USA Law and Practice Contributed by: Olesya Bakar, William “Bill” Jackson, Daniel E. Levisohn and Steven D. Lear, Holland & Knight LLP
5.2 Disclosure Obligations Certain basic information regarding each JV that is an LLC, LP or corporation (such as the entity type, name, address and registered agent) is filed with the secretary of state of its jurisdiction of formation and, if applicable, in every other jurisdiction in which it is qualified to do business as a foreign JV. In addition, an annual report is also required to be filed with the sec - retary of state of such jurisdictions, which, depending on the jurisdiction, usually includes the identity of at least one JV manager. This filed information is of pub - lic record. Additional information, including the fact that an entity may be a JV, the identity of the venturers and the scope, terms, business and operations of the JV, is not required to be disclosed through these filings and remains confidential. General partnerships do not file with a jurisdiction in order to come into existence and similarly do not file annual reports. The same is true for contractual JVs as there is no JV entity that needs to file. The extent to which additional details regarding the JV may need to be disclosed depends on the character - istics of the JV and its venturers. • The Corporate Transparency Act requires foreign JVs to file certain JV and beneficial owner informa - tion with FinCEN. This information is not publicly available. • A public company is required to disclose to the SEC when it has entered into a material agreement or transaction. Depending on the nature of the JV and its materiality to the public company, the JV agreement and its terms may require disclosure. If a JV is not required to disclose its status as a JV pur - suant to SEC or other legal requirements, this fact may remain hidden from the public, unless and until the venturers desire to make such disclosure. The ability of a venturer to disclose non-public confidential infor - mation regarding the JV or any other venturer is often restricted by an NDA, a term sheet or a confidentiality provision in the JV agreement. 5.3 Conditions Precedent, Material Adverse Change and Force Majeure Conditions precedent to closing a JV transaction are most likely to be relevant if the JV parties are contrib -
uting, selling or otherwise transferring assets to the JV. Before the JV parties are willing to transfer assets to a JV, they will seek assurances that the other par - ties are ready to perform their obligations. This may include depositing funds and documents into escrow arrangements and receiving certificates from execu - tive officers that representations made in the transac - tion documents are true and correct. In addition, if regulatory approvals (such as antitrust approvals) or other third-party consents are required, the JV par - ties may agree that the JV transaction will not close unless such required approvals and consents have been obtained within a certain period of time. If these conditions have not been satisfied before an agreed- upon outside date, the parties may be excused from continuing to seek to close the JV transaction. 5.4 Legal Formation and Capital Requirements A JV that is an entity is set up by filing an appropriate formation document with the secretary of state in its jurisdiction of formation. For example, in the State of Delaware, an LLC is formed by filing with the secretary of state of Delaware a “certificate of formation” signed by an authorised person. The venturers would enter into a JV agreement (which is not filed) to govern their relationship with the JV. A JV that will conduct business activities in a jurisdic - tion other than its jurisdiction of formation will likely be required to register in the applicable jurisdiction to do business as a foreign entity. If the JV will file a federal tax return or other tax-related documents, it will need to obtain a federal tax identification number for the JV by filing a Form SS-4 with the Internal Revenue Service. 6. Core Terms of a JV Agreement 6.1 Drafting and Structure of the Agreement The venturers of a JV that is an LP or an LLC would execute an operating agreement (“JV agreement”) in the form of an LP agreement (LPA) or limited liability company agreement (LLCA). If the JV is a corporation, it would file a certificate of incorporation and adopt by-laws, and the shareholders may enter into one or more shareholder agreements. The shareholders
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