It is important to review your business strategy before entering into a joint venture. This should help you define what you can realistically expect. In fact, you may decide that there are better ways to achieve your business goals. Check out our guide to evaluating your growth options. Below, we will examine the main critical clauses to be included in the joint venture agreement as follows: The three main forms of joint venture design are: to enter into a joint venture with the potential counterparty, a Memorandum of Understanding (MOU) and a Memorandum of Understanding (known as LoI) can be signed by the parties, which clarify the basis of the future joint venture agreement. This includes an understanding of the culture and legal context of the parties. When signing a joint enterprise agreement, the following clauses must be properly considered, for example. B: the purpose and extent of the joint venture; the participation of local and foreign investors and the approval of a future capital issue; The management committee Financial rules The composition of boards of directors and administrative arrangements; Specific commitments provisions for distribution of profits; The portability of actions in different circumstances; fixing a deadlock; termination; Restrictive agreements on the company and participants; How to vote Appointment of CEO/MD; Changing control/exit clauses; anti-competitive clause; Confidentiality The compensation clause attribution; Dispute resolution Applicable law and force majeure clause. Does competition law affect joint ventures? Competition law concerns certain joint ventures and non-compliance with competition law can have serious financial consequences for management and personal impact on management.
One option is to agree on limited and specific cooperation with another company. For example, a small company with an exciting new product might want to sell it through the distribution network of a larger company. Both partners could agree to a contract setting the operating conditions. There is not a single law or law dealing with joint ventures. Instead, depending on the structure of the chosen joint venture, a combination of these laws will govern the agreement: a joint enterprise agreement can be concluded between individuals, partnerships, limited partnerships (PPS) and limited partnerships. The agreement can also be very flexible, as it can be between one or two people or between two partnership companies. The shareholder contract completes the joint venture agreement and addresses issues such as the right to transfer shares and manages the operation of the joint venture by detailing the process of appointing directors, etc.