What is a joint venture?
A joint venture is a form of cooperation between enterprises that keep their independence. The joint venture is aimed at implementing a certain project or economic activity. The joint venture only pertains to the cooperation and does not entail a merger of the participating enterprises. The collaboration partners therefore keep their independence and also continue to conduct their own business operations, separate from the other partner.
Joint venture in the form of a Dutch BV, CV or VOF
A legally independent entity (the joint venture or JV) is established for the purpose of the cooperation. A joint venture may be given various forms of enterprise. The parties may decide to establish a limited partnership (Dutch CV) or a commercial partnership (Dutch VOF). Or a separate private limited company (Dutch BV) is established, in which the joint venture is incorporated.
Joint venture agreement
The partners are almost completely free to set up the joint venture as they see fit. They arrange the manner and scope of the cooperation and the relationships within the joint venture themselves. These relationships are often recorded in a specific joint venture agreement. This agreement contains inter alia provisions with regard to the financing, the distribution of the proceeds, the division of the tasks between the partners, the duration of the joint venture, and a dispute settlement procedure. In most cases, a joint venture has the structure of a BV; in that case, the joint venture agreement is in fact a shareholders’ agreement that provides for specific elements of cooperation.
Contractual freedom of the partners
There are no specific legal rules for joint ventures. In principle, the parties have considerable contractual freedom in setting up a joint venture. On the one hand this is a major advantage, as it gives the parties the opportunity to make only those agreements that they deem necessary within the framework of their targeted cooperation. On the other hand, however, this may result in the contract becoming a sizeable document in which everything is set out in detail.
Lawyer for setting up joint ventures
Another characteristic of a joint venture is that in principle it does not concern a long-term partnership. This entails a risk of conflicts. Except for the specific purpose of the joint venture, the partners are not (legally) bound to or liable in respect of each other. A situation may therefore arise in which the interest of one partner differs from the interest of the other partner. As shareholders and/or directors of the joint venture, the partners must give priority to the interest of the joint venture in their decision-making processes. In case of disputes, the Netherlands Enterprise Court at the Amsterdam Court of Appeal may offer a solution.