JOINT VENTURE

What is a joint venture

A joint venture (JV) is an engagement allowing multiple separate businesses or people to work together on a single project or a series of projects for an agreed-upon amount of time. Joint ventures are often established to pursue an objective that needs the combined resources, knowledge, and funds of the participating firms, such as the creation of a new product, entry into a new market, or pursuit of a business opportunity.
The following are important aspects of a joint venture:
Shared Ownership: each party in the joint venture owns a specific proportion of the company in question.
Shared Control: Joint venture partners frequently share authority to make decisions and venture-related obligations.
Shared Profits and Losses: The partners in the joint venture usually divide the profits and losses according to their ownership interests.
Limited Duration: Joint ventures tend to have an agreed-upon lifespan and are formed for a particular venture or purpose. While the parties work together on the project, they continue to exist as separate legal companies.
Risk-Sharing: In a joint venture, all parties share the risks and benefits of the enterprise. Spreading the risk among numerous organizations can be useful in this situation.

What Are The Elements Of A Joint Venture:

A joint venture (JV) normally consists of several crucial components that are necessary for both the creation and maintenance of the JV. A joint venture agreement, also known as a partnership agreement, which serves as the JV’s governing legal document, specifies these components. These are a joint venture’s main components:
Parties Involved: The joint venture’s parties or participating entities should be expressly identified in the agreement.
Objects and purpose: Specify the joint venture’s goals and purposes in detail. What the JV is supposed to accomplish should be described in this section.
Define the contributions that each party will make to the joint venture. This may involve monetary gifts, possessions, intangibles, technology, skills, or other resources. Contributions could take the form of money, property, etc.
Explain the ownership and equity structures that will be used for the joint venture. This covers the ownership stake each party will have as well as the allocation of gains and losses between the parties. Common ownership arrangements include proportional ownership based on contributions or equal ownership.
Managment and Decision-Making: Define the management and decision-making processes which will be used for the joint venture. This could include selecting a board of directors or managers, defining voting privileges, and laying out how important decisions will be made.
Capital and Financing: Describe the capital and financing plans for the joint venture. Listed in this are the initial capital contributions, the potential sources of additional money, and any borrowing or financing arrangements.
responsibilities and operations: Outline each party’s obligations and responsibilities in the joint venture’s daily operations. This covers duties related to management, recruiting, etc.
Confidentiality and non-compete: Confidentiality and non-compete clauses ought to be addressed in order to secure sensitive information and to stop partners from competing with one another during and after the joint venture.
Term and Termination: Specify the joint venture’s duration, as well as any arrangements for extending or ending it. Specify the conditions that would allow the joint venture to be dissolved as well as the procedures for doing so.
Dispute Resolution: Include means for settling disagreements between the parties, like arbitration or mediation, to prevent legal complications.
Exit Strategy: Outline the parties’ departure strategies, including how they can sell their ownership stakes or transfer their shares to another party. This could include buyout clauses or first-choice rights.
Intellectual Property: Talk about who owns and uses any intellectual property created or utilised during the joint venture.
Financial Reporting and Auditing: Outline the procedures that will be followed to retain, report, and audit financial records in order to uphold accountability and transparency.
Governing Law: Specify the legal system that will oversee the joint venture agreement and any potential legal problems.
Amendments: Describe the procedure for gaining all parties’ assent to any amendments or modifications to the agreement.
Regulatory Compliance: Ensure that all applicable laws, rules, and permissions are followed by the joint venture.
Insurance and Liability: In order to safeguard the parties concerned, discuss insurance coverage and liability agreements.



What Is The Legal Nature Of A Joint Venture:

In Turkey, joint ventures can take various legal forms, and the legal nature of a joint venture depends on how it is structured and established. The most common legal forms for joint ventures in Turkey include:
Joint Stock Company (A.Ş): A joint venture can be established as a joint stock company, a type of business entity in which ownership is indicated by shares. The Turkish Commercial Code governs joint stock enterprises in Turkey. In this configuration, the joint venture functions as an independent legal entity, and stockholders are only partially liable.
Limited Liability Company (Ltd. Şti.): A different choice is to set up the joint venture as a limited liability company (Ltd. ti.). The Turkish Commercial Code also applies to this kind of enterprise. The shareholders’ liability in a limited liability business is limited to their capital contributions. For more compact joint ventures, this structure is frequently used.
Partnership: Under Turkish law, a joint venture may also be organised as a partnership. General partnerships and limited partnerships are two different types of partnerships. In a limited partnership, certain partners have limited liability while others have unlimited liability, in contrast to a general partnership where all partners have unlimited liability. The Turkish Commercial Code and the Turkish Code of Obligations both are applied to partnerships.
Contractual Joint Venture: In some circumstances, a joint venture may be formed largely by a contractual agreement, without the need to establish a distinct legal company. In this case, the joint venture is merely a contractual agreement between the parties, not a separate legal body in and of itself.

Limiting Competition Through the Joint Venture Agreement

It’s possible that joint venture agreements may not always limit competition. However, a joint venture will be a competition-limiting agreement under Article 4 of the LPC if it is created with the intention of restricting competition between companies. According to Article 4; “Such concerted actions and associations of undertakings, which are intended to prevent, disrupt or restrict competition directly or indirectly in a particular market of goods or services, or which have or may have this effect, are unlawful and prohibited.” However, in the presence of the exemption conditions contained in Article 5, joint ventures that limit competition will be able to benefit from the exemption. An exemption will be raised in cases such as consumer benefit, competition not completely disappearing, and a state of necessity.
A joint venture may also have been created to create a dominant position in the market or to strengthen the current dominant position. Since the situation that will arise in this case will have the same consequences as mergers and acquisitions; It will be evaluated within the scope of Articles 7, 10 and 11 of LPC.

Accepting a Joint Venture as an Article 4 of the LPC-compliant Competition-Limiting Agreement

As a general rule, Article 4 of the LPC bans agreements that restrict competition. essentially, a joint venture needs to exist for an agreement to be deemed a competition-limiting arrangement. As a result, it must offer joint venture elements. These components are independence, economic purpose, and joint control power. A joint venture must also have a negative impact on competition because it impacts competition between partners or between other businesses operating in the market.
A joint venture will be recognized as a merger if a single party oversees it or if it has an autonomous organization.

CONCLUSION

Although the concept of a joint venture is not expressly covered by the Law on Protection of Competition, it might be viewed as a contract that restricts competition and is forbidden by Article 4. A joint venture is established for financial reasons, such as when multiple enterprises seek to broaden their market, compete successfully, make more money, or raise their income rapidly. The establishment of a joint venture can be done with or without the use of a separate legal organisation. The idea and aspects of a joint venture have been laid out in this article.