Equity-Based Joint Venture Agreement Template

Sometimes, two businesses are better than one. Whether you want to expand into new markets, share resources, or develop something amazing together, a joint venture can help you make it happen. And when you’re looking for a long-term, legally structured partnership with shared ownership, an equity-based joint venture might be just what you need.

In this guide, we’ll walk you through what equity-based joint ventures are, why they matter, how they work, and what you need to consider when setting one up. Whether you're a legal expert or just getting started with partnerships, this post is designed to be clear, helpful, and full of useful insights.

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Joint Venture Agreement

CACM GROUP NY, INC.

contract

Joint Venture Agreement

THIS JOINT VENTURE AGREEMENT (the “Agreement”) is entered into as of [Date], by and between , a [Party 1 Incorporation Details], and , a [Party 2 Incorporation Details] (each, a “Party”; collectively, the “Parties”);

WHEREAS, possesses the personnel and the knowledge to operate in the [Specific Business Area] and is willing to establish a limited liability company, which shall 100% own one or more operating entities (the “Operating Entities”) in the [Location] to engage in the Business, on an exclusive basis with ;

WHEREAS, is desirous of implementing the Business and is willing to provide the working capital and certain technology support for the Business and the Operating Entities;

WHEREAS, both and believe that their combination of capabilities can successfully develop and operate the Business.

NOW, in consideration of their mutual promises, it is agreed as follows:

Joint Venture

The Parties on this date create a joint venture named [Jv Name] (“JV”), a limited liability company in accordance with the laws of [State/Region], for the purposes stated above, for the management and operation of the Business located at [Business Address].

The purpose of this Agreement is to clearly identify and describe the basis of understanding and the responsibilities of each Party as relates to the Business and the Operating Entities. The Parties agree to manage the JV in accordance with [Source Document] of JV (the “[Source Document]”).


Contributions and Responsibilities

, during the term of the JV, shall:

[List of contributions and responsibilities of Party 1]

, during the term of the JV, shall:

[List of contributions and responsibilities of Party 2]


3. Proprietary Rights

The Parties agree that the leases and all other tangible and intangible assets, including intellectual property rights and know-how associated with located at , shall remain the property of during the Term of this JV. retains the absolute rights to transfer, sell, or assign any tangible and intangible assets and rights of during the Term of this JV.

The Parties agree that all tangible and intangible assets, including intellectual property rights and know-how, shall remain the property of [Party 1 Affiliate]. [Party 1 Affiliate] retains the absolute rights to transfer, sell, or assign such assets during the Term of this JV.

Except as stipulated in Sections 3(a) and 3(b), the Parties agree that the assets developed by the JV shall be the property of the JV during the Term of this JV.

The Parties further agree that is and shall remain separate from the JV and its Operating Entities unless agreed otherwise in writing.


4. Profits & Losses

The Net Profits of the Business shall be distributed and the percentage ownership of JV shall be as follows:

: [Ownership %]

: [Ownership %]

“Net Profits” and “Net Loss” shall be defined as per the [Source Document] and allocated accordingly.


5. Dissolution, Liquidation and Termination

Upon dissolution, liquidation or termination of the JV, any remaining assets and cash of the JV shall be distributed in accordance with the terms of the [Source Document].

If the JV is dissolved, liquidated or terminated before generating any profits from the operation of the Business, any remaining cash within the JV shall be distributed entirely to after paying off all of the debts, liabilities and obligations incurred by the JV during the duration of its operation.

In the event that the JV is dissolved, liquidated or terminated after it has generated certain profits from the operation of the Business, a liquidator shall be appointed by the Board of Managers of the JV to valuate the non-cash assets of the JV at fair market value.

If the total value of all assets of the JV, including cash and non-cash assets, is less than [Minimum Distribution Threshold] after paying off all of the debts, liabilities and obligations incurred by the JV during the duration of its operation, all the assets of the JV shall be distributed to .

If the total value of all assets of the JV, including cash and non-cash assets, is more than [Minimum Distribution Threshold] after paying off all of the debts, liabilities and obligations incurred by the JV during the duration of its operation, an equivalent of [Minimum Distribution Threshold] including cash and non-cash assets shall be first distributed to ; if there are any assets remaining after the distribution of [Minimum Distribution Threshold] assets to , the remaining portion of assets shall be distributed to .

After the distributions to both and , any remaining value of the JV’s assets shall be distributed to other members of the JV in proportion to their respective interests in the JV.


6. Board of Managers and Chief Executive Officer

Pursuant to the [Source Document e.g., “Operating Agreement”], the business of the JV shall be managed by the Board of Managers. shall appoint three (3) designees on the Board of Managers of the JV, and shall appoint two (2) designees on the Board of Managers of the JV.

The General Manager of the JV shall be appointed by and report to the Board of Managers. All the capital expenditures that are above [Approval Threshold Amount] shall be approved by the General Manager in advance.


Term

The JV shall commence on the duly execution of this Agreement and the [Source Document e.g., “Transaction Documents”] and continue until it is dissolved, liquidated and terminated pursuant to the [Source Document] or as otherwise provided by law (with such period being referred to herein as the “Term”).


Services

Both of the Parties shall cooperate in carrying out the purposes of the JV and shall devote a substantial time to it, but both of the Parties may engage in any other business or activities.


Public Relations

The Parties shall not make any public statements, issue any press release, or disclose any details of this JV to any media, publicist, or the public at large, unless such statement is approved by the other Party in writing, and in advance of its publication.


Warranties

The Parties have the full power and authority and licenses and permits required by governmental authorities or otherwise necessary to carry on their businesses as now being conducted. The Parties have full power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution and performance of this Agreement by the Parties has been duly and validly authorized by all necessary action on the part of the Parties and their shareholders/boards.

This Agreement, when executed and delivered, shall constitute a valid and binding agreement, enforceable in accordance with its terms. The Parties’ execution and delivery of this Agreement and the consummation of the transactions contemplated hereunder do not, and will not, violate, or result with the passage of time in the violation of, any provision of, or result in the acceleration or termination of, or entitle any Party to accelerate or terminate (whether after the giving of notice or lapse of time or both) any obligation under, or result in the creation or imposition of any lien, charge, pledge, security interest or other encumbrance upon any of the assets of the Parties pursuant to any provision of any mortgage, lien, lease, agreement, permit, indenture, license, instrument, law, order, arbitration award, judgment or decree to which any Party is a party or by which it or any of its assets may be bound.

The Parties indemnify, defend and hold each other, and each of their respective affiliates, officers, directors, employees, agents, successors, and assigns harmless from and against any and all claims, losses, liabilities, damages, and expenses (including, without limitation, reasonable attorneys’ fees) arising from the inaccuracy of any representation or warranty made.


Limits of Joint Venture

The relationship between the Parties shall be limited to the performance of this Joint Venture Agreement, solely in accordance with the terms of this Agreement. This Agreement shall be considered and deemed to be creating a joint venture for the sole purpose of carrying out the terms of this Agreement. Nothing herein shall be construed to create a general partnership between the Parties or to authorize either Party to act as general agent for the other Party, or to permit either Party to bid for or to undertake any other contracts for the other Party without the express written consent of the other Party.


Assignment

Neither this Agreement nor any interest of either Party, including any interest in moneys belonging to or which may accrue to the JV in connection with this Agreement, or in any property of any kind employed or used in connection with this Agreement may be assigned, pledged, transferred, or hypothecated, without the prior written consent of the Parties hereto.


Attorney’s Fees and Litigation Costs

If any legal action or any arbitration or other proceeding is brought for the enforcement of this Agreement, because of an alleged dispute, breach of, or default in connection with any of the provisions of this Agreement, the successful or prevailing Party shall be entitled to recover reasonable attorney’s fees and other costs incurred in that action or proceeding, in addition to any other relief to which that Party would be entitled.


Confidentiality

This Agreement is confidential. and agree to treat any confidential information disclosed to it under this Agreement with strict confidentiality. Confidential Information includes any non-public information about either Party, including but not limited to financial information, technical information, and information about each other’s business strategy and know-how. Notwithstanding the foregoing, recognizes that [Applicable Laws or Regulations] govern the use of [Sensitive Information Description] information about and/or its affiliated entities, and such information may be disclosed by the Parties as required by applicable law or regulation.


Entire Agreement

This Agreement constitutes the entire agreement of the Parties with respect to the JV and supersedes all prior agreements, understandings and negotiations, whether written or oral, between the Parties. This Agreement may not be changed orally but only by an agreement or writing signed by all Parties which is expressly stated to be an amendment hereto.


Provisions Severable

In case any one or more provisions of this Agreement shall be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not be in any way affected or impaired thereby.


Headings

Headings set forth herein are for the conveniences of the Parties only and not a part of the Agreement.


Interpretation

This Agreement shall be construed and interpreted under the laws of the [Jurisdiction].


Location

Any action or proceeding arising from this Agreement shall only be brought in the [Jurisdiction].


Notices

All notices, requests, demands and other communication under this Agreement shall be in writing. Notices may be delivered personally, or by facsimile or by mail, postage prepaid, to the last known address of the Parties. A copy of any notices shall be sent to:

To :

To :

With a copy to (which shall not constitute a notice):

[Attorney Name]
[Firm Name]
[Address Line 1]
[Address Line 2]

Any notices sent by mail, postage prepaid, will be deemed received [Mail Delivery Timeframe] after it is mailed. Each Party may designate a new address for purposes of this Agreement by notice to the other Party, in the manner set forth herein.


Execution

This Agreement may be executed by facsimile and in one or more counterparts, each of which shall be deemed to be an original but, when taken together, shall constitute one agreement. The persons executing this Agreement represent that they have the necessary authority of their respective Party to do so.


In Witness Whereof, the Parties have executed this Agreement as of the day and year first above written.

[ No signatories assigned ]
Pending
[ No signatories assigned ]
Pending
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Disclaimer: The original creator, the author of this template, and fynk GmbH are not responsible for any damages or liabilities that may result from using this template. This template should not be considered a substitute for legal advice, and consulting with a legal professional is recommended before use. fynk GmbH, the original creator, and the author do not provide legal advice and will not be held accountable for any legal consequences arising from its use.

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Background Information

Create a Clear and Effective Joint Venture Agreement

Understand the essentials of a joint venture agreement, including key clauses to protect your interests, ensure clarity among parties, and facilitate smooth operations.

What Is an Equity-Based Joint Venture?

An equity-based joint venture is when two or more companies create a new legal entity like an LLC or corporation. Each party contributes something valuable, like money, technology, intellectual property, or expertise, and in return, they get equity ownership in the new business.

This new business has its own identity. It files its own taxes, keeps its own financial records, and has its own team. Each partner becomes a shareholder and shares in the profits and risks based on how much they invested.

This type of joint venture is different from a simple contract-based one. In an equity-based joint venture, there’s more structure, more commitment, and a stronger sense of shared purpose.

Why Choose an Equity-Based Joint Venture?

There are many reasons companies go the equity-based route when forming a joint venture:

  • It’s built for the long haul. If your collaboration is more than a one-off project, this structure supports long-term goals.
  • You want to share resources and risks. Whether it’s manufacturing, research, or market access, sharing costs and responsibilities makes sense.
  • You want clear governance and liability. A separate legal entity gives everyone peace of mind and clarity.
  • You’re building something big. If the partnership involves major investments or new markets, an equity-based joint venture helps you grow confidently.

This model works especially well when both sides are making significant contributions and want an ongoing relationship.

Key Features of an Equity-Based Joint Venture

FeatureWhat It Means
Legal EntityA new company is formed.
Equity ContributionEach partner contributes assets or capital and receives shares.
Shared ControlDecisions are often made based on ownership percentage.
Limited LiabilityEach party’s risk is limited to their investment.
Corporate GovernanceThe new company has a board, bylaws, and legal oversight.
Defined Exit StrategyClear rules for what happens if one party wants to leave.

Equity-based joint ventures are flexible and can be structured to meet your specific needs. Here are a few common formats:

1. 50-50 Joint Ventures

Both parties contribute equally and share control. This setup feels balanced but needs good conflict resolution tools to avoid gridlock.

2. Majority-Minority JVs

One partner owns more than 50 percent. This is useful when one party brings more resources and wants more say in decisions.

3. Silent Partner JVs

One party provides capital but doesn’t take an active role in daily operations. This is great when an investor teams up with an operator.

4. Cross-Border JVs

If your JV spans countries, you may need to consider things like local ownership rules, taxes, and international compliance.

How to Set Up an Equity-Based Joint Venture

Creating an EBJV is a step-by-step process. Here’s a roadmap to help you get started:

  1. Align on Goals: Start by making sure everyone is on the same page. What’s the purpose of the joint venture? What does success look like?

  2. Do Your Due Diligence: Each party should look closely at the other’s financials, legal status, intellectual property, and reputation. Trust is important, but so is verification.

  3. Choose the Right Entity Type: Depending on your goals, you might set up a limited liability company, a corporation, or a limited partnership. Each option has its pros and cons in terms of taxes, control, and flexibility.

  4. Draft the JV Agreement: This document is the foundation of your joint venture. It should cover everything from ownership structure to voting rights to what happens if someone wants out.

  5. Register the Entity: Pick a jurisdiction, file the paperwork, and make it official. Don’t forget to get tax IDs and open a bank account for the new company.

  6. Launch and Operate: Transfer funds, hire a team, start your project, and begin working together as planned.

Important Clauses to Include

Make sure you always include the necessary clauses in your

  • 🔹 Purpose: What is the joint venture supposed to do? Be specific about business scope, geographic limits, and strategic goals.

  • 🔹 Contributions: Who’s bringing what to the table? Cash, assets, IP, or services? Give a complete Definition of affiliate and Duty of cooperation.

  • 🔹 Ownership and Shares: Who owns how much and how are profits divided?

  • 🔹 Governance and Decision-Making: Who gets to make decisions and how are votes handled?

  • 🔹 Profit Distribution: Will it be based on ownership percentages or something else?

  • 🔹 Intellectual Property Rights: Who owns new inventions or shared IP? 👉 Include a License back clause so contributors retain certain usage rights to their own IP.

  • 🔹 Exit Terms: What happens if someone wants to sell their stake or leave?

  • 🔹 Non-Compete and Exclusivity: Can partners launch similar ventures on the side?

  • 🔹 Dispute Resolution: How will disagreements be handled? Mediation, arbitration, or courts?

  • 🔹 Mutual termination: Under what circumstances can the JV be ended by mutual consent? Specify process and winding-up procedures.

  • 🔹 Necessary further actions: Require both parties to take additional actions needed to effectuate the JV’s purpose.

  • 🔹 Call right: Allow one party to buy out the other under certain conditions, such as default or deadlock.

  • 🔹 Standstill Provision: Prevent parties from acquiring more equity or taking control without prior consent.

  • 🔹 Execution in counterparts: Allow the agreement to be signed in multiple parts, all forming one document.

  • 🔹 Language of Agreement: Clearly specify which language prevails in case of translations or misunderstandings.

  • 🔹 Non-Circumvention Clause: Protect against parties bypassing the JV to exploit relationships or IP directly.

  • 🔹 Forward-Looking Statements: Limit liability for forecasts or projections that don’t materialize as expected.

Benefits of Equity-Based Joint Ventures

Here’s why businesses love this model:

Shared Strengths: Each partner brings something unique, whether it’s local market knowledge, technical know-how, or access to customers.

Shared Costs and Risks: Instead of going it alone, you split the bill—and the potential rewards.

Clear Boundaries: Since the joint venture is a separate company, your core business stays protected from liability.

Long-Term Value: If the venture is successful, both parties benefit from growth and profits.

Legal and Financial Clarity: With structured governance and regular reporting, it’s easier to stay compliant and accountable.

What to Watch Out For

While equity-based joint ventures have a lot of upside, there are a few things to be careful about:

Decision Deadlocks: In a 50-50 structure, what happens if you can’t agree? Include clear rules for resolving disputes.

Cultural Clashes: This is especially tricky in international JVs. Make sure you align on work style, timelines, and expectations.

Changing Priorities: Your business might shift focus or your partner might lose interest. A good JV agreement should address what happens next.

Unequal Contributions: Even if ownership is equal, one partner might end up doing more of the heavy lifting. Be clear about roles and rewards.

Intellectual Property Confusion: If you’re creating something new, decide in advance who owns it and how it can be used.

When NOT to Use an Equity-Based JV

This structure is not for every situation. You might want to consider other options if:

  • ❌ You only need a short-term partnership.
  • ❌ The collaboration is more about buying or licensing than co-owning.
  • ❌ Legal or tax rules make joint ownership too complex.
  • ❌ You’re not ready for the level of commitment this structure requires.

How fynk Can Support Equity-Based Joint Ventures

At fynk, we make it easier to create, manage, and stay on top of complex agreements like joint venture agreements. Whether you’re working with one partner or several, fynk helps you:

  • Draft and automate your JV contracts
  • Collaborate with partners in real time
  • Track contributions, obligations, and deadlines
  • Stay compliant with version history and audit trails
  • Set reminders for governance meetings or renewals

It’s everything you need to manage the legal side of your joint venture without the stress.

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Use this template today.

Clause Library: learn more about the clauses in this template

Learn more about the clauses appearing in this template and find other clauses that are used in real contracts.

Duty of cooperation

The Duty of Cooperation clause mandates that all parties involved in a contract must actively assist and work together to ensure the successful fulfillment of their contractual obligations. This includes sharing necessary information, communicating effectively, and not hindering each other's performance.

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Mutual termination

A mutual termination clause allows both parties in a contract to agree to end their agreement by mutual consent, effectively releasing each other from further obligations under the contract. This clause typically outlines the conditions and procedures required for both parties to initiate and formalize the termination process.

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License back

A "license back" clause grants the original owner of intellectual property some rights to use or exploit improvements made to that property by a licensee. This allows the licensor to benefit from enhancements or developments made by the licensee during the term of the license agreement.

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Language of agreement

The "Language of Agreement" clause specifies the official language in which the contract is written and takes precedence in case of disputes regarding interpretation. Often included in international contracts, it helps ensure that all parties have a clear understanding of the terms, mitigating the risk of misunderstandings due to language differences.

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Necessary further actions

The "Necessary Further Actions" clause obligates the parties involved in a contract to take any additional steps required to fully implement or complete the agreement's terms. This provision ensures that both parties cooperate in good faith to resolve any unforeseen issues or formalities that may arise during the execution of the contract.

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Call right

A call right is a contractual clause that grants a party the ability to buy a specific asset or financial instrument at a predetermined price within a certain period. This provision is often used to provide flexibility and control to the party holding the right, allowing them to capitalize on favorable market conditions or strategic opportunities.

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Execution in counterparts

The "Execution in counterparts" clause allows a contract to be signed in separate, individual copies, with each party signing their own version. All signed copies together constitute a single, binding agreement, even though the signatures may not appear on the same document.

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Standstill provision

A standstill provision is a contractual clause that restricts one party from making certain actions, such as purchasing additional shares or launching takeover bids, for a specified period. This clause is often used in merger and acquisition agreements to maintain the status quo while negotiations or due diligence are ongoing.

7 example clauses

Forward looking statements

Forward-looking statements are projections or predictions about future events or performance, often included in business contracts, financial reports, and press releases. These statements are subject to risks and uncertainties, which means actual results may differ significantly from those projected.

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