A Joint Venture typically involves the incorporation of a company to act as the JV vehicle.
Recently we are seeing interest and curiosity from the UAE’s investment sector players in the structure of limited partnerships (akin to Delaware Corporation).
ADGM is proving to be an invaluable platform for regional businesses who can now utilise a variety of vehicles. The vehicles have proven successful in other jurisdictions, and established legal principles govern incorporation and operations.
Any JV model must cover the following minimum facets:
- Goals, defined economic targets, duration of the venture
- Choice of Corporate Vehicle
- Decision making – Board composition and management arrangements
- Financing and contributions
- Revenue distribution
- lock-up period
- Terms of exit
One of the more specialised uses for an LP is as a vehicle for raising investor funds. Private investors, usually HNWI, make passive investments, usually into private companies, with a view to a share in net income.
An LP structure gives investors protection from unlimited liability.Companies operating in niche and capital intensive markets. The logic of the deal is always the same: to give investors in the venture capital fund both ample downside protection and a favorable position for additional investment if the company proves to be a winner.