Funding a corporate joint venture

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Practice notes

Funding a corporate joint venture

Published by a ��˾��ҹ�� Corporate expert

Practice notes

Funding options

When setting up a joint venture (JV), the parties will need to consider how the JV is to be funded, both initially and throughout the course of the joint venture. Although this note highlights the main funding issues faced by corporate JVs, the General Principles apply across all JV structures.

The choice of funding methods may depend on:

•
the commercial objectives of the parties
•
the relative resources of the parties
•
whether the parties wish to and are able to fund the JV themselves or whether external funding will be required, and
•
tax considerations

A joint venture company (JVC) will typically be funded (initially and subsequently) by some combination of the following methods:

The joint venture agreement (JVA) should set out details of how the initial and future funding Requirements of the JV will be met.

Initial funding by the parties

The parties themselves will usually provide a significant proportion of the initial funding for a JVC through a combination of:

•
equity—cash or non-cash assets provided in return for

Jurisdiction(s):

United Kingdom

Key definition:

Corporate joint venture definition

What does Corporate joint venture mean?

A commercial arrangement between two or more parties who agree to pool their resources for the purpose of accomplishing an intended project (or other business activity) which takes the form of a separate limited liability company where each party is a shareholder.

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