BALDWINS • FoodLegal

Australian Lawyers and Consultants

Joint Ventures are in Fashion

April 1997 -- reviewed February 1998

The use of joint venture structures has been growing in the Australian small business and medium-sized business environment. There are a number of possible reasons for this:

• Smaller companies are joint venturing in order to be able to tap into the networks and brandnames of companies with strong distribution networks.
• Insufficient private capital within the smaller group itself.
• Contracting out by bigger companies to specialist smaller businesses is a clear trend.
• Bigger companies are by-passing market volatility by "stitching up" suppliers who may be smaller but also willing to bear a higher share of the market risk in exchange for obtaining a supply contract.
• Smaller businesses relying on new technology want to share the capital risk (e.g. potential obsolescence caused by superseding technologies).
• A Joint Venture can be a sharing arrangement which need not necessarily crystallise an ‘acquisition’ or ‘disposal’ to trigger Australian capital gains tax liabilities.

There are various types of joint venture situation and various issues need to be considered for different circumstances. Baldwins can document any joint venture arrangements.

For further information, contact Joe Lederman at BALDWINS, Australian Lawyers & Consultants.

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