A Joint Venture Is An Agreement Between Two Or More Companies To Share A Business Project
Often, both parties invest funds in what will become their third joint venture and contribute to the resulting profits or losses, says Innova Counsel. The joint enterprise contract with the AJE statutes are the two most fundamental legal documents of the project. The articles reflect many provisions of the Joint Enterprise Treaty. In the event of a conflict, priority is given to the JV document. These documents are prepared at the same time as the feasibility report. There are also ancillary documents (called offsets in the United States) on the know-how and supply agreements for brands and equipment. The ideal partner in a joint venture is one with the resources, skills and assets that complement yours. The joint venture must work contractually, but there should also be a good adjustment between the cultures of the two organizations. Chinese joint ventures are a mechanism for forced transfer of technology. In many cases, technology transfer through China`s Foreign Direct Investment (D) regime, which covers important economic sectors for foreign companies, is indeed necessary. To access these sectors, China requires foreign companies to create joint ventures with non-linked Chinese companies. The reasons for the creation of a joint venture are expansion, including activity, development of new products or relocation to new markets, especially abroad. Some of the topics of a shareholder pact are: Your company can have strong growth potential and you can have innovative ideas and products.
However, a joint venture could give you: a joint venture can use the combined resources of both companies to achieve the company`s objective. One company could have a well-established manufacturing process, while the other company has superior distribution channels. If you choose to create a joint venture, you should set the terms in a written agreement. This will help to avoid any misunderstandings as soon as the joint venture is operational. There are several advantages to being in a joint venture. With regard to resource sharing, companies can: the total amount of the investor`s assets in the year prior to the demand for activity in China should not be less than US$400 million in the territory of China. The paid-up capital must exceed $10 million. In addition, more than three project proposals for investment projects envisaged by the investor must have been approved. Shares of foreign investors subscribed and held by foreign investment companies (ICFI) are expected to be 25%. The investment company can be incorporated as an EJV. Again, no matter what type of joint venture you create, you should develop a joint venture agreement that contains all the details on how it is managed. You can start with a joint venture agreement model, as shown above, to create your own contract for your specific agreement.
However, depending on the company you work with and the risks associated with the joint venture, you can also choose to consult a business lawyer for help. If the joint venture results in the creation of a new entity, it can be structured as a company, limited liability company or company. For example, if the joint venture is a company and the two founding companies want the same control, they would generally structure the joint venture so that each founding company has an equal number of shares in the company as well as equal management responsibility and representation on the board of directors. Investment companies are companies incorporated in China exclusively by foreign companies or in conjunction with Chinese partners who make direct investments.