![]() ![]() Potential for double taxation – tax will be applied at the JV company level and possibly again on the JV parties directly when they take profits out of the JV company or realise their investment in it. ![]() Realising an interest by way of a sale of shares will not disrupt the legal ownership of the underlying business.Permits employee share incentive schemes.Tailored share rights can reflect the size, contributions and motivations of the JV parties.Comprehensive legislative framework supports the contractual arrangements between the JV parties.Liability is limited to the amount each party contributes by way of share capital.Can own its own assets, sue and be sued and enter into contracts in its own right.Familiar, universally recognised structure with a clear corporate identity and established corporate governance regime.Below we look at the most commonly used structures, their key features and the advantages and disadvantages associated with each. There is no distinct legal form for a joint venture in the UK, allowing each joint venture relationship to take the form which is best suited to its own circumstances and specific purpose. The potential benefits may be easy for those involved to see but will be difficult to achieve without a clear-cut strategy, mutually understood objectives, thorough documentation and plenty of commitment from all involved. It may wish to share the costs and risks associated with developing new markets or technologies. It may be looking to tap into a partner’s greater or more specialised expertise or resources – financial, technical, marketing or employee-related. It may wish to expand, develop new products or markets or grow returns from existing ones. There are many reasons why a business may seek a joint venture partner. Joint ventures cover a wide range of collaborative business arrangements which involve differing degrees of integration and which may be for a fixed or indefinite duration. A joint venture is a commercial arrangement between two or more participants who agree to co-operate to achieve a particular objective. ![]()
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