Joint Ventures Setting Up
Legal support in setting up joint ventures
Combining the capabilities, knowledge, experience, technologies, capacities of different entrepreneurs is increasingly becoming a hot topic for mutually beneficial cooperation. More and more entrepreneurs decide to join forces to develop or maintain a business. In this regard, businessmen decide to create a joint venture (hereinafter referred to as the “JV”), with the aim of interacting, expanding the business and extracting more profit.
A single definition of “Joint Venture” is not fixed by the legislator, at the same time, it can be characterized as a form of joint interaction of entrepreneurs to achieve joint goals.
In most cases, the creation of joint ventures is carried out in the interaction of Russian and foreign businesses, while the created legal entity is registered in Russia. However, this is not a rule; joint ventures can only be created by Russian companies. Regardless of the form of interaction, in the legal field, joint ventures are usually characterized by the presence of several features:
- joint investments, production and profit;
- shared responsibility and risk sharing;
- joint ownership of the means of production (mechanisms, premises, technologies, etc.).
Meanwhile, it should be noted that the entry of a foreign company to the Russian market is often associated with certain difficulties, for example, restrictions imposed by the state on foreign business. At the same time, such difficulties can be overcome, including through the creation of a joint venture.
In an unstable economic environment, entrepreneurs are increasingly uniting to conduct business together, and when creating a joint venture, participants in such a transaction receive the following benefits:
- expansion of the sales territory;
- by increasing capacity, the ability to outperform stronger competitors in the market;
- reducing individual risks by distributing them among JV participants, etc.
The success of a joint venture depends on the chosen development strategy, qualified formalization of relations between the participants of the joint venture, well-coordinated interaction between partners, etc. At the same time, before creating a joint venture, the participants need to clarify some issues:
- agree on the goals of establishing a joint venture, types of activities and development strategy;
- designate the governing bodies of the JV;
- determine the applied technologies and capacities of the JV;
- determine the investments of the parties (participation share of each partner);
- separate responsibilities between participants, etc.
To create a joint venture, entrepreneurs will need not only to clarify all of the above issues, but also to correctly formalize the emerging relationship in terms of law. After all, the further development of the joint venture may depend on the qualified execution of all necessary documents.
At the same time, one should not forget the possible difficulties that participants in a joint venture may face. Such difficulties include:
- development of a common strategy, including taxation, distribution of profits, interaction with partners;
- additional material costs of joint venture participants, etc.
To avoid possible difficulties, the parties to the joint venture need to carefully consider the structure of the joint venture and specifically determine what and in what format each party to the joint venture is responsible for, and at the same time take into account the format of separation of control.
The identified tasks and issues may cause some difficulties for the participants of the joint venture in organizing a joint venture, and therefore, in order to take into account all the interests of the parties, clearly articulate responsibility, prescribe a development and interaction strategy, as a rule, entrepreneurs decide on the need to involve a qualified lawyer.
Depending on the chosen form of interaction for organizing a joint venture, the participants will need to understand the current legislation, negotiate, formulate all the necessary conditions for the parties, delineate responsibility, document the organization of a joint venture. At the same time, entrepreneurs can create a joint venture, both independently and with the involvement of qualified lawyers. Qualified and experienced lawyers will help determine the scheme of interaction between the participants of the joint venture, depending on the purpose of its creation, determine the share of participation of each entrepreneur, delineate responsibility and draw up all the necessary documents for the functioning of the joint venture.
The participation of experienced lawyers in the creation of a joint venture will allow entrepreneurs to receive qualified legal assistance, minimize possible emerging risks, take into account the interests of the contracting parties to the maximum and reduce the time for creating a joint venture.
- Advising clients on the establishment of joint ventures
- Representation services in negotiating the establishment of JV
- Preparation of legal documents taking into account the interests of the parties to the JV
- Legal support of joint ventures
- Representing the interests of a JV in various organizations, institutions and authorities