Key issues to consider for a term sheet for joint venture


1. Parties
Who are the parties to the joint venture?

2. Objective
What is the objective of the joint venture? What business is the joint venture undertaking?

3. Structure
What form/legal entity is the joint venture?

4. Shareholding
What is the shareholding proportion of each party?
What class of shares are held by each party?
Are there any special rights and restrictions attached to the shares?

5. Capital and funding
What is the amount of initial investment required from each party?
How will the parties fund future expenses of the joint venture and in what proportions?

6. Roles of the parties
What are the responsibilities of each party in the joint venture? For example, is one party responsible to provide funding and the other party responsible to provide expertise/technical skills?

7. Board representation
What is the total number of directors?
How many board seats does each party have?

8. Reserved matters
What are the matters requiring specific approval at shareholders and board level?

9. Exit provisions
Whether there is any restriction on exiting the joint venture (e.g. pre-emptive rights on transfer of shares)?

10. Confidentiality
What is the scope of confidentiality obligations of the parties?

11. Exclusivity
Whether there is any obligation on the parties not to negotiate similar joint venture with other parties and how long is the exclusivity period?

12. Conditions precedent
What are the conditions precedent to be fulfilled prior to commencement of the joint venture?

13. Definitive agreements
What are the definitive agreements for the joint venture?

14. Governing law
What is the governing law for the definitive agreements?

15. Binding/ non-binding nature of the term sheet


This post was first posted on Linkedin on 28 May 2022.

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