Difference between equity joint venture and contractual joint venture
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The other major difference between acooperative joint venture and anequity joint venture is that, in a cooperative joint venture, profits can be allocated according to the partners' discretion and do not have to be proportional to the investments made by the partners
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Contractual joint venture
Agreement in which two parties come together for a particular business project and sign a contract outlining the terms under which they will work together. The parties do not set up a separate legal entity for the project but work together in partnership, sharing the profits or losses of the venture on the terms set out in the joint venture contract. The contractual joint venture is a different legal arrangement from the incorporated or equity joint venture in which two or more parties set up a separate legal entity to act as the vehicle for carrying out the project. Participants in a contractual joint venture normally would set out the objectives of the joint venture in the agreement. They also would agree on the contributions in cash or in kind made by each of the parties to the contract, with details about the valuation of the contributions. The functions of the parties within the project, including their technical contributions and commercial commitments, would be defined in the contract. Arrangements would be made for the parties to meet to discuss progress on the project and to appoint a management committee
Equity joint venture (EJV)
A type of joint venture in which two or more parties set up a separate legal company to act as the vehicle for carrying out the project. This new company would usually be located in the same country as one of the two partner companies, with the purpose of mutually establishing an activity with its own objectives: marketing and distribution, research, manufacturing, etc. The joint venture contract establishes all the agreements needed to start up and manage the Joint Venture.
Agreement in which two parties come together for a particular business project and sign a contract outlining the terms under which they will work together. The parties do not set up a separate legal entity for the project but work together in partnership, sharing the profits or losses of the venture on the terms set out in the joint venture contract. The contractual joint venture is a different legal arrangement from the incorporated or equity joint venture in which two or more parties set up a separate legal entity to act as the vehicle for carrying out the project. Participants in a contractual joint venture normally would set out the objectives of the joint venture in the agreement. They also would agree on the contributions in cash or in kind made by each of the parties to the contract, with details about the valuation of the contributions. The functions of the parties within the project, including their technical contributions and commercial commitments, would be defined in the contract. Arrangements would be made for the parties to meet to discuss progress on the project and to appoint a management committee
Equity joint venture (EJV)
A type of joint venture in which two or more parties set up a separate legal company to act as the vehicle for carrying out the project. This new company would usually be located in the same country as one of the two partner companies, with the purpose of mutually establishing an activity with its own objectives: marketing and distribution, research, manufacturing, etc. The joint venture contract establishes all the agreements needed to start up and manage the Joint Venture.
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