Joint Venture Agreement

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What is a Joint Venture Agreement?

A joint venture (JV) agreement is entered into by a group of persons or companies to do business together or to collaborate on a particular project without losing their individual legal identities. Such an agreement is legally binding and clearly lays down the areas of cooperation and divergence, and makes provisions for profit-sharing and operations. Usually, before entering into such a formal agreement, the parties sign a Memorandum of Understanding (MoU).


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Allow companies to enter related businesses or new geographic markets or gain new technological knowledge


Allow access to greater resources, including specialised staff and technology.


Provide companies with the opportunity to gain new capacity and expertise.


Both parties share the risks and costs.

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A ‘Joint Venture’ is a structure where two or more businesses create a separate Joint Venture business to pursue a common goal. But any kind of collaboration with another company could be described as a Joint Venture.

A joint venture can be a) A separate Joint Venture company where each party has a shareholding and can appoint directors to carry out a specific project such as development of a new product. b) Contractual arrangements such as entering into a distribution agreement. c) Forming a partnership. d) Merging two businesses.

Joint ventures are usually formed through the legal procedures of creating a memorandum of understanding, a joint venture agreement, any ancillary agreements, and obtaining regulatory approval.

The people contributing their assets to the Joint Venture will be the parties to the Joint Venture Agreement.

It outline the project or object of the joint venture, the contributions and obligations of each member, the duration of the joint venture, the management of the joint venture, and the distribution of any revenues or expenses of the joint venture.

Any asset can be put into a Joint Venture e.g. employees, intellectual property, offices, customers and suppliers and their related contracts.

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