Corporate | Energy & Infrastructure | Private Equity
This website will offer limited functionality in this browser. We only support the recent versions of major browsers like Chrome, Firefox, Safari, and Edge.
When approaching a joint venture (JV) you need to consider which legal structure will best fit your requirements. Below we have outlined the three most commonly used legal structures in England and Wales, highlighting defining features and comparing the key advantages and disadvantages of each.
A JVC is a separate legal entity formed by the joint venture parties (JVPs) to deliver the JV. The defining features are:
An LLP is a hybrid form of separate legal entity aimed at combining the operational flexibilities of a partnership with limited liability for JVPs. The defining features are:
A UA is created by contract. The JVPs retain their separate legal status with their inter-relationship being regulated solely by the contract. The defining features are:
|Time||Can be incorporated in a matter of days.||Can be time consuming - dependent on preparation and negotiation of partnership agreement.||Can be time consuming - dependent on preparation and negotiation of JV agreements for each project.|
|Tax||JVC will be liable for corporation tax on any profits it makes.||LLP is transparent for tax purposes. Each JVP pays tax on profits from the LLP in line with its existing tax status.||UA is transparent for tax purposes. Each JVP pays tax on profits from the project in line with existing tax status.|
|Contracts||Separate legal entity. Can contract in its own name.||Separate legal entity. Can contract in its own name.||Not a separate legal entity. Cannot contract in its own name. Contracts will have to be entered into by JVPs on a project-by-project basis.|
|Ring fencing risk and protection risk||Liability of JVP limited to amount they have contributed to the capital of the JVC.||Liability of JVP limited to the extent of their contribution to the LLP.||If partnership, each JVP incurs joint and several liability for all the debts and obligations of the project.|
|Publicity||Annual accounts and auditors report to be filed with Companies House. Articles of association filed at Companies House.||Annual accounts and auditors report to be filed with Companies House. LLP agreement is confidential.||All arrangements are confidential.|
It is great to have a variety of options when setting up your JV but you need to make sure you proceed with the best fit for your business opportunity. Each have their advantages and disadvantages so consider these in line with your needs to come out on top.
If you have any questions or would like support with your approach to joint venutures, please get in touch.