2.8.4 Joint ventures

A joint venture is taken to mean a legal entity owned by two or more partners on more or less equal terms. Section 2.8.1 explained that there is no provision in the 2014 Act for societies to invest in partnerships, including limited liability partnerships. Instead, the joint venture must be a registered society or a company.

If a society is investing its general reserves in a joint venture, then it should only do so in pursuit of its objects and business. It should only invest in a joint venture where it has influence over the venture that is written into the shareholder agreement, or by holding at least a quarter of any voting rights. The amount invested should not be so large as to adversely affect its own liquidity or solvency, should the joint venture encounter financial difficulties.

A society should not raise capital through a public offer to invest in a joint venture unless it has overall control of the joint venture (in which case it would be more properly described as a majority-owned venture (see Section 2.8.3)).

If you have any questions or suggestions for new information you would like to find in the Handbook, contact the team by email at [email protected]