…to propose to another company.
Why not use one of those five gold rings this Christmas to initiate a marriage between your company and another?
This kind of agreement is more commonly known as a joint venture, which is a commercial arrangement between two or more economically independent organisations.
Those involved will need to address a number of issues at the outset, including how the joint venture will be structured, whether it will operate as a separate legal entity and the tax implications for members, as well as the operation itself.
In terms of structure, you need to decide if you wish to establish a separate corporate vehicle for the joint venture. This is often the most appropriate medium through which to conduct business, as the new company can purchase assets and contract in its own right.
The main documents required in the setup process include a Joint Venture Agreement or Shareholders Agreement and Articles of Association. Between them, this paperwork should cover a number of constitutional aspects governing the new business and its daily operations, such as:
- The scope and purpose of the joint venture
- How it is to be managed
- The division of power between parties and the extent they influence management of the joint venture
- Capitalisation and financing of the company, including the respective contributions of all parties
- The terms by which any member of the venture can transfer its shares to a third party
- How to deal with disputes and deadlock
- The circumstances in which the joint venture will cease, including the mechanics and implications of termination
You will also need to consider EU and UK competition law, intellectual property, employment matters, pensions, share schemes and listing laws.
Setting up a joint venture can be a complex and detailed process, best dealt with by expert solicitors. To find out more, contact corporate specialist, Rob Moore, on (0114) 218 4000 or follow us on Twitter, @tayloremmet.