Oftentimes, you may have a need to set up a 'joint venture' with a third party. These collaborative businesses can be extremely profitable for all parties involved, but you must ensure on
way in to such an agreement that you have done your due diligence, and that everyone understands exactly what terms and conditions of venture are.For this reason, we here at www.lawyersbench.com have put together a quick 15 point checklist that will help you determine that you have all bases covered. This is more important than you may think - after all, mid venture is NOT time to be arguing about basic terms and conditions!
1. Identity. Confirm in writing exactly who is involved in joint venture.
2. NDA. Do you need a Non Disclosure Agreement to be signed? (typically if one party has a great idea, and other will be involved with manufacture or promotion).
3. What are responsibilities of each party? List in writing what each of you will bring to 'party'.
4. Is enterprise global, or limited in geographical scope?
5. Are there any legal considerations related to setting up business (are licenses required from Government etc)
6. Structure of joint venture. Is it a partnership or a Company, or simply a JV contract between 2 parties? If it is a company, who sits on board and how are they appointed? What classes of shares are in circulation, and under what conditions? How are minority shareholders protected?
7. Financing. Who supplies capital for venture? Is it split in some way between Joint Venture parties or does it come from an outside source, such as a Bank or venture capital firm? Is investment in cash or goods or services?
8. If a Company structure is to be used, what exit provisions are needed? For example, if one side wanted to sell their shares, what conditions apply? Will other party have first refusal to buy? Can they also demand to be bought out at same time? How is a shareholding to be valued? Will new incoming shareholders have same rights and responsibilities as existing shareholders? Is there a right of veto?
