Partnerships offer little liability protection, but they offer ”pass-through” tax treatment. In other words, there is no tax at the entity level. Instead, the income, deductions and credits of the joint venture are passed on to the partners and then recorded on their personal tax returns. In addition, partnerships offer the greatest flexibility in the distribution of profits, losses and liabilities between partners based on their specific contributions to the company and not on their share of participation. Tasks. The partners of the joint venture will accept responsibility for their own share of the work, although they both register as the main contractors in the contract awarded, that they are jointly responsible to the employer in the event of a problem. However, the responsibility is then distributed in accordance with the agreement of the joint venture. The joint venture agreement or shareholder contract should also specify how control is exercised; (z.B. the form of the board of directors of a registered joint venture or board of directors in a non-corporate joint venture; How decisions are made and what types of decisions require a super majority or unanimous approval. Joint ventures offer many potential benefits. First, you can extend the geographic reach of your construction company. In partnership with companies located on other sites, you will have access to markets that would be difficult to penetrate on your own. Note in particular item 24.8 (Competition Act).
In certain circumstances (such as where the parties are large and do exercise monopoly control over a market in question), a joint venture may constitute an anti-competitive practice. In the event of a risk, the parties would be well advised to refer the agreement to the Director General of Fair Trade. Often, the Director General will authorize an agreement provided that the terms of the agreement are made public. However, the Director General will often agree to protect the economically sensitive conditions of an agreement (or a full agreement) at the request of a party. This clause requires both parties to make reasonable efforts to implement the Director General in order to protect the economically sensitive aspects of the agreement (for example). B working capital). A decision on a possible reference should not be made without specialized legal advice. If a major project has just appeared on the horizon and you think a joint venture could be the key to the gain from the job, you should consult your financial advisor at Smith and Howard before each action. For more information on joint venture ins and outs, contact Debbie Torrance, Marvin Willis, David Lee or another member of our construction niche at 404-874-6244. There are many reasons why contractors may try to create a joint venture. In some cases, it is only a business decision because it allows a contractor to share the risk and increase its purchasing capacity, either in relation to a given project or more generally.
In other circumstances, this is a necessity when contractors with particular skills or experience must seek partners with other qualifications to demonstrate the breadth of experience indicated in the tendering file, or where local legal requirements provide that contracting entities must have specific local representation.