Hamilton Pratt

Joint Ventures and Partnerships

Joint Ventures

You may prefer to establish business in the UK through a joint venture.  Joint ventures have no legal status of their own.  English law permits businesses to co-operate through a company or partnership structure (including limited partnership or limited liability partnership) as well as by purely contractual arrangements.  Your choice of vehicle or structure will be influenced by both commercial and tax issues.  However the majority of joint venture arrangements in the UK are through private limited companies, which are the most common type of business organisation in the UK.  Accordingly most of the provisions of the preceding four pages dealing with setting up a subsidiary will apply to joint ventures.

It is also possible to establish a joint venture company which is a public limited company (plc), an EEIG (European Economic Interest Grouping) or an unlimited company.  Public companies are subject to a stricter corporate governance regime but in return are allowed to offer their shares (or debt securities) to the public.  EEIGs involve little formality but are restricted to members based in Europe.

Key issues which you must address when structuring joint ventures are taxation and accounting issues, initial and future funding, management structure (both at shareholder level and at operational level), resolving deadlock in a 50:50 joint venture (or protecting any minority shareholders' interests where one party has legal or economic control), termination and share transfer provisions.  These issues must be dealt with early on in negotiations.

Partnerships

The expression 'partnership' is often used loosely to describe a co-operative arrangement between two or more companies. Nonetheless, English law recognises three types of partnership – general, limited and limited liability.  The legal and tax status of each is different.  In practice very few non-UK franchisors are involved in partnership arrangements within the United Kingdom.