GETTING INTO A JOINT VENTURE AGREEMENT IN CAMEROON
A Joint Venture is a business agreement entered into or created by two or more parties to accomplish a specific task or business goal while retaining their separate identities. The importance of a Joint Venture agreement can be seen when parties intend to access new emerging market, gain profits margins, accessing skills and capabilities, or to share the risk in major projects.In drafting a Joint Venture agreement hire the services of a corporate lawyer.
There are steps in getting into a Joint Venture agreement in Cameroon, which includes having to define the business strategy, selecting the partners after due diligence in checking their credentials, develop a Joint Venture deal that negotiates all terms and conditions, planning and execution of the joint venture agreement.
The importance of a Joint Venture agreement is that it runs for a specific period of time, for example, in oil and gas supply business, once the purpose is achieved, liabilities are discharged and profit is shared; and then the venture is extinguished.
In Cameroon , this agreement can be created in the following instances:
- A foreign investor buying an interest in a local company in Nigeria
- A local company buying an interest in an existing foreign company
- Both local and foreign companies joining to form a new enterprise
DRAFTING A JOINT VENTURE AGREEMENT
Drafting the agreement requires a lot of professional skills thus making the services of a Corporate Attorney indispensable. Here are some relevant terms to consider when drafting a Joint Venture agreement in Cameroon;
- Name in which the joint venture business is to be conducted
- The principal office of business
- The term duration of the contract
- The purpose of which the business is formed
- The initial capital to be contributed by each partner
- Interest owned by each partner in the joint venture should also be clearly stated to avoid disagreements
- Profits and expenses- the net distribution of profits, losses and disbursement to be borne out of the joint venture.
- The powers to be exercised with the consent of the partners.
- Transfer of interest, where the parties agree that the joint venture is precluded from selling, assigning transferring any interest in the joint venture without the consent of parties, it should be clearly expressed in the contract.
- Legal Title to the Joint Venture assets usually remains in the name of the joint venture where applicable
- A confidentiality agreement, which is one of the most important clauses in the agreement.
- Arbitration clause: this is also an important clause that must be found in a Joint Venture Contract.
- Termination of a Joint venture: it is also an important element found in the contract stating the liquidation of the Venture and the manner of distributing proceeds upon determination of the contract.
- Governing law: this is important since a joint venture may involve parties from different countries and jurisdictions. The need to know the law applicable and the court to have jurisdiction over the agreement is sacrosanct.
THE IMPORTANCE OF A JOINT VENTURE AGREEMENT
In conclusion a Joint Venture is a common form of foreign investment in Cameroon. Parties to the agreement can be individuals or incorporated bodies. It is very important that in drafting a joint venture agreement the various aspects listed above are carefully crafted. The importance of a joint venture agreement is that parties can incorporate important clauses such as sharing formula, management structure, obligations of the parties, termination, governing laws are entrenched into agreement to make it legally binding on parties.
Article by Barr. Mafany Victor Ngando
“The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstance”