Joint venture in Quebec: everything you need to know
What a joint venture is
A joint venture is a collaboration between two or more businesses to carry out a specific project while remaining independent. It is not a legal form in itself: it may be structured as a contract, a partnership or a jointly owned corporation.
Possible structures
- Contractual joint venture: each party contributes resources under a cooperation agreement; flexible, but risk of being characterized as an undeclared partnership with solidary liability if profits are shared (arts. 2186 and 2250 ff. C.C.Q.);
- Partnership (general or limited) declared to the Registraire des entreprises;
- Joint venture corporation: limited liability, governance through a shareholders’ agreement; the most common structure for long-term projects.
Key clauses
Purpose and duration, contributions (cash, assets, IP, staff), governance and deadlock resolution, sharing of profits and losses, ownership of jointly developed IP, confidentiality, exclusivity and non-competition, exit mechanisms (buy-sell, put/call options) and dissolution.
Regulatory issues
Collaboration between competitors may raise issues under the Competition Act (s. 45 on agreements, s. 90.1 on civil review). Large transactions may require pre-merger notification.
