A joint venture is basically a partnership between two different parties. This may include two different companies either international or local. When setting up a joint venture it is important for the two parties to agree on how the venture will be operated. Before the venture in put into business, the role of each party should be clearly defined and its contribution to the process noted. International joint ventures have become relevant in the world today due to economic crisis all over the world today. During the discussions it is necessary to involve representatives from both sides. The paper with therefore analyze the process of setting out a joint venture and what is required during the process for it to be successful.
Before setting up a joint venture it is important to seek legal advice. This is important for the sake of avoiding any conflicts in future and also to lay the basis of the agreements. This is mainly because of the requirements for the establishment of a joint venture. Both parties should be involved throughout the process. It is important to have commercial managers from both sides together withy their lawyers during the negotiations. The Lawyers will mainly give legal advice and interpret legal clauses for the managers to fully understand the process. The parties should clear agree on the issues of shares in the venture if they are not to contribute equally. During the operations it is also important to discuss the issues of liabilities so as to determine the amount of capital the parties are to raise. The main aims of the joint venture should also be considered so as to it successful.
To bind the agreement, it is important to sign a memorandum of understanding between both parties. Several issues should be agreed upon as to how the venture will be operated. This also includes how the managers and directors will be appointed. All the restrictions should also be discussed in details. The performance of each party should also be considered in the agreement so as to determine the role to be played by each party. The lawyers should also play an important role while interpreting the article of association. This is to avoid the chances of conflicts within the venture. Restriction to both parties should also be established in order to clearly set out what each partner should o or not. Mechanisms to settle any dispute that may arise should be put in place. Incase the time for the venture expires and the goals have not been met then the lawyers will be useful in giving advise (Darrell, 2012).
This is despite the fact that disputes are not expected during the formation of the venture. The means of settling disputes should be reasonable enough to avoid the chances of court battles. An efficient mechanism within the venture should be established. Post establishment issues should also be discussed. This includes the disposal of shares once a party decides to transfer its shares. Incase of termination it should be discussed on how the process will be done. Incase of any changes to be done on the contract in future the modalities should also be put in place. However it is also necessary to include the lawyers through al the stages of negotiations. Incase the lawyers from both sides cannot agree on an issue, it important for the managers to settle issue during the negotiations. If the venture does not live up to its expectations then it will b e important to dissolve it. This will however be successful if the necessary clauses of dissolution are put in place (Darrell, 2012).
According to the paper, it is necessary to set out terms and conditions before entering g into a joint venture. The paper also insists that it is in god order to include legal experts during the process. The terms of agreement should be clearly spelt out for al the parties to be in consensus. The paper also emphasizes the need for establishing conditions after all the agreements have been agreed upon. This is mainly for the purpose of avoiding conflicts. It is also important to agree on what procedure to follow incase of transfer of share or termination of the venture. According to the paper, once an agreement is in place it will easy to operate the venture.