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Joint Ventures, Shareholder + Partnership Agreements

We're experts in preparing and reviewing joint ventures, shareholder and partnership agreements.

Joint ventures, shareholder and partnership agreements are important commercial documents that help reduce the likelihood of future disputes and provide the framework for resolving any issues that arise.

  • When would I use a joint venture agreement?

    The term ‘joint venture’ is used to describe a business relationship between two or more parties who seek mutual profit or benefit. The parties may wish to combine their resources, skills, networks or funds to achieve a goal that they could not achieve on their own.

    When two or more parties want to complete a project together (eg a residential development), they will usually enter into a joint venture agreement. Parties in a joint venture agreement do not necessarily form one legal entity, meaning they can cooperate without merging. This is one of the important benefits to a joint venture partnership agreement.

    However, joint venture agreements can be complex. A well-drawn agreement can save you from uncertainty and disputes down the track, so it is critical to engage an experienced lawyer who can prepare or review your document.

  • What do I need to consider?

    Joint venture agreements should be customised to your situation. Otherwise the agreement may be unenforceable.

    You must choose an agreement that suits your circumstances. The different kinds of joint ventures include:

    • Incorporated joint ventures - Here an independent company is established to carry out the parties’ activities. The company owns all the relevant assets and conducts its business via a board of directors. The parties take up shares in the company, which requires a shareholder agreement (discussed below).
    • Unincorporated joint ventures - No separate legal entity is formed. This will involve a contractual agreement that sets out the rights and liabilities of each party.
    • Unit trust joint ventures - A unit trust is established to combine some of the features of an incorporated joint venture with those of an unincorporated one. The amount of units in the trust can reflect the percentage of equity held by each party.
    • Partnership vs joint venture - In a partnership, two or more parties come together to conduct business on an ongoing basis. Partnerships are usually not created for a specific project, but have an intention to operate over a longer term.

    Your lawyer can help you review the alternatives and recommend your best option.

    It is important to understand that joint ventures always involve an element of risk: they require ongoing investment (financial or otherwise) and often cover long-term projects that are not immediately profitable. A joint venture agreement spreads risk/liabilities across all parties. The best way to minimise risk is to ensure that your agreement has been drafted or reviewed by an expert in this field.

  • What makes a good joint venture agreement?

    These agreements can be complex. One of the common problems we see is poorly drafted agreements that do not cover all the important aspects of a commercial relationship. If your agreement has not been drafted well, it may expose your funds down the track and/or give rise to disputes over terms that have not been included.

    Aspects to be covered include:

    • The purpose/objective of the joint venture
    • Each party’s participation, role and contribution
    • Each party’s responsibilities or duties
    • Tax and financial management
    • Dispute resolution processes
    • Termination
  • When would I need a shareholder agreement?

    Shareholder agreements set out the operation and procedures of a company, as well as each party’s rights and responsibilities. The more parties there are to an agreement, the higher the risk of dispute. This is why these agreements are crucial: they clarify expectations and ensure that your company can operate as smoothly and efficiently as possible.

  • What do I need to consider?

    A good shareholder agreement will be customised to each situation. Without a properly drafted agreement, you may find yourself in hot water down the track.

    The terms that might be included will depend on the nature of the business, the number of shareholders, and the risks, concerns or agreements that the parties wish to address.

    Generally, you will need to consider:

    • Decision-making and management - Who is responsible for managing the company? How are directors appointed or removed? When will meetings be held and how will they be conducted? What powers do the shareholders have?
    • Buy-sell provisions - Who can buy or sell shares and when? Under what circumstances? How are shares valued
    • Contributions: Who is contributing what capital to the company? What powers and privileges will the parties have, based on their contributions?
    • Dispute resolution - What will the procedure be for addressing and resolving disputes? What will happen in the event of deadlock?
    • Exit strategy - What happens in the event of a buy-out, sale of business and listing?
    • Unexpected exit - What happens if a shareholder dies or becomes totally and permanently disabled for work?
    • Dividends and financing - How and when will shareholders be paid dividends?
    • Transfer of shares - How and when can shares be transferred?

    A good agreement will cover these (and other) aspects and will be tailored to your situation. It is therefore crucial to engage an experienced lawyer who understands how these arrangements work in practice.

Why choose Slater and Gordon?

We have prepared and reviewed any number of shareholder and joint venture agreements, and are experienced in this field – allowing us to consider all the issues involved and tailor an agreement that best reflects your situation.

We always aim to draft an agreement that minimises risk and protects the commercial, financial and legal interests of all parties.

By choosing us, we prmoise to:

  • Ensure a well-drafted and planned agreement that covers issues relevant to your situation
  • Minimise risk and stress
  • Handle disputes and breaches if and when they arise
  • Ensure you understand your rights and responsibilities under any agreement
  • Guide you through the process and keep you informed of your options at every step

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If you have a question, want some more information or would just like to speak to someone, make an enquiry now and we’ll be in touch with you very soon.

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