Joint venture files write the rules of the business that two companies will run together. The texts are long, dense with definitions and full of cross-references; this is where translation consistency is put under the greatest strain.
Two documents together
The shareholders' agreement and the articles of association are prepared together. Which of them prevails if the two conflict is written. This article is not skipped.
Definitions section
Defined terms govern the whole of the text. A single equivalent is used for each term. Drifting to a synonym damages the agreement.
Capital contributions
The capital each partner will put in, and its form, are written. Contributions in kind are valued separately. The valuation report is submitted as an annex.
Shareholding percentages
The percentages and the conditions for dilution are regulated. That the total comes to one hundred is checked. A percentage that drifts because of rounding gives rise to argument.
Structure of the board of directors
The number of members and each partner's right of appointment are determined. How the chair will rotate is written. This arrangement is kept in translation.
Qualified majority matters
An increased majority is required for some decisions. The list of matters is set out subparagraph by subparagraph. Shortening the list weakens minority protection.
Veto rights
The minority partner may have the right to block certain decisions. The scope of the right is written item by item. A translation that widens the scope upsets the balance.
Right to information
Which information the partners will have access to, and how often, is regulated. The reporting schedule is given as an annex. This obligation generates continual translation.
Dividend policy
The percentage to be distributed and the conditions are determined. Investment needs may be given priority. The statements of the policy are categorical.
Deadlock
The route to be followed where no decision can be taken is written in advance. Mediation, talks between senior management and exit mechanisms come in sequence. The sequence is kept.
Exit mechanisms
Tag-along and drag-along rights work differently. One protects the minority, the other gives the majority an option. The two are not mixed up.
Right of first refusal
It is provided that a partner wishing to sell its shares must first offer them to the other. The period and the method of setting the price are written. The name of the method is kept.
Valuation method
How the shares will be valued on exit is defined. The procedure for appointing an independent valuer is written. Formulas are carried over exactly.
Non-compete
The partners undertake not to compete with the venture. The duration and the geographical limit are stated. The limits are not widened.
Intellectual property contribution
The technology and licences brought in by the partners are regulated separately. What happens when the licence ends is written. This article is critical in technology partnerships.
Funding obligation
Who will do what when additional capital is needed is regulated. The consequence that a partner who does not take part is diluted is written. The method of calculation is kept.
Termination
The venture may end by expiry of the term, by achievement of the purpose or by termination. The liquidation procedure is regulated separately. The articles on the sharing of assets are translated in full.
Governing law
Which law will apply and where the dispute will be resolved are written. If arbitration has been chosen, the institution, the seat and the language are stated. All three are carried over.