the percentage of participation of each partner in terms of their initial contribution (cash or property).
• the distribution of net profits (through dividends or cash payments).
• the distribution of losses and liabilities.
• return (withdrawal) of capital contributions with or without consent.

3. MANAGEMENT AND CONTROL DUTIES

This section describes all responsibilities and processes that both parties will have to follow:

• The management of the joint venture could be conducted through a ‘Policy Committee’ that can hereby be established.
• Number of votes per partner (could be equal to their percentage of participation).
• Insurance coverage plus liabilities.
• Salaries and expenses.

4. APPOINTMENT OF AUTHORITY 

This section includes:

• Appointment of Administrative Managing Partner and description of responsibilities.
• Appointment of Project Managing Partner in charge of the project work.
• Appointment of General Manager and description of responsibilities.

5. ACCOUNTING AND AUDITING

This section includes all arrangements to be made for:

• Bookkeeping
• Internal and external audits
• Accounting method

6. RESOLUTION OF DISPUTES

This section describes how any disputes (that cannot be dissolved in good faith) will be resolved and under which rules.

7. DISSOLUTION-EXIT STRATEGY

This section describes the procedures of dissolution and liquidation of the joint venture.

8. 8. CONFIDENTIALITY

This section describes how to protect any trade secrets that are disclosed (non-disclosure agreements).

9. INTELLECTUAL PROPERTY

This includes a description of the ownership of intellectual property created by the joint venture.

10. INSURANCE

Insurance against loss where reasonable and especially if it is standard practice in the industry.

11. INDEMNITY

Indemnity for both parties involved in the venture.

(AppBusinessinaBox, n.d.), (Καραμπαγιας, 2013)