1. Joint‐Ventures
Cooperation: Equity Joint‐Ventures (Business combination agreements)
 Business unit in the form of a company
 Rights under law of obligation  Partners transfer powers and rights
 Partners keep their full autonomy in business decisions  Profit‐ and loss particication
 Contractual claims  Deemed to be long‐lasting
 Short term/project related (eg consortium); possibly strategic (eg
licence agreement)
Contractual issues (examples) Contractual issues (aspects)
 Project related cooperation  Choice of legal form (generally: GmbH or GmbH & Co. KG)
Definition of partners` contributions To be determined under tax considerations
Project management GmbH: „2‐tier“ structure with shareholders´ agreement and company´s articles
Definition of milestones GmbH & Co. KG: if indicated in the form of a “unitarian KG”
 Contracts on research and developement (r&d)  Participation ratio and influence
Subsidies law to be taken into consideration In 50:50 constellation danger of deadlock
Regulation of property and exploitation rights ‐> procedure for resolving deadlock required
Cost bearing rules In majority vs. minority
 Distribution agreements/licence agreements ‐> clear definition of minority rights
Choice of distribution channel determines the intensity of the  Finance
contractual commitment Calls for additional contributions in case of deviation of business plan?
Dependent on this further legal issues to be regulated (eg. in Definition of maximum investment
Franchise or Licence Agreement: IP rights)  Termination clause/change of shareholders
Restrictions on transferability, rights of first refusual, etc.
Conprehensive assesement of the value of the shares
Option model vs. shoot out
 Members of management, advisory board
 Protection of know‐how
Restraints under competition legislation Restraints under competition legislation
 If appreciable restraint of competition: Cartel Prohibition  If certain turnover thresholds are met: fusion control
 Legal consequences: Voidness of contract! Competitors’ Claims! Procedure of notification and permission with cartel authority
Administrative fines! Prohibition to execute and implement agreement prior to administrative decision
 Under certain conditions: exemption of SME‐cartels, etc..
This survey is intended to provide a brief overview on Joint‐Ventures available under German law. It is not designed to serve as a basis of business decisions. No responbility is taken for the correctness of this
information Status: 12/2011
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