Checklist for establishing/ settling partnerships, joint ventures and shareholder agreements

Structure

  • What are the business and financial targets of the proposed partnership or joint venture
  • Is there a robust and researched business plan with projections
  • What will be the name of the partnership or joint venture business
  • What have the other proposed parties got that we need
  • Do we need to carry on business with the other parties or will contracts for particular assets or resources or some other strategic alliance suffice?Is a partnership, LLP or limited liability company the preferred joint venture vehicle
  • Is the joint venture for a particular project or period of time or will it run indefinitely?
  • What parallel or related commercial activities do the venture parties wish to start up or continue outside the joint venture for their own benefit; will these conflict with the joint venture business
  • Is ownership to be equal or in differing proportions
  • Will one or more parties have a majority vote in decision making or will there be equality
  • Is a party to have a casting vote in cases of equality of voting
  • If deadlock arises what will be the means of resolution
  • Is there to be protection for a party in the minority
  • What arrangements are to apply when a party wishes to exit
  • When might a party be required to exit (compulsory transfer of interest)
  • Are there any international dimensions, EU and non EU

Contributions – money and or other

  • What is each party contributing to the partnership or joint venture; what are the terms
  • How will the different contributions be valued and what proportions of ownership will they produce What consent might be required under the Companies Act or FSA listing rules for contributions made by a PLC
  • Will there be contracts of employment, lease, licensing and other resource provision between a partner or venture party and the partnership/ joint venture
  • Will the parties receive rent, royalties, salaries, consultancy fee, dividends or other payments from the partnership or joint venture

Other

  • What rights will a party’s shares carry to participate in board decision making
  • What formalities are required for governance meetings, such as frequency
  • Is there to be a quorum for meetings
  • Do we require different voting thresholds for different subject resolutions?
  • What financial systems must be put in place to monitor progress against budgets
  • What financial reporting is required
  • Will guarantees or security be required for funding the partnership or joint venture; if so who is to provide and on what terms
  • Is consortium relief required by corporate joint venture parties?
  • What is required to ring fence and protect the joint venture and its properties and opportunities, eg intellectual property and commercial secrets, from the partners and venture parties’ outside interests
  • Should the venture parties enter into restrictive covenants or have a memorandum of understanding in the complex area of parallel or related businesses
  • If a valuation of the joint venture and interests in it are ever required who or what sort of organisation should be used, on what bases should the valuation be made and who bears the costs

Please do get in touch to discuss your requirements.