Joint ventures fail less often on commercial logic than on governance. Aligning control, funding and exit expectations before incorporation prevents the disputes that dominate our litigation docket.
Choosing the Vehicle
Incorporated joint ventures offer limited liability and a clear ownership record; contractual joint ventures suit project-specific collaborations with defined lifespans.
Regulatory approvals, local content requirements and tax treatment should drive the choice rather than convenience.
Governance and Deadlock
Reserved matters, board composition and quorum rules determine who really controls the venture.
Every shareholders’ agreement needs a workable deadlock mechanism — escalation, buy-sell or expert determination.
Funding and Exit
Set out capital call obligations and the consequences of default clearly, including dilution formulas.
Pre-emption rights, tag-along and drag-along provisions protect both majority and minority interests at exit.
Key Takeaways
- Agree reserved matters before incorporation
- Document funding obligations and default consequences
- Build a deadlock and exit route into the agreement
