Joint venture lawyers knows that a good joint venture is one with clear contracts that govern everything from its formation, to its running, and dissolution. A joint venture is a partnership between two businesses for a defined period of time. It has its own objectives, independent to those of each of the partner businesses. All expenses, risks, liabilities, and capital are shared between the parties in an agreed-upon ratio. If successful, all profits will be split in accordance with the joint venture agreement drafted by a lawyer.
A joint venture can be structured as an LLC, corporation, or a partnership.
What Are the Legal Aspects of a Joint Venture?
The state where the joint venture is formed will govern the laws for the joint venture. The corporate laws, labor laws, and commerce laws of the state will apply to the joint venture. For taxation purposes, the federal government will treat a joint venture like a partnership. This means income from the joint venture can be filed in the personal income statement rather than a corporate tax statement.
A business joint venture lawyer can assist businesses in a successful joint venture. Seek counsel and guidance throughout the process.
Joint Venture Standards
Companies must meet the following standards when forming a joint venture:
- File a certification with the department of commerce for a trade name certification
- Draft contracts defining the business joint venture intent
- Include agreements on the ownership, equity control, and decision-making authorization of each party
- Define the contribution of each party to the capital and assets
- Define how any revenues and losses will be shared between the partners
While there are some state and federal laws that regulate joint ventures, these partnerships are mainly defined by the joint venture agreement. This is a contract which stipulates the contribution of each party, how the partnership will be run, and how each party will exit the joint venture. The contract will ensure both parties are on the same page, minimize liability, and increase the chances of a successful partnership.
The Global Impact of Joint Ventures
Joint ventures are a popular way to move into international markets. The local partner will lend credibility and help them navigate the laws of the state or country. A business joint venture attorney will help you to navigate the complexities of an international agreement. They will assist with navigating taxation, regulations, laws, and statutes of both countries.
Limitations of a Joint Venture
No matter if your joint venture operates internationally or domestically, it will face many of the same regulations of general partnerships. These similarities include:
- All partners are liable for their share of the debts, dependent on the terms of the contract
- Assets are shared as per the stipulations of the joint venture contract
- If one partner leaves or dies, the joint venture is terminated
- A buy-sell provision allows the interests of a joint venture to be transferred to heirs stipulated in the contract
- If there is a first right of refusal clause in a joint venture agreement, then transfers of interest can be prevented
- If the joint venture remains with one person only, then the agreement is no longer a joint venture.
A business joint venture attorney is key to a joint venture succeeding. They can pre-empt any issues and prevent them through strong and thorough contracts.