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Global guide: Joint Ventures

Global Guide: Joint Ventures

Joint ventures pose their own challenges, especially when entering into new areas. Commercial issues are key, such as choosing the right partner and building safeguards around valuable assets. Often it will be necessary to consider multiple jurisdictions. Investors must also understand the legal environment and any particular challenges that it imposes.

Our updated Global Guide is designed to help businesses navigate the legal challenges of international joint ventures in 25 jurisdictions. Topics covered include the types of entities used for joint ventures, foreign investment restrictions, registration formalities and shareholder influence. The guide also includes an appendix on the EU Foreign Subsidies Regulation and how it applies to joint ventures.

While no two joint venture deals are the same, we hope this is a useful guide to some of the main features of doing global deals. Please also feel free to get in touch with your own Linklaters contacts about any of the issues raised.

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Key trends

Investing in new territories

For businesses seeking to expand into new or emerging markets, strategic alliances with local partners continue to make sound commercial sense. Asia remains the most active region to locate cross-border joint ventures, particularly the PRC and India. The next most active region is Europe, with the UK and Germany the leading locations for joint ventures. When it comes to volume of cross-border joint ventures, over the last five years the US has been the leading jurisdiction. Saudi Arabia and the UAE are also among the most active cross-border joint venture locations globally.

Popular sectors for joint ventures

A key sector for joint venture activity is the Energy & Utilities sector. There is also significant joint venture activity in the Mobility sector, particularly in relation to transport and battery related activities. Other important sectors for commercial joint venture activity include Real Estate, Industrials and Telecoms, Media & Business Services.

Foreign investment restrictions

For companies seeking growth opportunities, particularly when entering new markets, joint ventures are often the best way to share risks and resources. We continue to see a rise in restrictions on foreign investment, and joint ventures in certain key sectors may be subject to prior approval in some jurisdictions. In these cases, carrying out the foreign investment without authorisation or in breach of set conditions may be considered a serious infringement and result in penalties. Our guide gives an overview of foreign investment restrictions and reporting requirements in each jurisdiction.

Resilience in challenging times

There are many ways to structure a joint venture, and this flexibility allows an investment to be implemented in the best way considering the investors’ preferences and the prevailing market conditions. Joint ventures may be more resilient during periods of economic uncertainty and the current complex geopolitical landscape may mean we see joint ventures being preferred over outright acquisitions.

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