Joint Venture
Introduction
A joint venture (JV) is a business agreement in which parties agree to develop, for a finite time, a new entity and new assets by contributing equity. They exercise control over the enterprise and consequently share revenues, expenses and assets. It is important to note that this "new entity" is a commercial collaboration, or two or more entities, and the new entity is responsible for following all government regulations, just like the individual companies that make up the JV.
Most JVs in the US Government industry are established for the purpose of securing and performing a particular contract or series of contracts.
Legal Entity
When forming a JV, it is important to indentify the form of the JV, and the legal consequences and liabilities associated with the legal form of the JV. The new JV will have responsibility for tax, regulatory, labor and benefits (including DOL regulation), Intellectual Property (IP), and exit strategies (dissolution of assets and equity). Labor and Benefits may or not be of a concern, because some JVs are non-populated enties. There are several types of that it can take. They are:
- Jointly owned Corporation (C Corp)
- Partnership (General or Limited)
- Limited Liability Corporation (LLC)
- Contractual only (non-equity)
As noted above, some entities are non-populated entites, so in addition to entity type, one must understand the structure and requirements of populated vs non-populated entites.
A Sample JV Agreement
The following link provides a sample JV agreement. Joint Venture Agreement Template