1. Farming Joint Ventures
Andrea V. Argue
February 13, 2018

2. Outline Distinguishing Joint Ventures
2. Use of Joint Ventures in the Farm Growth Phase and Farm Transition Phase
3. Setting up Joint Ventures from a Farm Management Perspective

3. Distinguishing Joint Ventures

4. Sole Proprietorships
“Owned and run by a single equity investor who manages the company and is entitled to the residual of the business”
No distinction between the owner and the business entity
All profits go to the business owner
Business owner also has unlimited responsibility for debts, loans, losses, etc.
May or may not use a business name

5. Partnerships
“A business relationship where two or more persons carry on a business with a view to making a profit”
Has the following characteristics:
Partners share the profits and losses of the business equally in proportion to their partnership interests
Property may be jointly owned
Each partner has the ability to contractually bind and act as agent for the other partner(s)
Formal registration as a partnership
See The Partnership Act

6. Corporations
“A company or group of persons authorized to act as a single distinct entity and recognized as such in law”
Has the following characteristics:
A distinct legal entity – may own its own property, enter into contracts, and sue or be sued
Limited liability – owned by shareholders whose liability is generally limited to their investments
Distinct management structure - shareholders elect a board of directors to control the corporations in a fiduciary capacity; officers manage the day-to-day affairs
Perpetual existence – continues despite the coming and going of new shareholders, officers, and directors
Created through registration
See The Business Corporations Act

7. Joint Ventures
“A binding business arrangement where two or more parties combine their skill, knowledge, funds, property, technology, etc. to achieve a common objective”
Generally characterized by shared ownership, shared risks and returns, and shared governance
Equipment and resources are pooled to reduce production costs, promote efficiency and profitability, and minimize losses
Not a separate entity – doesn’t own its own property
Dissolved more easily than either a partnership or a corporation and often designed only for a specific term
Profits and losses are allocated to “venturers” as opposed to any general assumption of equal participation
1,200 x 160 = 192,000

8. Joint Ventures Different levels of formality exist
Joint venture agreements create legally binding obligations
1,200 x 160 = 192,000

9. 2. Use of Joint Ventures in the Farm Growth Phase and Farm Transition Phase

10. Operations
Sharing of capital assets may allow fixed costs to be spread over a larger base, lowering production costs and maximizing overall profitability
May be used in parent and child business arrangements, or among arm’s length parties
Allows for control over a specific business undertaking while remaining separate business entities
Allows farm income to be maintained and tax deferrals preserved

11. Succession A joint venture may be the bridge to farm succession
A way to transition financial and management responsibilities
Consider inter-generational rollovers

12. 3. Setting up Joint Ventures from a Farm Management Perspective

13. Joint Venture Agreement Terms
Designate parties
Outline the objective(s), scope, and purpose
Contributions
Consider attributes of the joint venturers
Management responsibility
Signing authority
Consider ancillary documents

14. Joint Venture Agreement Terms
Determine place of business, records, and bank accounts
Other essential considerations:
What it is not
Insurance
Restrictions on assignment of interests
Division of profits and losses
Tax considerations
Mutual obligations
Exit provisions

15. Conclusion
A joint venture may be a valuable business arrangement for you
Consider formalizing your joint venture!

16. Ashley D. Falk, Student-at-law
Questions?
Thank you for your attention.
Presented by:
Andrea V. Argue
Powerpoint by:
Ashley D. Falk, Student-at-law
Kanuka Thuringer LLP
Cheadle Street West
Swift Current SK, S9H 4G3
This presentation and its content is provided to you for general informational purposes only. It is not intended as and should not be taken as legal or any other kind of advice. Please seek specific professional advice with respect to your unique circumstances.