Presented by Evans[088805], Naftali[089179] And Ronnie[088254]

DEFINITION  The cooperation of two or more individuals or businesses in which each agrees to share profit, loss and control in a specific enterprise  joint venture (JV) is a business agreement in which parties agrees to develop, for a finite time, a new entity and new assets by contributing equity.assetsequity  A Joint Venture is commonly defined as collaboration between two or more persons/ companies; through an agreement in any form; to pool their capital and resources together; to jointly manage their business; for a specific or defined purpose; and to share costs and profits  In a Joint venture two or more companies combine forces to work on a project and once the project is done the joint venture is dissolved.

IMPORTANT CONSIDERATIONS IN A JOINT VENTURE The following are the most fundamental items of consideration within a joint venture:  ownership  control  management responsibilities  risks  Profits/losses

An example of a joint venture in Kenya  Corporate News  Woolworths to own 51pc of joint venture with Deacons  A Woolworths store at Sarit Centre, Nairobi. The South African firm has formed a new venture with Deacons. Photo/FILE Nation Media Group  Deacons Kenya is set to take up a 49 per cent stake in the venture that formally ends the previous franchise arrangement where Woolworths only supplied Deacons with its brands.  Deacons will reserve the right to manage the venture despite its minority stake.

Advantages of joint ventures  Taxes Taxation is an advantage for partners of a joint venture and a partnership. A joint venture and a partnership are not required to file taxes as a business entity. Partners are allowed to pass their portion of company profits and losses directly to their personal income tax return. This means that partners pay taxes on company profits according to their personal income tax rate. Also, business losses reported on a partner’s tax return can be used to offset income gained from other sources. Considerations  One of the biggest benefits in a partnership and a joint venture is the ability to collaborate with other partners when making business decisions. Partners can share the work load so that the burden does not fall on one person. Also, partners can share the financial responsibility of capitalizing the business. Partnerships and joint ventures can adopt whatever management structure owners deem suitable because partnerships are not regulated in the same fashion as corporations.

Advantages of joint ventures.

Disadvantages of joint ventures Conflicts and Disputes  The potential for conflicts and disputes is one of the biggest disadvantages present in a partnership and a joint venture. Partners may disagree on how to manage the company’s business affairs. There may be disagreements regarding the direction or future of the business, as well as disputes regarding how to capitalize the business. A written partnership agreement may help eliminate partner disputes, but a conflict can arise at any time when more than one person has an ownership interest in a business. Operating without a written partnership agreement leaves the door open for a multitude of conflicts to arise between partners Liability  Partners in a partnership and joint venture have unlimited liability for company debts and obligations. The partnership is not a separate legal entity from the partners of the business. This means a business creditor may pursue a partner’s home, automobile, bank account and other personal assets if the company’s assets do not cover the obligation. Likewise, a partner’s personal creditor may pursue business assets as compensations for a partner’s personal debts. Also, partners are liable for the negligent acts of the other partners.

 It takes time and effort to build the right relationship and partnering with another business can be challenging. Problems are likely to arise if:  The objectives of the venture are not 100 per cent clear and communicated to everyone involved.  There is an imbalance in levels of expertise, investment or assets brought into the venture by the different partners.  Different cultures and management styles result in poor integration and co-operation.  The partners don't provide enough leadership and support in the early stages.  Success in a joint venture depends on thorough research and analysis of the objectives.

 The parties involved.  The objectives of the joint venture.  Financial contributions you will each make whether you will transfer any assets or employees to the joint venture.  Intellectual property developed by the participants in the joint venture.  Day to day management of finances, responsibilities and processes to be followed.  Dispute resolution, how any disagreements between the parties will be resolved  How if necessary the joint venture can be terminated.  The use of confidentiality or non-disclosure agreements is also recommended to protect the parties when disclosing sensitive commercial secrets or confidential information. A written Joint Venture Agreement should cover: