A joint venture is a commercial company held between two or more persons, in which the partner deals with others in his personal name. It is limited to the relationship between partners and does not apply to third parties. It is also hidden and does not have a legal personality and has no capital or address.
The characteristics of the joint venture
The joint venture contract is not subject to registration in the commercial registry and publicly
The joint venture is characterized as a hidden company because it is not subject to registration in the commercial registry or to the public. The company’s contract is concluded with several conditions, namely:
- Determining the rights and obligations of the partners
- Determine how profits and losses are to be shared between them
The contracts of joint ventures are proven by all means of proof, including evidence and presumptions. It is a binding contract for both sides and is subject to the general rules to which these contracts are subject, and the principles established in the company’s contract apply to it in general.
This is what was decided by the Kuwaiti Court of Cassation in its ruling No. 1406 of 2008 dated 2/1/2011, the Commercial Department, that the joint venture company’s contract is not subject to registration in the commercial registry, and its establishment, dissolution or liquidation can be proven by all means of proof. The partners intend to participate in an activity that has a liability and that each partner contributes to this liability, i.e. shares in profit and loss.
The joint venture does not have a legal personality
The joint venture does not have a legal or legal personality independent of the personality of its constituent partners, and therefore it does not have a financial liability independent of the financial liability of its partners, and third parties have no legal connection to the company’s business except with the partner or partners with whom it has contracted.
Partners refer to each other to calculate profits and losses
The recourse of the partners in it to each other in relation to the company’s business by accounting for the profits and losses it achieved as a result of the total operations carried out by the partners and according to what they agreed upon in the contract concluded between them, as well as for the rights that each of them owes the other as a result of the agreement to terminate The company or its termination for any reason.
Failure to legally represent the director of the joint venture
If the joint venture is a partnership of persons, there is no objection in the law that it consists of natural and legal persons, and the management of the company is carried out by one of its natural or legal partners, but he does not represent the company legally because his dealings with others in this case is in his personal name.
The partner who owes the right, whether he is a natural or legal person, is the person with the capacity to file a lawsuit claiming this right.
The joint venture does not own the shares of the partners
The joint venture does not own the shares offered by the partners, nor the goods that each of them buys in his name and is owned by him and not by the rest of the partners whenever the share is specific in particular despite it being transferred to the possession of the partner managing the joint venture. It transfers to the ownership of the shareholder manager and becomes a debt to the applicant in the custody of the manager.
Referral of third parties to the partners based on the company’s contract
An exception to the fact that the joint venture company does not have a legal personality, and that a third party does not have a legal connection to the company’s business. A third party has the right to adhere to the contract of the joint venture, in the face of the partners, if you deal with it in its capacity as a company.
Joint venture companies are not subject to liquidation procedures
Joint venture companies are not subject to the liquidation system and there is no place for appointing a liquidator because they do not have a legal personality and have no independent financial liability that requires liquidation. Rather, the matter is limited to settling the account between the partners to determine the share of each of them in the profit and loss.
However, the joint venture contract is considered one of the binding contracts for both sides, and therefore it is subject to the general rules to which these contracts are subject, and then it can be rescinded for rescission and nullity, if the conditions prescribed for either of them are met, and in this case the contracting parties must be returned to the state they were in before the contract.
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