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The coronavirus has plunged the world into a new reality with closed borders, remote work, disrupted shipments and canceled deals. But the business is not discouraged and is trying to capitalize on the current situation. As we adapt to the current situation, new possibilities for JVs of all types are surfacing. The pandemic has "leveled" all companies around the world, making it easier to enter previously inaccessible markets. In registering a joint venture in the EU or other jurisdictions, many see the potential for significant savings and competitiveness through pooling of resources and knowledge sharing. If you are planning to start activity using such a structure, then the information in our blog post may come in handy.

JV structures in Europe

Getting a JV to work successfully usually requires careful planning. Experts recommend taking a responsible approach to this issue. The key to establishing a JV in the EU is to agree on the legal structure and mechanisms that will be used for its implementation and operations. This is largely due to taxes, especially if such an organization includes transactions in multiple jurisdictions. By the way, the experts of our company can consult on JV registration in Europe in order to choose the best option for your case.

Today, the practical aspects of adaptation to the new reality will play a special role in JV's activities in relation to:

  • decision making;
  • remote control of operations;
  • exchange of knowledge and experience;
  • commercial dispute resolution in the EU.

The structure of any JV must be flexible enough to ensure the efficient and effective functioning of such a company registered in Europe. At the same time, it should be firm enough so that the interests of JV partners are protected.

Those who intend to establish a JV in the US or the EU should carefully consider the issue of assets not contributed in exchange for shares or other participation interests in any JV or instead of a party's funding obligations.

JV setting up in Europe: obtaining permits

Entrepreneurs who are interested in registering a Joint Venture in the EU should be careful and first study the additional conditions that will need to be met before the completion of the work of the partner companies.

For example, consent may be required for contracts with key customers or suppliers. Contracts need to be checked to ensure that early termination rights are included as a result of the difficulties associated with the pandemic. During the planning process, it is also important to understand that if the proposed JV requires regulatory or third party approval, it may take longer than usual.

Technical support for video conferencing meetings should be arranged in advance, as well as, if possible, create conditions for effective and well-coordinated remote work of employees.

 

Dispute resolution in Europe during the pandemic

Those planning to register a company in Europe during this difficult period will need to carefully study the available methods of resolving business disputes in Germany, the UK or another jurisdiction where the activity is planned. It is important to bear in mind that, for example, the courts of the United Kingdom and the main arbitration bodies are now trying hard to adapt to the new reality and this is slowing down their work.

In the current conditions, it is natural that the number of business conflicts based on non-fulfillment of contractual obligations due to the pandemic is increasing. Resolving the conflict through mediation in the EU is a perfectly reasonable option since it is more cost-effective and often faster.

Other issues to pay attention to:

  1. Force majeure circumstances. Partners in new JVs will have to carefully analyze the specific points that should be included in the list of force majeure circumstances.
  2. Insurance. If you decide to register a JV in the UK, it is imperative to provide adequate insurance coverage for possible risks arising from the challenges of the COVID-19 pandemic.
  3. Terms of JV termination.

If you still have questions on this topic, do not hesitate to contact the IQ Decision UK experts for a personal consultation on the regulation of joint ventures in the EU and other jurisdictions. Our seasoned professionals will advise you and help revise the terms of the contract in connection with force majeure circumstances.