Capital contributions (which can include cash, resources, or services) are an important aspect of a joint venture because they typically impact both the structure of your venture and its management provisions.
When drafting an agreement, members of a joint venture must decide the total value of their capital contributions and the weighting of their vote at meetings. Votes can be equal for each member or proportional to their capital contribution. These decisions create a framework for how the business will proceed between the members, including the initial funding, allocation of resources, and decision-making processes.
Once you establish capital contributions and voting guidelines, you must also decide who is responsible for managing the venture. LawDepot's Joint Venture Agreement template provides three options for business management:
Management committee
Board of directors
Individual manager(s)
With a management committee, each member hires a representative to sit on the committee and make authoritative decisions related to the venture on the member's behalf. The benefits of setting up a management committee include the efficient delegation of projects and the facilitation of trust between members, management, and staff.
With a board of directors, all of the JV members collectively appoint directors to sit on the board. Unlike representatives in a management committee, the directors' primary duty is to the venture, not to any individual member.
If your venture doesn't need an entire committee or board, you can appoint one or more managers instead.