Establishment of a Joint Venture | Advisory Throughout a Global Joint Venture Process for Component Manufacturing

Company A is a mid-sized enterprise that manufactures precision control components, and it sought to respond proactively to the rapidly increasing demand in the global industrial robot market.

In particular, at the request of overseas client companies, securing a local production base emerged as a key task.

With the existing simple export method alone, it was difficult to resolve various risks such as logistics instability, rising costs, and supply delays.

Accordingly, Company A sought to establish joint ventures with two overseas companies that each had different technological capabilities and market competitiveness.

To respond to the complex investment structure and the various legal issues, it requested comprehensive legal advisory from a corporate attorney.

▶ Advantages

▶ Disadvantages

Because a joint venture is a complex structure in which various interests are intertwined, going beyond a simple combination of capital, precise legal advice is indispensable at every stage, including the design of the contract structure and the allocation of management control.

Because it was a multiple structure in which a separate joint venture would be established with each partner company, a tailored contract design suited to the characteristics of the counterparty was necessary.

Accordingly, the structure was designed with the client’s business stability as the top priority, including the allocation of investment funds, voting rights, prior-consent clauses, and competition-restriction mechanisms.

In addition, an Exit strategy was prepared in case of business termination or sale, with a focus on dispersing risk.

The focus was on clearly defining the scope and conditions of the technology transfer necessary for production through the joint venture.

The ownership and commercialization rights of jointly developed technology were also systematically organized, and a long-term supply contract was carefully designed to guarantee a stable supply of parts from the joint venture.

During the negotiation process with the regional government agency in the area where the joint venture was to be established, the attorney supported the review of the main agreements and the analysis of risks related to the conclusion of the contract.

The attorney interpreted the local incentive conditions and coordinated so that these would be reflected in the contract.

The attorney also checked in advance the laws related to foreign investment regulations and import and export restrictions so that the joint venture structure would avoid legal problems.

A joint venture is a high-difficulty structure in which complex interests and legal risks are intertwined.

Accordingly, the assistance of a specialized attorney across the entire process, from the initial contract design to the allocation of management control rights, dispute prevention, and the Exit strategy, is necessary.

This firm has formed a TF team consisting of corporate attorneys and attorneys specializing in overseas investment, and cooperates to build a sustainable partnership for the client’s business.

The firm provides comprehensive legal advisory services regarding all procedures related to the establishment of a joint venture, and does its best to prevent potential risks in advance.

If you are in a situation where you need legal advice regarding a joint venture, please request assistance from Daeryun’s corporate law attorneys at any time.