What is a Joint Venture?
A joint venture is a business partnership between two or more parties. The parties agree to share the profits and losses of the business venture.
What are the types of Joint Ventures?
There are two types of joint ventures:
- Equity joint ventures: In an equity joint venture, the parties contribute equity to the venture. The parties share the profits and losses in proportion to their equity ownership.
- Contractual joint ventures: In a contractual joint venture, the parties contribute assets or services to the venture. The parties agree to share the profits and losses of the venture in accordance with the terms of the contract.
What are the applicable laws?
The Companies Act 1965 is the main piece of legislation governing joint ventures in Malaysia.
What Does a Joint Venture Agreement Include?
A joint venture agreement should include provisions on the following topics:
- The business purpose of the joint venture
- The duties and responsibilities of each party
- The ownership and management structure of the joint venture
- The percentage of ownership interest of each party
- The duration of the joint venture
- The termination of the joint venture
What are the benefits of a Joint Venture?
There are several benefits of entering into a joint venture, including
- Access to new markets
- Sharing of risks and costs
- Access to new technology
- Increased capital
What are the drawbacks of a Joint Venture?
There are several drawbacks of entering into a joint venture, including
- Loss of control over the venture
- Difficulties in managing the venture
- Potential disagreements between the parties
It is important to seek legal advice when considering entering into a joint venture to make sure that it is the right decision for your company. OneCompany can help you draft a custom joint venture agreement that takes into account your company’s specific needs and requirements.