Joint venture company (JVC) meaning

This Checklist This Checklist highlights the different avenues for bringing a joint venture (JV) to a close or facilitating an exit, and the factors to weigh depending on the pathway chosen. For guidance on addressing a JV dispute, see Practice Note: Joint venture disputes—how to respond. For further detailed guidance on terminating joint ventures where a specially created or nominated joint venture company (JVC) is involved, see the following Practice Notes: Termination—corporate joint ventures Tax implications of operating and terminating a joint venture company Corporate joint venture dispute—dealing with deadlock: initial considerations Majority-minority joint venture dispute—a practical illustration Entering a JV relationship usually calls for significant planning and effort from the JV parties, who opt to work together for mutual advantage (often by sharing cost, resources and expertise). You will need to assess the full ramifications of ending or exiting the JV, including whether there are sound reasons to be prepared to see that investment lost if the JV is...

Purpose of checklist This checklist aims to set out the types of considerations that must be kept in view-and for which client instructions will be required-when preparing a joint venture agreement (JVA) and articles of association for a corporate real estate transaction. For further key points to address when drafting a JVA, see Checklists: Corporate joint venture preliminary issues-checklist and Joint venture shareholders’ agreement-checklist. See also Practice Note: Property Joint Ventures-general issues for a summary of the commercial matters the joint venture parties will need to weigh when establishing a property joint venture (JV). Corporate real estate JVs typically involve collaboration between parties able to source real estate (with one party possibly owning, and contributing to the joint venture company (JVC), the property to be developed), provide substantial capital to the JVC, supply or arrange debt funding (to finance the development) and offer the expertise to develop and/or manage the property. The JVA will document the parties’ agreement on their respective rights in relation to issues such as management...

Purpose of Checklist The aim of this Checklist is to set out the types of factors that should be kept in view, and about which direction will be required, when preparing a joint venture agreement (sometimes referred to as a shareholders’ agreement) together with the articles of association for a joint venture company (JVC). It serves purely as guidance and does not claim to be comprehensive. This Checklist has been produced with English law requirements in mind and, while related issues will arise for an international joint venture agreement, one must acknowledge the limits of this Checklist where a foreign joint venture (JV) vehicle is used. For a Checklist covering the initial matters to be considered, and on which instructions should be obtained, when contemplating entry into a JV structure with a JV vehicle that is a private company limited by shares, see Checklist: Corporate joint venture preliminary issues—checklist. See also Precedents: Joint venture shareholders’ agreement—deadlock (50:50) and Joint venture shareholders’ agreement—majority/minority for Precedent joint venture agreements, and Precedents:...

Prepared with Anthony Shatz of Fladgate LLP, this flowchart outlines the steps to be taken and the key matters to consider for a transfer of shares in a joint venture company (JVC), where a right of first refusal (ROFR), together with drag along and tag along provisions, appear in the articles of association/shareholders’ agreement...

A deadlock arises when parties to an agreement face an irreconcilable dispute and cannot reach consensus. The expression is commonly associated with corporate joint ventures (JVs), especially 50:50 JVs where neither side holds a controlling interest and, as a result, unanimous consent is required for all decisions. Deadlock may equally occur in non-50:50 JVs, for example where specific matters demand unanimity or where more than two JV participants vote and no majority is achieved. Certain conflicts can trigger a deadlock that prevents the joint venture company (JVC) from operating effectively. It is sensible to address at the outset how a deadlock might be settled. Consequently, joint venture agreements (JVAs) usually include deadlock resolution mechanisms (often in stepped stages) that must be followed to resolve the impasse. Defining deadlock procedures within the JVA will save time and expense if a deadlock emerges and will help the parties to maintain the JV's continuity. On occasion, the very circumstances that produce a deadlock can also prompt the aggrieved party to seek relief under...

Funding options When establishing a joint venture (JV), the parties must decide how it will be financed, both at the outset and throughout the life of the arrangement. Although this note focuses on the key funding issues typically arising in corporate JVs, the overarching principles are relevant to all JV structures. The selection of finance methods may turn on: the parties’ commercial aims the comparative resources available to each party whether the parties intend and are able to finance the JV themselves or if external finance will be required, and tax considerations A joint venture company (JVC) is usually financed, initially and on an ongoing basis, by a combination of the following methods: The joint venture agreement (JVA) should specify how the JV’s initial and future funding needs will be met...

Board composition In 50:50 joint ventures, the joint venture agreement (JVA) commonly grants each party the right to nominate the same number of directors to the board of the joint venture company (JVC). The parties may alternatively rotate the appointment of the chair for a defined term (eg an annual rotation), and the chair will ordinarily have no casting vote. As a result, control of the JVC’s board is shared, and neither side can unilaterally set the joint venture’s course. That shared control can, however, produce deadlock if the parties cannot reach consensus. For guidance on deadlock scenarios and potential solutions, see Practice Notes: Deadlock in corporate joint ventures and Deadlock—fundamentals. Where a joint venture involves a minority shareholder (ie a shareholder, or several shareholders, each holding under 50 per cent of the JVC’s issued share capital) alongside a majority shareholder, the majority will generally be entitled to appoint more directors to the JVC’s board than the minority and/or to appoint a chair. In such a structure, both parties...

Joint venture between [ insert name of first shareholder ] ([ A ]) and [ insert name of second shareholder ] ([ B ]) [ Agreed form ] [ list OR List ] of [ completion ] documents Definitions: JVC – [ [ insert name ] [ Limited OR PLC ] OR the joint venture company to be formed with [ A ] and [ B ] as shareholders ] (the Joint Venture Company) AS – [ insert name ] [ LLP OR Solicitors ] ([ A ]’s Solicitors) BS – [ insert name ] [ LLP OR Solicitors ] ([ B ]’s Solicitors) [ insert other persons (i.e. financial advisers, accountants, parties and subsidiaries) and documents involved ] No. Document Responsibility Status/ comments Preliminary documents Confidentiality agreement [ insert details ] [ insert details ] Exclusivity agreement [ (NB provisions could be contained in Heads of Terms) ] [ insert details ] [...

COMPANY NUMBER: [ insert company number ] [ Insert company name ] limited Minutes of a meeting of the board of directors (the Meeting) for [ insert full name of company ] Limited (the Company) Venue: [ insert place of meeting ] Date: [ insert day, month and year of meeting ] at [ insert time of meeting ] [ am OR pm ] Present: [ Insert names of the director(s) present in person ] [ Insert names of any directors attending by telephone, as permitted by the Company’s articles of association ] (by telephone) [ Insert names of any directors attending by other means permitted by the Company’s articles of association ] (by [ insert other means ]) In attendance: [ Insert name of any attendee who does not count towards the quorum for the Meeting (eg the company secretary, any legal advisers) ] Apologies: [ Insert...

COMPANY NUMBER: [ insert company number ] [ Insert company name ] limited Minutes of a board of directors’ meeting (the Meeting) for [ insert full name of company ] Limited (the Company) Convened at [ insert place of meeting ] On [ insert day, month and year of meeting ] at [ insert time of meeting ] [ am OR pm ] Present: [ Insert names of the director(s) physically present ] [ [ Insert names of any directors present by telephone as allowed by the Company’s articles of association ] (by telephone) ] [ [ Insert names of any directors present by other means allowed by the Company’s articles of association ] (by [ insert other means ]) ] In attendance: [ [ Insert name of anyone in attendance who does not count towards the quorum for the Meeting (eg the company secretary, any legal advisers) ] ] Apologies:...