Advantage Hong Kong

Cooperative Joint Venture

Unlike an equity joint venture, profit sharing and representation on the board of directors is NOT required to be proportionate to the contribution by each party. The CJV is formed after negotiation of the joint venture contract terms between the foreign and Chinese investors, and the approval of the contract by the relevant authority.

A CJV may be established as a "legal person" (i.e. a limited liability company) but this is not required. If it is formed as a limited liability company, the CJV will own all of the venture's assets, but the liabilities of the investors would be limited to their investment contributions.

The capital contributed may be in cash, land-use rights, industrial property rights, and other property rights may form part of the capital contribution subject to governmental approval. Foreign investors usually contribute cash, technology and equipment, while Chinese investors usually provide land or factory. The parties to the CJV have considerable freedom to negotiate in the joint venture contract their respective rights, obligations, sharing of risks and liabilities, management and ownership of property at the time of termination of the contractual joint venture.

A CJV operating as a limited liability company is required to appoint a board of directors or a joint management committee, which will make all major decisions and oversee the management of the company.

The information provided on this web site is for your general guidance only. Before you take any action or decision based on this information, you should obtain professional and legal advice which apply to your specific circumstances. Advantage Hong Kong, its affiliates and staff do not accept any responsibility, loss or liability arising in connection with the information this web site.