CLOSE SEARCH
If you are considering a joint venture and reading this, you are likely at the stage of planning and evaluating the venture and considering how to structure it, allocate responsibilities, manage risk, and document the arrangement to support your commercial objectives while protecting your interests.
In terms of process, we find that preparing heads of terms or a memorandum of understanding, setting out the commercial principles crystallises the parties views and provides a framework for negotiating and drafting the full joint venture agreement. Decisions made at the planning stage shape the legal, tax, and operational outcomes, and influence the structure of the venture, the management of employees, and the treatment of intellectual property.
UK joint ventures are typically structured as either a contractual arrangement or a corporate vehicle (being either a limited company or a limited liability partnership). The choice between a contractual or corporate joint venture is influenced by factors such as the level of commercial and operational risk, the need for external financing, and the expected duration of the venture, with longer-term, higher-risk, or capital-intensive projects typically favouring a corporate structure. The 2 basic types are :-
Contractual joint venture - formed solely by agreement and where each party contributes agreed resources and retains responsibility for its own obligations. This model is flexible and quick to implement, suitable for short-term projects or collaborations where formal governance is not required. Its main limitation is that it does not create a separate legal entity or provide limited liability.
Corporate joint venture - involves incorporating a new limited company (“Newco”) or a limited liability partnership (“LLP”)jointly owned by the parties. The Newco or LLP operates independently, holds assets, and contracts in its own name. This structure provides limited liability, clear governance, and a framework familiar to external investors and lenders, making it well suited to ongoing or long-term ventures. The parties’ relationship is governed within a Newco by a shareholders’ agreement supported by the company’s articles of association or within an LLP by the LLP Agreement, which define ownership, management, decision-making, and funding arrangements.
We provide guidance on all aspects of joint ventures, from planning and structure to drafting and negotiating agreements. This includes:
Advising on appropriate structures (contractual vs corporate) and governance frameworks.
Drafting and reviewing joint venture and ancillary agreements.
Addressing intellectual property, employment, and regulatory considerations.
Supporting tax planning and efficient financial structuring.
A joint venture agreement (and the internal JV vehicle structure documents) establishes how the venture will operate and how risks, rewards, and responsibilities are shared. Key terms typically include:
Purpose and Scope – objectives, activities, geographic reach, and expected duration of the venture.
Capital Contributions – each party’s initial and ongoing contributions, including funding, assets, technology, or intellectual property, and processes for additional funding.
Ownership and Profit Sharing – equity, voting rights, profit distribution, dividend policy, and reinvestment.
Governance and Decision-Making – board composition, appointment rights, voting thresholds, quorum, and reserved matters requiring joint consent.
Funding and Finance – capitalisation, shareholder loans, external finance, and financial reporting requirements.
Intellectual Property – ownership and licensing of pre-existing and new IP, confidentiality, and post-termination use.
Confidentiality and Restrictive Covenants – obligations to protect information and prevent unfair competition, including non-compete and non-solicitation clauses.
Dispute Resolution – escalation procedures, typically negotiation, mediation, and arbitration or court proceedings.
Deadlock Resolution – mechanisms such as “buy-sell” or “Russian roulette” provisions.
Exit and Termination – pre-emption rights, tag-along and drag-along rights, transfer restrictions, and triggers such as breach, insolvency, or completion of the venture’s purpose.
Employee Matters – management of staff secondment or transfer and compliance with employment law, including TUPE where relevant.
Regulatory and Sector Considerations – obligations relevant to the venture’s industry, including licensing or approvals.
Governing Law and Jurisdiction – typically English law and disputes resolved in the English courts or London-based arbitration.
A Joint Venture will also typically require transaction related documents which may include some or all of a Confidentiality/Non-Disclosure Agreement (NDA), Memorandum of Understanding (MoU) or Letter of Intent (LoI), Heads of Terms, Exclusivity Agreement and/or Process Agrement.
A joint venture will almost always require additional agreements to operationalise the commercial arrangements:
Service Agreements – covering management, administrative, or technical support.
Supply or Distribution Agreements – governing the flow of goods or services between the venture and its parties.
Licence Agreements – for intellectual property, software, or brands.
Loan or Funding Agreements – shareholder or member loans or external financing.
Employment or Secondment Agreements – for transferring or placing personnel with the venture.
Asset transfer agreements
For specific advice on establishing or operating a joint venture, please contact our Commercial or Corporate team to arrange a consultation.
Get in touch
If you would like to speak with a member of the team you can contact us on:
