As the above shows, the impact of a termination event on the business of a joint venture can be significant. Parties to the joint venture should consider the wide range of commercial, operational, legal and practical issues that could result from the termination of a joint venture. Indeed, the parties to the joint venture would be well advised to carry out a thorough due diligence before any termination to ensure that, if the transaction is contemplated, (i) the joint venture is sustainable; (ii) the value of the joint operation is not significantly eroded and (iii) there are no unwanted surprises after the end of the operation. In general, a joint enterprise agreement would include a termination date. If a joint venture is set up for a specified period of time, such a joint venture would be terminated at the end of that period. But issues related to the liquidation of all receivables and obligations and accounting continue even after such termination. The liability of the employees of the joint venture, either permanently or detached, can be problematic. Staff members will likely return to their original employer, who may leave the joint venture under the joint venture. If the parties to the joint venture do not intend to reintegrate staff into the parent companies, the costs and consequences of the layoffs must be taken into account.
The termination of a joint venture or the liquidation of a joint venture is the process by which a joint venture ends. The termination of a joint venture may be motivated by a number of reasons. Among the more frequent situations in which a joint venture can be fine-tuned, the tax impact will play an important role in choosing the most appropriate termination method for a given joint venture. This article is based on the assumption that the joint venture is a limited liability company. In this case, the transfer of assets to the parties to the joint venture during the liquidation of the vehicle may result in a tax burden on the companies (as well as stamp duty and VAT depending on the type of asset).