Silent Joint Venture Agreement

A silent partner only plays the role of an investor in exchange for income or passive interest generated by a company`s profits. Unlike a complederr, the silent investor is not allowed to participate in the day-to-day management of the business and does not have the explicit right to make decisions or enter into contracts on behalf of the company. Include in the contract the voting rights of the tacit partner with respect to voting, the evaluation of accounts and accounts, as well as whether the partner can be consulted at any given time for decision-making. This part of the agreement is intended to draw the boundaries of the role of the silent partner, especially if things do not go as planned. For example, in a seven-partner oil and gas joint venture, most of which were global players, the Board of Directors disagreed on whether a new project proposed by management should be approved. In this situation, the status quo prevailed and the project continued without the new project. In other situations, a deadlock may lead to the persistence of the status quo temporarily rather than in the long term. For example, a joint enterprise agreement could provide that if an annual work plan and no budget is not approved, the last work plan approved and the last budget for a given period (for example. B one year) will be renewed and will only be able to withdraw from one or more partners if the parties have not resolved the impasse. As a result of these blockages, companies have maintained the status quo. Other deadlocks that maintain the status quo may not relate to substantial changes proposed by management or the operator, but to issues that are generally dealt with by the board of directors.

Take dividend approval as an example. A typical joint venture agreement requires the agreement of the majority of distributions to shareholders, which means that a minority shareholder could block a distribution if he preferred the company to keep profits and invest in growth projects. In other words, money stays where it is, in boldness. This continuation of the status quo can have negative effects on partners who wish to participate in short-term financial returns or use company capital in other parent company activities. Once a business is in operation, it can be shown that the joint venture agreement did not take into account all possible conditions. If the legal provisions do not address the way a particular subject is treated, the law fills the gaps with a standard concept. With respect to joint enterprise agreements, this notion of default is often that the status quo persists, unless all parties to the agreement agree otherwise. For example, in a joint venture of two large chemical companies in the joint venture agreement, there were no exit provisions, unless it was a material failure of either contracting party.

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