Dissolution Of Joint Venture Agreement
April 9, 2021

Joint ventures can simply be fine-financed by the sale of one or all of the shares of the joint venture (as was the case for the joint venture TNK-BP mentioned in our first article). Please click here to see. This is the latest in our series that looks at joint ventures in the energy and natural resources field. Prior to that, we examined the legal mechanisms available to the parties to end a joint venture in a dead end. This article continues this issue by examining the main causes of dismissal and listing the top ten issues to consider in determining whether a joint venture should be terminated. If the parties to a joint venture do not enter into an agreement to terminate the joint venture, a joint venture may be terminated as they see fit. A joint venture may be dissolved by the will, behaviour or words of the parties to the joint enterprise agreement. In the event of an amicable agreement, a joint venture may be terminated at any time. It is also essential that the current CAPEX and OPEX requirements of the joint venture activities be understood so that the termination does not result in a funding gap. The outgoing partner may also have granted a parent company guarantee for the joint venture transaction, which may need to be replaced. However, the courts have found that the dissolution of a community company with two 50% shareholders has a margin of appreciation and must be decided in the circumstances of this case.

When one party acquires the interests of the other party as part of the termination, the purchaser should ensure that there is appropriate financing for the initial purchase, which may require the entry into the market of the capital or debt, or even the guarantee of a new partner. It is also important to understand all the existing financial means that are made available to the joint venture by the outgoing party, as this must undoubtedly be dealt with in the context of withdrawal. When the outgoing party requires repayment of its loans to the joint venture, the remaining party should carefully consider whether it is in a position to refinance that debt. We are often asked to advise on the most important issues that need to be considered when a party is considering terminating a joint venture. In most cases, the activity of the joint venture continues and a part simply acquires the entire joint venture and leaves alone, on the basis that the interests of any of the parties cannot be served if the transaction is dissolved and the assets are liquidated or if a sale is imposed on the parties. From this point of view, we have drawn up the following list of the first ten reflections. The key factors will naturally vary depending on the structure of the joint venture. In the oil and gas sector, for example, contractual joint ventures are on the agenda, so the recitals will deviate from the following recitals. In general, a joint enterprise agreement would include a termination date. If a joint venture is set up for a specified period of time, such a joint venture would be terminated at the end of that period. But issues related to the liquidation of all receivables and obligations and accounting continue even after such termination.

After dissolution, a surviving joint venture is entitled to ownership of the community property and also has the right to co-operate. If no one is taken into possession, a joint venture and its property will be sold. However, for the racehorses of total blood, the sale will take place only after the question of whether a part of a joint venture had the power to sue the company after the termination.


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