Joint Venture Agreement in Israel
This article will address what you need to know about a joint venture agreement in Israel. The joint venture agreement, sometimes abbreviated with JVA, or referred to as a shareholders agreement, is a contract that is used when two businesses wish to collaborate on a project.
We will briefly outline the different parts of a joint venture agreement in Israel and how we can help you with this.
Why would you want a joint venture agreement?
There are a number of reasons that people may want to draw up a joint venture agreement, but the most common reason is that a minimum of two businesses or parties wish to combine their resources, strengths, and expertise while also sharing risks in pursuing a shared goal. Having a joint venture agreement can outline the terms and conditions of the partnership between these parties and stipulate the responsibility of each party in working toward this goal. 
What to include in a joint venture agreement
Joint venture agreements in Israel should include a number of components, which we will list here and then expand on. First and foremost, these agreements should outline the purpose and scope, management and governance, and obligations and contributions of the parties.
The purpose and scope of the joint venture
When making a joint venture agreement, it is important to include a number of key elements addressed in these questions: What is the business venture? What are its goals and objectives? How will the two parties collaborate on this? What is the timeline? Addressing these questions will help ensure that the purpose and scope of the joint venture are clear.
Management and governance in a joint venture
The joint venture agreement must define how the project will be structured and managed. Among other things, this can include a board of directors, how often they meet, how decisions are made, and what responsibilities each party takes. Specifying the financial arrangements as part of this management and governance process is also important to indicate how financial benefits, expenses, and losses will be divided.
Additionally, addressing intellectual property rights emerging from the JVA is likewise important, as patents, trademarks, and copyrights, among other things, can emerge from the joint agreement. (For more on various issues on intellectual property, see our articles on the topic.) Another issue to address is how disputes should be resolved, which can minimize potential legal issues and costs. Finally, adding a clause about terminating the JVA in the event of a breach of agreement, and the course of action that will be followed, can likewise be beneficial. Establishing management and governance for the joint venture agreement can help minimize future uncertainty and conflict.
Obligations and contributions in a joint venture
Building on the previous sections, where the parties decide how they will collaborate and what responsibilities they will have, it is also important to outline the obligations and contributions. In joint venture agreements, parties can contribute with intellectual property or by making financial contributions. They can also have obligations like which party is more responsible for marketing, accounting, and other day-to-day aspects of the joint venture. Dividing obligations and contributions can help establish an agreed-upon division of labor and demonstrate each party’s commitment to the joint venture agreement.
Together, these aspects, which are important but non-comprehensive, form the basis of launching a successful joint venture agreement.
Joint venture agreement in Israel
There are a few legal structures for joint venture agreements in Israel. Any contract specifying a mutual endeavor between parties, drawing on the various elements noted above, can constitute a legally enforceable joint venture agreement. At the same time, there are certain sectors in Israel that have specific regulations for joint ventures. Thus it is important to consult with a lawyer to ensure that the sectors you are engaging with, and the most important aspects of the contract, are relevant and included in the joint venture agreement.
There are three primary joint ventures in Israel. First, there is a contractual joint venture between parties where they can work together for a specific purpose (a joint venture) where the two parties do not form a new legal entity. Second, parties can establish a limited liability company, which many prefer as there is a clear separation in liability between the company and the shareholders or managers. This entails registering the company with the Israeli Companies Registrar, and we provide resources on our site where we explain various aspects of this and the services we provide. Finally, the third main joint venture employed in Israel is a partnership, which is most often a general partnership or limited partnership.
Contact Us
If you seek assistance with your joint venture agreement in Israel, contact us. Our law firm has extensive experience in corporate and company law, and we would be happy to help you with a joint venture agreement or other company needs.
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