Structuring an International Joint Venture in the European Union

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1.Introduction ..………………………………………………………………….…... 3 2.General overview of international joint ventures ……………………………... 4 2.1Main classification of joint ventures ……………………………………. 5 2.2Structure of joint venture entity ………………………………………..… 5 3.Advantages and disadvantages of international joint ventures …………….. 6 3.1Advantages of IJV ……………………………………………………….... 7 3.2Disadvantages of IJV ……………………………………………………... 8 4.Planning an international joint venture ………………………………………... 8 4.1Preliminary investigation …………………………………………………. 8 4.2Planning the operation …………………………………………………… 9 4.3Finalizing the operation …………………………………………………... 9 5.Antitrust issue ……………………………………………………………………... 12 6.Joint ventures in Poland …………………………………………………………. 13 6.1Examples of international joint ventures in Poland ……………………. 15 7.Conclusion ………………………………………………………………………… 17 8.Bibliography ……………………………………………………………………….. 18

1.INTRODUCTION

Globalization has radically changed the way many European companies do business. Because of advances in communications, transportation, and technology, virtually every business of any size can now internationally distribute goods, services, or intellectual property. Although dealing with international markets could be difficult, companies must be ready to overcome differences in legal and regulatory regimes, cultural norms, language problems, and currency issues especially in Member States where the Euro has not been introduced. Only the largest companies have the resources and experience to surmount these obstacles on their own. Many other businesses simply do not have the capacity to deal with all the variables in foreign jurisdictions without a partner organization. For this reason, many companies create an international joint venture (IJV).

In this project I will briefly examine the structure, the advantages and disadvantages of international joint ventures; the key contract provisions for creating them; and the antitrust issue concerning this type of activity. I will also provide some Polish regulations about joint ventures as well as the examples of the most important joint ventures that have occurred in Poland. Joint ventures between domestic companies (that are in developing countries such as Poland) and foreign companies have become a popular means for management of both organizations to satisfy their objectives. Additionally, Poland is considered to have one of the healthiest economies of the post- communist countries, with GDP growing by 6,1% in 2006. The Polish economy is currently undergoing economic development, and there are many challenges ahead. 2.General overview of international joint ventures

International joint venture is a joint undertaking among two or more business entities from different jurisdictions. It means that the concept of joint venture can vary from country to country depending on the domestic law of the country where the joint venture exists. Within the European Union, joint venture agreement can be identified by some common features. It is important to mention that the joint venture aim is to reach a common result for the benefit of all the parties involved, and this kind of agreement lasts for a reasonable period of time. The definition generally refers to the purpose of the entity and not a type of entity. Therefore, as I will present, a joint venture may be a corporation, limited liability company, partnership, or other legal structure. We will see that in Poland the legal form could be different. Joint ventures are common in the oil and gas industry and can often be the co-operations between the local and foreign companies. It is said that 75% of joint ventures are international. A joint venture is often seen as a very viable business, as the companies can complement their skill sets while it offers the foreign company a geographic presence. It is also known that joint ventures show a greater instability in under-developed countries. Also, those...
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