Joint ventures in Mexico are normally atypical contracts. If doing business in Mexico through a joint venture, we note that the Mexican Company Law does recognize a certain type of joint ventures, i.e. strategic partnerships. This does not mean, however, that the Law does not recognize the existence of other joint ventures, because they are, in the end, contracts. And, contracts can take different legal structures, shapes, or forms in Mexico.
Accordingly, joint ventures are the “genre” while “strategic partnerships” and “co-investments” are the species, and one could define these concepts as follow:
A Joint Venture implies two natural or legal persons that come together to work on a common project, basing their relationship on a contract. In essence, it creates a sort of partnership without necessarily creating a new, distinct legal person.
Strategic Partnerships or Strategic Alliances, a species or type of joint venture, are agreements that entail a collaboration project between two persons or firms. The idea is to share resources (offices buildings, researchers, clients, expertise, etc.) and risks (without the guarantee of obtaining any results). In other words, each firm provides qualities or features that the other firm requires for which the purpose or end may be common or different. In this type of joint venture, it is possible for the parties not to invest in money, but rather in their qualities or characteristics.
An example may be when an establishment allows another firm to use their facilities for other purposes other than those it ordinarily is involved in, so as to increase the flow of customers in its stores (i.e., express delivery services located in stationeries).
In contrast with Strategic Partnerships, a Co-investment is another joint venture species whereby two persons or firms invest money or goods in a common project. This type of joint venture involves joint management and parties, therefore, make decisions together.
As for the clauses contained in joint venture contracts, these can vary significantly since they are not expressly regulated in Mexican Contract Law.
The common clauses are the following:
As for other legal considerations, it is important to note that joint ventures may be considered as legal persons for tax purposes in Mexico and even give rise to the creation of permanent establishments for foreign investors in Mexico.
In that sense, when drafting a joint venture contract it is critical to take into account Mexican Tax Law and/or any relevant Tax Treaty. Finally, the Federal Competition Law must also be taken into consideration since anti-trust issues may arise with joint-venture contracts.
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