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INTERNATIONAL LAW

INTERNATIONAL LAW. PARMA UNIVERSITY International Business and Development International Market and Organization Laws Prof. Gabriele Catalini. JOINT VENTURE.

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INTERNATIONAL LAW

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  1. INTERNATIONAL LAW PARMA UNIVERSITY International Business and Development International Market and Organization Laws Prof. Gabriele Catalini

  2. JOINT VENTURE

  3. A joint venture is a general partnership typically formed to undertake a particular business transaction or project and is intended to exist for a limited time period.

  4. Joint ventures typically exist for 5-7 years. • In a joint venture, two or more "parent" companies agree to share capital, technology, human resources, risks and rewards in a formation of a new entity under shared control. • A joint venture is created with a specific project in mind and generally dissolves once the project has been completed.

  5. Joint ventures may be formed for a vast variety of purposes. Joint ventures (in USA) are commonly used in real estate matters where two or more persons undertake to develop a specific piece of real property. • Joint ventures are also widely used by companies to gain entrance into foreign markets (mainly in EU).

  6. Foreign companies form joint ventures with domestic companies already present in markets the foreign companies would like to enter. • The foreign companies generally contribute new technologies and business practices to the joint venture, while the domestic companies contribute their relationships and requisite governmental documents within the country, along with their established involvement in the domestic industry.

  7. Benefit of a Joint Venture • 1) Providing companies with the opportunity to obtain new capacity and expertise. • 2) Allowing companies to enter into related businesses or new geographic markets or obtain new technological knowledge • 3) They do not represent a long-term commitment. • 4) Companies can gradually separate a business from the rest of the organization, and ultimately, sell it to the other parent company (appr. 80% of all joint ventures end in a sale by one partner to the other). • 5) Sharing of fianancial support and financial risks. • 6) New product development.

  8. Legal structure of Joint Venture • Joint ventures are governed entirely by the legal agreements that brought them into existence. • Joint venture companies can be very flexible entities in which partners each own shares and agree on how they will be managed.

  9. More common are joint venture agreements that do not include the formation of a new entity. • Instead, the venture is operated through the existing legal status of the venture partners, or co-venturers. • Since the joint venture is not a legal entity, it does not enter into contracts, hire employees, or have its own tax liabilities.

  10. These activities and obligations are handled through the co-venturers directly and are governed by contract law. • Corporate law, partnership law, and the law of sole proprietorship do not govern joint ventures. • Finally, since the venture ends at the conclusion of a specific project, there is no need to address issues of continuity of life and free transferability, unless a joint venture company has been created.

  11. ITC – Contractual JV Model Agreements 2004 http://www.jurisint.org/doc/orig/con/en/2004/2004jiconen2/2004jiconen2.pdf

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