International Joint Ventures
What should I know before doing business
with a foreign partner?

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This presentation is similar to any other seminar designed to provide
general information on pertinent legal topics. The statements made
and any materials distributed as part of this presentation are
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advice nor do they necessarily reflect the views of Holland & Hart LLP
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What is a Joint Venture?

Where are you going and how will you get there?
Objectives of the Joint Venture

Transaction Cost Analysis
Expertise
Technology
Know-How of Separate Businesses
with Shared Costs and Risks
• Time and Expense of Creating the JV
• Conflicts of Management Style
• Cultural Differences

Compatibility
Alignment of Goals
Business Cultures
Financial Resources
Operational Savvy
Leadership Commitment
Business Plan
Reputation
Legal Compliance/Ongoing Disputes
Geographic Stability

Financing
Sweat Equity / Cash

Contribution of Assets

Cross-border / Local Law Issues

Competition

Alternative International Strategies
Outsourcing
Contracts
(ex: Exclusive Distributor
Agreement)
Strategic Alliances
Equity/Non-Equity
Traditional M&A
Control/Full Acquisition
Create a Wholly-Owned
Subsidiary
Less Commitment/Less
Control/Risk of Losing
Partner
Higher Commitment/More
Control/Less Risk of
Losing Relationship
Easy/Fast/Cheap
Complex/Longer to
Establish/More
Expensive

Share Capital
Share Capital
Contributions
Ongoing Financing Needs
Classes of
Shares/Interests

BoardofDirectors/Management/Shareholders
Appointment and Removal of Directors
Approval Requirements
Quorum and Notice Requirements
Director and Officer Liability
Shareholder Decision Making Authority

Profit Distribution
Party expectations – reinvest in
business or distribute cash?
Distributions out of capital or
profits
Special allocations

Transfers of Interests
Restrictions on transfer
What transfer restrictions are
enforceable?
Co-Sale, Drag-Along, Right of
First Refusal

Restrictive Covenants
Restrictions from competing with Joint Venture
Requirement to refer opportunities to Joint
Venture
Access to, or rights over, confidential information
belonging to Joint Venture

Records
Information on business of Joint Venture provided
to parties and how frequently
Rights of shareholders to inspect records

Intellectual Property
IP rights transferred or licensed and
on what terms
Who owns IP rights developed by
the Joint Venture
What happens to IP upon
dissolution

Employee Issues
How will employees be transferred to the Joint
Venture
Will Joint Venture have its own employees
Employee benefits

Ancillary Arrangements
Supply of goods
Transitional arrangements for sharing information technology
Technical assistance
Secondment of staff
Provision of facilities

Dispute Resolution and Deadlock
Referral to CEOs
Reference to an independent
director or third party
Arbitration

Termination
Fixed term or indefinite
Permitted termination
Any restrictions on parties after termination

Questions?