A Joint Venture is a legal arrangement between two business entities or organisations which allows to cooperate, sharing the costs and profits of operations. We have a document to regulate a single venture. The type of venture is of no importance – it could be a property deal, a diving expedition or any short term business. There is particular emphasis on the exit strategy and on protection of a minority who wants compliance with the terms.
About this Document
This shareholders agreement is suitable for any type of trade or business. Any shareholder or prospective shareholder may propose a shareholders’ agreement and offer one of these template legal documents as a draft.
Shareholders’ agreements are about setting the ground rules for the relationship between shareholders. Mostly that means protecting the interests of one or more shareholders against the others. Yes, the directors operate a company and make the decisions. But the directors operate only in accordance with the instructions of the shareholders to whom they are accountable. Furthermore, to the extent that shareholders are also directors, they are bound to the terms of an agreement they have signed as a shareholder.
This shareholders agreement is suitable for a situation where two or more shareholders are forming a new company to work together on a project which may be of any length, but is intended to have an end date. This may be a project to develop a property, engage in property dealing, set up a website for sale, or buy a company specifically to sell off its assets. The shareholders may or may not be directors. Their contributions by way of loans may be different. One or more may work part time or not at all. One may be a “hands off” lender.
You should be aware there are alternative ways of providing the business structure for joint venture operations:
• Where two partners are involved in a major project, it may be more appropriate to form a new company and operate under a joint venture agreement.
• A limited liability partnership may be more suitable in certain circumstances.
• A limited partnership, rare though it is, is a simple structure which may reduce risk.
It includes provision for valuation of the shares of a departing shareholder by reference to a valuation based on your instructions to an accountant. The valuation depends on the parameters used, so your instructions are critical. We have provided a comprehensive version which you can edit according to the deal you wish to strike with a selling shareholder.