Setting up a joint venture—choice of structure
Setting up a joint venture—choice of structure

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

  • Setting up a joint venture—choice of structure
  • Choosing the joint venture vehicle
  • Key features of a limited company
  • Statutory framework
  • Separate legal personality
  • Limited liability
  • Flexibility
  • Publicity
  • Key features of a partnership
  • Limited statutory framework
  • More...

Choosing the joint venture vehicle

A joint venture is not recognised under English law as a distinct legal concept. It is essentially a commercial arrangement between two or more parties who agree to pool their resources for the purpose of accomplishing an intended project (or other business activity). It describes many different types of situations that range from structural arrangements that create or change the economic control of a legal entity, such as joint venture companies or partnerships, to non-structural arrangements such as contractual joint projects and informal (undocumented) collaborations. A joint venture can be formed for one specific project, period or a continuing business relationship. 

Parties wishing to enter into a joint venture have a number of choices of structure available to them. The choice of structure depends on the circumstances of the parties.

The most common structures used are a:

  1. corporate joint venture—establishing a separate limited company of which each party is a shareholder

  2. joint venture partnership—establishing a new partnership, or

  3. contractual or commercial joint venture—setting out all the details of the joint venture relationship in a contract

Key features of a limited company

The key features of a limited company are:

  1. statutory framework

  2. separate legal personality

  3. limited liability

  4. flexibility, and

  5. publicity

Statutory framework

The Companies Act 2006 (CA 2006) contains a number of mandatory provisions which the parties will not be able to override in contractual documentation. In particular,

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