How Can I Start a Joint Venture in New Zealand?

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Table of Contents

• What is a Joint Venture?
• How Do I Set Up a Joint Venture?
• Is a Joint Venture the Same as a Partnership?
• What Can Other Business Structures Provide for Collaboration?
• Key Takeaways 
• Frequently Asked Questions

You can start a joint venture to grow your business prospects. Ensuring that your business operates successfully can be a considerable challenge. Therefore, people often use teamwork and collaboration to improve their business. Some people choose to run their business with a partner in a business partnership. However, you could consider creating a joint venture if you have an existing business and want to join your assets with another enterprise. While this may sound similar to a partnership or other business structure, there are some essential differences. This article will outline:

• what a joint venture is;
• how you can start a joint venture;
• the differences between a joint venture and a partnership; and
• what other business structures can provide for collaboration and cooperation. 

What is a Joint Venture?

A joint venture is an alliance between two or more parties working to accomplish a goal, typically a business venture. The two parties retain their independence while they can use each other’s: 

• skills;
• resources; and 
• assets.

There are a few reasons why parties enter into joint ventures. For example, they may wish to collaborate on a new product release to combine markets and improve sales. Or, perhaps, a business wishes to sell products overseas. They may enter into a joint venture with an overseas brand to sell their products to ensure they have a good pool of customers in the new market.

How Do I Set Up a Joint Venture?

Incorporated Joint Venture 

One way to set up a joint venture is by registering a limited liability company with the Companies Office. This is known as an incorporated joint venture. It also means that some structures are automatically in place for your business. Typically, registering requires each party to hold shares in the company proportionate to their investment in the joint venture. Additionally, it ensures that the joint venture agreement is binding on all parties. 

Usually, a joint venture agreement is needed when you set up a joint venture. This document ensures that every party involved in the partnership understands their rights and responsibilities within the partnership. You should make sure to include:

• the names of the parties involved in the joint venture;
• the rights and duties of the parties;
• the goals of the venture; and
• dispute resolution processes.

As an incorporated joint venture, a separate legal entity has been created. Therefore, the joint venture can own its own assets, and the individual businesses can remove their personal liability for any of the venture’s debts. 

Unincorporated Joint Venture

If you do not want to create an incorporated joint venture, it is still a good idea to create a joint venture agreement, even if you do not register the company with the Companies Office. If you do not make a joint venture agreement, there is the risk that future disputes may arise, or the parties may not understand their rights and responsibilities. They also may not understand the agreement’s purpose and what the venture plans to do. 

Additionally, unincorporated joint ventures do not require any business to put forward specific amounts of investment. Therefore, the agreement should take note of the contributions to the venture.

Is a Joint Venture the Same as a Partnership?

While a joint venture is similar to a partnership, some key differences exist. In partnerships and joint ventures, there is the similarity of having a group of people working together in a team for a common goal. However, a partnership involves two or more people who run and own a business together. Typically, they will have tax obligations due to their business relationship. However, in a joint venture, the parties remain separate but agree to work together to achieve a common goal. 

What Can Other Business Structures Provide for Collaboration?

If you do not feel like a partnership or joint venture is right for you, you may also wish to set up a company and become co-directors with your business partner. In a company structure with two people who want to share ownership, the company should be set up so that each party holds a 50% shareholding in the company. They both can be company directors. 

Suppose the business expands further to incorporate more individuals. In that case, it is a good idea to set up a company constitution and shareholders agreement at this point to ensure that everyone understands their rights and responsibilities. 

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Key Takeaways 

If you want to expand your business, you can engage in collaborative work with other business people. One option is creating a joint venture, which you can incorporate through a relatively simple registration process. Still, no matter what kind of joint venture you set up, you should ensure that you create a joint venture agreement. You may also consider setting up a partnership or a co-directorship if they suit your business goals better. 

If you need help setting up a joint venture, our experienced business lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0800 005 570 or visit our membership page.

Frequently Asked Questions