Joint Venture Agreement Malaysia Sample

A joint venture agreement is legally binding in most jurisdictions and can be used in court to claim damages if one of the parties fails to comply with the terms of the contract. In most cases, the profit-bearing agreement between the parties to a non-legally viable joint venture shall be structured on the basis of the contributions of their respective partners to the joint venture. Similarly, each partner is responsible for debt and liabilities on the basis of its share of contributions. A tempting advantage for an unregistered joint venture is that the unregistered joint venture may be a short-term agreement between the parties, unlike a registered joint venture, which is usually structured in the longer term between the parties to achieve the objectives of the registered joint venture. There are different types of joint venture agreements that you can conclude. They depend mainly on the objective of the Joint Undertaking and the objectives it is to achieve. The shareholders` agreement includes, among other things, shareholder participation, the composition of the SPV Board of Directors, the Management Committee, the transferability of shares, voting rights and the appointment of key personnel. If your agreement contains all this, it would most likely be effective. Now let`s move on to the planning phase of your joint venture. A joint venture itself is not a separate legal entity and is not recognised as such by the supervisory authorities. Joint ventures are carried out by private or legal persons. One of the most fundamental conditions of a joint venture agreement is the purpose and volume of the joint venture. The objective of a joint venture is to carry out a joint activity or project between the parties involved.

These common objectives should be defined in the Joint Undertaking Agreement in order to avoid disputes between the parties. If the objectives and scope of the Joint Undertaking cannot be agreed between the parties, it is very likely that the Joint Undertaking will not succeed. There is never a guarantee of commercial success and, in some cases, one or more parties in a joint venture may find that their business objectives and interests have changed from the original objectives and scope of the joint venture. The parties should consider including exit strategies in the Joint Undertaking Agreement. Exit strategy provisions generally assist parties to a joint venture to terminate the joint venture in a predictable and consensual manner. Common exit strategies include liquidation, the put and call option, as well as the right of pre-emption in the case of a registered joint venture. The inclusion of an exit strategy helps the parties not to be forced to remain in a trade impasse.

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