There are different strategies for entering international markets. Our company, its position in the market, its needs and its objectives will determine which one to implement.
Internationalization can be channeled through different means: law, marketing or sales, among others.
In this case, we will talk about the Joint venture as an international strategy based on law. This is because, Setting up a company in another country can help us channel the market opening we need.
And the political, social and technological changes that guide today's world have had an impact on international economic activity, causing a growing interdependence between state economies and the internationalization of economic processes.
This new reality has imposed an important reorganization of the protagonists of international traffic, companies; and an example of this is shared management or business cooperation that has given rise to the growing use of formulas such as a joint venture which today have become an integral part of the international trade.
What is a joint venture?
La a joint venture It is defined by Spanish (or rather, European) jurisprudence as the "commercial collaboration agreements concluded by two or more businessmen, remaining independent of each other and for the purpose of making a common investment managed by a manager and that said collaboration does not require its own legal personality» (as defined in STS (Supreme Court Ruling) June 20, 1992 and more recently STS May 30, 2008).
It could be concluded, then, that it is a business alliance that embraces two possible articulationslegal s: the contractual -o non equity joint venture and equity joint venture -o joint venture corporation-, the latter characterized by the instrumental presence of a capital company jointly controlled by the participants or partners.
The contract of equity joint venture
The contract of a joint venture is the agreement by which the participants in an operation of equity joint venture (in this case) they agree on the creation of the company or common subsidiary, on its objectives, activities and duration, as well as on the way in which its joint control and direction will take place.
This contract is based on a base agreement and satellite agreements.
The first gives rise to the operation of a joint venture and usually contains, in a programmatic way, the planning of the cooperative project that will be developed by the participants.
The clauses of these contracts could be integrated into elementary sections: the stipulations relating to the creation of the joint company (name, registered office, legal form and organic structure), the commitments of concrete contribution of the participants to the company (such as license contract of brands, technical assistance or distribution), and the agreements referring to the design of its control and direction.
The latter are the so-called shareholders agreements, which lack publicity as they are not contained in the corporate statutes.
Through these, the participants establish their reciprocal commitments as shareholders of the common company, in relation to the management and control of the company, as well as in relation to the transferability of their shares/interests.
Regulatory clauses
Along with this basic content, there are also frequent the clauses that regulate the behavior of the participants (such as non-competition agreements with the company's activity) a joint venture or confidentiality agreements); as well as pointing out the duration and the causes and modes of termination of the a joint venture; and designate the applicable law or dispute resolution mechanisms, such as arbitration.
However, sometimes, It is impossible to establish a more detailed regulation at the time of conclusion of the basic agreement., which will be done later through satellite agreements, which will appear formulated, in their fundamental aspects, in the base agreement itself. a joint venture.
Ultimately, The base agreements will contain the bases for the negotiation, the objectives pursued and the circumstances surrounding the creation of the Joint Venture; while the satellites will regulate the details of execution adapted to the specific circumstances.
The contractual joint venture agreement
La a joint venture contractual is one that is materialized through a contractual complex of diverse nature - base and satellite contracts - and is articulated around a single economic cause (an objective), based on the contract of a joint venture to organize the alliance between companies.
This contractual complex contains the underlying obligations assumed by the parties and the objectives of the operation, but no company is established.
Recommendations for the internationalization of the company
The figure of the a joint venture es widely used as a strategy for internationalization Company.
This is because it allows us to access other markets through a local partner.
This local partner will know the market, which will help us to know, first-hand, how to act (legally, fiscally and commercially) and how to reach our customers.
Here you can see other strategies: Link
In short, analyze your company, your competitors, your clients, your environment and the new market; and from there, develop the international strategy that generates business for your company (a high return on the investment you will make).
At RRYP we are specialists in internationalization strategies from all perspectives.
We are a boutique consultancy in internationalization services and we will position you abroad.
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LL.M in International Business Law and Law from ISDE and graduated in Law and International Relations from Loyola University. CEO and business internationalization consultant at Reáculoateypunto.
