Management of the corporate joint venture and minority shareholder issues
Management of the corporate joint venture and minority shareholder issues

The following Corporate guidance note provides comprehensive and up to date legal information covering:

  • Management of the corporate joint venture and minority shareholder issues
  • Board composition
  • Shareholder control of joint venture management
  • Statutory protections for minority shareholders
  • Directors' duties
  • Unfair prejudice
  • Winding up on just and equitable grounds
  • Rights dependent on percentage shareholding
  • Contractual protection for minority shareholders
  • Contractual protections for majority shareholders

Board composition

In 50:50 joint ventures, the joint venture agreement (JVA) will usually provide for the parties to have the right to appoint an equal number of directors to the board of the joint venture company (JVC). The parties may also take turns to appoint the chair of the board for a specified period (eg annual rotation of appointment of the chair) and the chair will usually not have a casting vote. The parties will therefore have joint control of the board of the JVC and neither party will be able to dictate the joint venture's direction. However, such joint control may lead to deadlock between the parties if they cannot agree. For more information on deadlock situations and how to resolve them, see Practice Note: Deadlock in corporate joint ventures.

In joint ventures with a majority shareholder and a minority shareholder, the majority shareholder will usually be permitted to appoint more directors to the JVC's board than the minority shareholder and/or to appoint a chair. The majority shareholder will therefore have control of the JVC's board. The majority shareholder may also be given the right to appoint named board executives, eg the chief executive of the JVC. The majority shareholder will also be able to pass majority votes on shareholder resolutions.

It is however common for joint venture agreements to