A joint venture (JV) is an arrangement where two or more businesses join forces to pursue a common project or opportunity, while remaining separate organisations. JVs let businesses share costs, risk, skills and market access, but they need careful structuring. Here is a plain-English guide for England and Wales.
The basic idea
In a joint venture, the parties collaborate towards a shared goal (developing a product, entering a new market, bidding for a contract, or running a business together) and agree how to share control, profits, risk and any assets. Crucially, each party keeps its own separate business; the JV is the collaboration, not a merger.
The two main forms
Incorporated (corporate) joint venture
The parties set up a new company (usually a private limited company under the Companies Act 2006), each taking shares, to run the venture.
- Pros: limited liability, a clear separate legal entity to hold assets and contracts, and a familiar structure for longer-term ventures and investment. Governance is set out in the articles and a shareholders' agreement (board seats, reserved matters, deadlock, exit).
- Cons: more cost and admin (incorporation, accounts, filings), and profits taxed via corporation tax.
Contractual (unincorporated) joint venture
The parties simply enter a contract setting out what each will do and how to share costs and profits, without creating a new entity.
- Pros: quick, flexible, private; good for short-term or single projects.
- Cons: no separate entity (the parties contract directly), and (a key risk) if it amounts to "carrying on a business in common with a view to profit", it could be treated as a partnership under the Partnership Act 1890, with unlimited joint liability. Clear drafting should make the intended status explicit.
(An LLP is a third option, combining limited liability with partnership-style flexibility and tax transparency.)
Why a JV agreement is essential
Whatever the form, a written JV agreement (or shareholders' agreement for a corporate JV) should cover:
- each party's contributions (cash, assets, people, IP);
- control and decision-making (board, reserved matters, deadlock);
- profit-sharing and funding of losses;
- IP ownership created by the venture;
- confidentiality and non-compete;
- term, exit and what happens on a dispute or deadlock.
Regulatory considerations
Some joint ventures trigger extra rules:
- Competition law (Competition Act 1998): JVs between competitors can raise competition concerns, be careful about sharing commercially sensitive information or coordinating on price/markets. Some JVs may also fall within UK merger control under the Enterprise Act 2002 if the jurisdictional thresholds are met; this is not limited to "full-function" JVs and can arise in various structures.
- National security (NSIA 2021): the National Security and Investment Act 2021 may require mandatory notification only where the JV structure involves a notifiable acquisition of control over a qualifying entity in a mandatory sector. Not every JV "involving" a sensitive sector triggers mandatory notification, and asset-only structures are outside the mandatory regime; otherwise the risk is call-in review rather than automatic mandatory filing.
Key takeaways
- A joint venture is a collaboration between separate businesses to pursue a common goal, sharing cost, risk and reward.
- The main structures are an incorporated JV (a JV company, limited liability, good for the long term) and a contractual JV (quick and flexible, but watch the partnership trap); an LLP is a middle option.
- A robust JV/shareholders' agreement (contributions, control, IP, deadlock, exit) is essential.
- Watch competition law (information-sharing between competitors) and the NSIA 2021 for sensitive-sector deals.
Sources
- Companies Act 2006 (incorporated JV companies; articles and shareholder arrangements); Partnership Act 1890 / Limited Liability Partnerships Act 2000
- Competition Act 1998 (joint ventures between competitors; information sharing); Enterprise Act 2002 (UK merger control, including JVs meeting jurisdictional thresholds)
- National Security and Investment Act 2021 (mandatory notification for qualifying entity acquisitions in mandatory sectors)
--- This article is general information about the law of England & Wales as at 2026, not legal advice. For advice on your circumstances, consult a qualified solicitor.