A joint venture occurs when two companies engage in a new venture while remaining distinct entities. Unlike mergers or acquisitions, each company will remain its own unique business, only coming together for the purpose of the joint venture. Even though a new company is formed and is considered independent from a legal standpoint, it is operated as a wholly-owned subsidiary of the companies that formed the joint venture.
To protect the interests of all parties involved, joint ventures require an agreement that will outline the rights and responsibilities of each party. An experienced joint venture attorney at Beth Santilli Law, LLC can help to draft these agreements and assist with other legal issues surrounding the venture.
Joint Venture Agreements: Key Issues
The most important issues to address in a joint venture agreement include:
– The purpose and name of the joint venture
– The structure of the business
– The ownership rights of all parties engaging in the joint venture
– The scope of the joint venture, which can include just one project or a separate time period
– Investments such as cash, equipment, or expertise made by each party within the joint venture
– Distribution or assignment of profits and losses
– Details regarding how the venture will handle matters of governance
– Ownership rights of the venture’s intellectual property
– Procedures for early termination of the venture
Joint venture agreements may also include other provisions, depending on the nature of the venture and the parties involved. At Beth Santilli Law, we will work closely with you and other shareholders to determine any other essential provisions to include in your agreement.
Limitations of Joint Ventures
Regardless of how they operate, joint ventures will typically face the same limitations as those found in general partnerships. These limitations may include:
– Depending on the terms of the agreement, all parties are considered liable for their share of debts incurred due to the joint venture
– Sharing of proprietorship, revenues, and assets can be structured flexibly depending on the terms of the contract among the parties involved in the venture
– Joint venture agreements dissolve when one party dies
– Transfers of interest in the joint venture can be stopped if a first right of refusal clause is included in the joint venture agreement
– Companies no longer retain joint venture status if they are only owned by one person for a certain period of time
These are unfortunately just a few of the limitations that joint ventures may have. For anyone entering into a joint venture, it is imperative to speak to a knowledgeable business attorney who can help you navigate these issues and more.
Get Legal Help Today
At Beth Santilli Law, LLC, our joint venture attorneys know have experience drafting joint venture agreements to protect your interests and help ensure you get as much out of the venture as possible. Contact us today to schedule a consultation and learn more about how we can help.