JV, Partnership or Shares?

[George Smiley]

There's an excellent International business opportunity from a colleague. She's been working on it for the last 2 years but now is stuck with finding financiers for the project.

She's set up a company in the targeted foreign country with her colleagues, and at the same time she's a ready set up a company here in the UK.

Coincidentally, me and a friend did set up a general trading & services company here in the UK and also in the same foreign country that the lady did.

We've had discussions on how best we can work together as I have financiers and who can easily fund the business and more importantly I have the clients who would give her lucrative & long term contract to supply the goods and they would have branding rights and others

The project could be structured as a PPP such as Barclays London Bicycles.

Since she's acknowledged my potential, I've told that me and my partner are willing to work with her under condition of having 49% shares of the business as suggestion which she's accepted.

But I wonder how we should structure this, should we:

a) Sign a JV agreement?
b) Sign a partnership agreement?
c) Acquire some shares in the trading company in the foreign country


I wish to point out that the foreign country was a former British Colony so they use common law and legal system so almost every business set up is similar to UK's

 

[moduslegal]

Hi George

I think I would be inclined to structure this as a UK JV company with the foreign company being a wholly-owned subsidiary of the UK JV company, subject to tax advice.

First, I think that, while the foreign company is a former British colony, there is no guarantee that its courts and legal system will be of the same standard as those in the UK, which could be important in the case of any disagreements.

Second, I think that a UK JV company would be a 'safer' place for your financiers to invest their money and a better regulated forum for managing the relationships between the joint venturers.

I don't like the idea of a partnership because of the unlimited liability and the potential problems with what is or what isn't 'partnership property' in the event of any problems in the relationship.

I'm not sure I like the idea of investing directly into a foreign company because of the potential problems in dealing with any court action over relationship breakdowns in that foreign country and problems with extracting any investment in that foreign country.

I hope that helps.

James