Joint Ventures

Joint ventures enable parties to form strategic alliances for one, or any number of projects, of a large or small scale. Projects might range from property acquisition and development, to exploitation of expertise and knowledge, or the co-operation of parties in a particular area of business. BTO can advise you on the best structure to suit the project and draft the necessary documentation to support  the venture.

Checklist of Commercial Points

• What are the primary commercial objectives of the venture?
• What assets will each party be contributing to the joint venture (JV)?
• Cash and resource commitments to be made by each party. How will the JV be financed?
• Tax issues: regarding location, establishment of JV, ongoing operations, repatriation of profits.
• Responsibilities: What will be the key responsibilities of each party? What services, facilities, personnel or products is each party to supply.
• Profits/Income: How will any income or profit (loss) be shared?
• Costs: How will the costs be allocated and/or calls for finance be structured? How will budgets be adopted? Will a joint bank account be operated and who will be entitled to access and draw upon that account? What accounting systems will be put in place? Will there be a right to require an audit?
• Operational Management: How will day to day operations be managed? What rights of control or management participation will each party expect?
• Patents/Intellectual Property Rights: Will each party grant licences for existing IPR, including software copyright and trade marks? How will IPR developed during the JV be owned or dealt with? 
• Liability/indemnity: will each party be responsible for its own activities in the JV? Any potential liabilities to third parties? If so, will each party indemnify each other against any third party claims attributable to its activities (including product liability, IPR infringement or employee claims)? Will there be any joint activities for which liabilities should be shared – perhaps unless one party has been guilty of gross negligence or wilful default.
• Non Compete/Exclusivity: Are restrictions to be imposed on the ability of parties to engage in activities in competition with the JV?
• Term and Termination: Is there to be a specific term or milestone after which the JV may be terminated? Will the JV be for a fixed term with joint renewal if agreed thereafter? Consequences of termination: Should any specific arrangements be pre – agreed in the event of termination – distribution of assets, entitlement to IPR, restrictive covenants, non-compete?
• Disputes and governing law: How are disputes to be resolved? What should be the governing law?

Contact: Scott Wyper, Partner swy@bto.co.uk / Jeremy Glen, Partner jsg@bto.co.uk / Alastair Dunn, Partner akd@bto.co.uk / Emma Barclay, Partner eba@bto.co.uk / T. 0141 221 8012