Joint venture – Collaborative enterprise

What Is a joint venture/collaborative enterprise?

A joint venture, or "fellesforetak" in Norwegian, is a structured collaboration where two or more parties operate together through an established company. In Norway, as in other jurisdictions, joint ventures can be aimed at a specific project or long-term cooperation. Typically, the parties contribute industry expertise, but one or more may also be financial partners providing capital investment.

Why establish a joint venture?

Joint ventures allow parties to pool resources into a unified offering, achieving a broader range of services, increased capacity, risk-sharing, and cost distribution. In Norway, joint ventures are common among companies wishing to act as a collective purchaser or bidder in larger acquisition processes, where collaboration can serve as an alternative to acquiring one of the companies. Parties may also transfer parts of their business to the joint venture through a business transfer.

How to establish a joint venture?

In Norway, joint ventures are often set up as limited liability companies (AS), where the collaborating parties hold shares. Alternatively, partnerships or limited partnerships may be considered. It is important to note that contractual collaborations not formalized as a company may still be regarded as partnerships for tax and accounting purposes.

A comprehensive agreement regulating the joint venture is essential. When structured as a limited liability company, the collaboration is typically governed by a shareholder agreement. This agreement should include provisions on capital contributions, dividend policy, internal transactions, personnel, management, and handling potential changes in ownership or dissolution. The company's bylaws must also be adapted, particularly regarding share transfers and pre-emption rights.

When establishing a joint venture, it is crucial to consider Norwegian competition law to ensure compliance.