Partner Article

Legal Requirements to consider with Business Joint Ventures

Setting up a joint venture with another business partner is an exciting prospect and, as with all business models, there are a number of intial legal requirements to consider in order to get things right. Legal aspects to think about include:

1. which structure to use for the joint venture - possible joint venture structures include corporate joint ventures; partnerships (limited, limited liability or unlimited), or a joint venture based on contractual relationship
2. the parties’ respective interests in and contributions to the joint venture
3. the accounting and taxation treatment of the joint venture
4. whether any legal requirements must be complied with before the joint venture can be established
5. preliminary documentation such as confidentiality agreements, exclusivity agreements heads of terms and business plans, and
6. due diligence

Furthermore, the legal requirements that the parties are legally or commercially obliged to address before entering into a formal completion of the joint venture may also include:

1. obtaining merger clearance where EU or UK merger control applies

2. obtaining industry specific approvals, eg approvals for transfers of businesses or subsidiaries if a regulated industry such as financial services is involved

3. shareholder approval

4. complying with an employee consultation process

5. in relation to business transfers, obtaining consents for novation of major contracts

6. obtaining tax clearances in relation to proposed transfers

7. obtaining consents in relation to existing financing arrangements, and

8. a requirement for a party to announce the formation of the joint venture (e.g. if the party is listed and the proposed joint venture constitutes inside information)

This was posted in Bdaily's Members' News section by Max Tebbitts .