Do the partners of the joint venture have informed accounting or reporting problems regarding their participation in the joint venture? Even if the entity is never created, some contractual joint ventures can be as complex as a partnership and/or joint venture because of the nature of the joint venture. In the case of a joint venture, the parties may decide to include a number of clauses (including those relating to governance and liquidity) either in the company`s by-laws or in a shareholders` pact. The main difference between them is that the articles are public and therefore binding on third parties, while the shareholders` pact remains confidential. In addition, French law provides that any transfer of shares within certain forms of business (for example. B of an SAS) carried out in violation of the provisions of the statutes is annulled; This would not be the case if such provisions were contained in a single shareholder pact. Boards of directors (where required by law) and legal representatives of a joint venture have fiduciary obligations and must act in the best interests of the joint venture, while shareholders may act in their own interests. The other format of the CJV is similar to a partnership in which the parties jointly assume unlimited liability for the company`s debts without a separate corporation. In both cases, the status of the company formed is that of a Chinese legal person who can directly engage the work as a z.B a Chinese national interlocutor. The minimum capital is recorded at different investment levels. The company can be a group of companies (for example.
B Dow Corning), a project/JV designed to pursue a specific project or joint venture that aims to set standards or serve as an “industrial utility” providing a limited number of services to industry players. An alternative is the purchase or sale provision (Russian roulette), which has been recognized as valid by the French courts. In essence, one shareholder may declare a price for the shares of the joint venture and, if he does, the other must decide to buy or sell his stake at that price. The purpose of this clause is to ensure a fair price for the shares. The drawbacks are that it favors a financially stronger party, and the party that starts the process will not know at this point whether it will eventually buy or sell the shares. Under French accounting law, a company is required to establish consolidated accounts if it has “exclusive control,” “common control” or “significant influence” on a business (i.e. a joint venture). Depending on these control situations, the accounts are consolidated using three different consolidation methods.