Joint Venture Agreement

Our job is to ensure the Joint Venture Agreements fit the rewards with the risk, investment and commitment involved.

Joint Venture Solicitors

Joint ventures remain popular as vehicles for collaboration and expansion. If you need solicitors for legal advice on the advantages and disadantages, legal, commercial or tax, or a joint venture agreement drafted or reviewed, please get in touch with us.

We are highly experienced in all aspects and types of joint ventures and our services are highly commercial and cost effective.

Joint venture agreement 

There are a variety of possibilities for you to consider. The structure most appropriate for any particular joint venture agreement will be dependent upon the parties, their respective objectives and roles.

The most typical joint venture structures are:

  • Special Purpose Vehicle – a company especially created for the joint venture agreement. Often known as a special purpose vehicle (“SPV”) company and the most common structure.  We find SPVs can work well for commercial transactions involving commercial property;
  • Partnership or limited liability partnership (LLP); or
  • Collaboration agreement – which generally does not involve the creation of a new vehicle.

Key considerations in a Joint Venture Agreement

  • Who will own the technology and other intellectual property?
  • Is the joint venture to be of fixed term or indefinite duration? If fixed term, is there an overall exit strategy?
  • Can a shareholder terminate the joint venture early (e.g. on material breach, insolvency, change of control)?
  • Is a shareholder permitted to exit by transferring its shares? If so will any other person have the right to first refusal?
  • Will other shareholders have specific veto rights on transfers to third parties or actions of the other party?
  • On a transfer, if permitted, is the transferor to be given drag along rights? Are other shareholder(s) to be given tag along rights if a major shareholder wishes to exit?
  • How will the equity in the joint venture company be held between the parties? Is it appropriate to issue each party to the joint venture agreement with a separate class of shares so that the parties can have differing rights to voting, income and equity?
  • How much money each party will contribute and how?
  • How will capital distributions on the sale or breaking up of the joint venture be dealt with?
  • Will either party be required to licence intellectual property to the joint venture vehicle and on what terms?
  • If there is a dispute under the joint venture agreement how will this be dealt with?
  • Who has the power to appoint directors and control the board under the joint venture agreement?

Compliance issues for the joint venture

We deal with  common compliance issues such as:

  • Where will the joint venture company be incorporated?
  • Does the joint venture proposed business require any consents, licences or approvals?
  • To what extent can shareholders in the joint venture compete with the joint venture company?
  • Will the joint venture company employ dedicated staff? If so, will there be a requirement to consult with employees under TUPE?
  • Where the joint venture involves the sharing of data have consents been obtained and who is the data controller.
  • Is there tax payable on assets transferred to or acquired by the joint venture.  How will the profits be extracted from the joint venture?  The tax issues can be complicated often involving consideration of capital gains tax, corporation tax, personal tax and stamp duty.

IP aspects of the Joint Venture

Many intellectual property joint ventures are formed for the purposes of creating or developing software. You need to set out clear terms on what happens to existing software and intellectual property shared with the joint venture as part of the collaboration. Following on from that is consideration about how new software, technology and intellectual property created by the joint venture will be owned.

Unfortunately, ownership of intellectual property can be a common area of dispute. To avoid disputes, you should set out the position at the start of the joint venture.

Joint venture exit terms

The exit strategy is a very important consideration in any joint venture agreement. In practice, details on how an exit will happen and how the parties will be paid needs to be reflected in the joint venture agreement and in the articles and shareholder agreement since it overlaps between the scope of the joint venture and the share capital of the joint venture.

Similar considerations are required if the joint venture vehicle is an limited liability partnership LLP or a common law partnership.

Get in touch for a discussion or quote with our expert joint venture agreement solicitors.

Catherine Gannon

Catherine is an extremely experienced solicitor and deals with all types of corporate and commercial matters and advice and also tax law. She is well known for turning complex problems into solutions, priding herself on always finding a way. In her spare time she runs Gannons!

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