You only need to google "Indigenous joint venture" or open the business section of a newspaper to know that joint ventures between Indigenous groups or businesses and "non‑Indigenous" businesses are a hot topic.
Despite the volatility in the mining and resources market, mining and contracting businesses are still investing billions of dollars in regional and remote areas. Competition for contracts is fierce. Operating as a joint venture with a Traditional Owner Group can give your business the edge it needs to win, and keep winning, contracts; and an opportunity to build quality, long-term business relationships. Indigenous groups can also provide access to land, reputational endorsement, credibility and business support.
Benefits also flow to the Traditional Owners, allowing them to generate income, reduce dependence on mining royalties and develop business experience and capabilities. With the right relationship, and the right advice, an Indigenous joint venture can deliver great benefits to the parties involved.
What gives an Indigenous joint venture "the edge" over other contractors?
All major mining and contacting companies and, increasingly, those seeking government contracts, have come to realise that, in order to deliver sustainable financial returns to their shareholders, they must play a part in creating economic, environmental and social stability in the regions in which they operate. Most, if not all, have developed policies that cover investment in Indigenous enterprise. Whilst the details of each policy differ, they each contain a preference for contractors with substantial Indigenous involvement or ownership.
What is a joint venture?
A joint venture is a relationship between parties where they share the product or output of an enterprise. A joint venture should be distinguished from a partnership, where the partners share profits and are jointly and severally liable for the debts of the partnership. A properly structured joint venture will not impose joint and several liability on the joint venture parties.
There are two main types of joint venture: an unincorporated joint venture, where the rights and obligations of the parties are set out in a Joint Venture Agreement and an incorporated joint venture, which generally takes the form of a company in which the participants hold shares, and which is governed by a Shareholders Agreement. In either case, the document governing the joint venture sets the rules and responsibilities of the parties and each party's entitlements.
Are joint ventures only useful for mining contractors?
No. Joint Ventures have an incredibly wide and varied application. We have assisted with the establishment of many successful joint venture arrangements in the areas of tourism, facilities maintenance, small construction projects and service delivery. In these cases, some are focused on financial returns and others deliver broader involvement in training, business referral and endorsement.
I am interested in entering into a joint venture, what is my next step?
There is no single process for developing a joint venture, but the following is a general roadmap:
Identify a joint venture opportunity;
Select a co-venturer;
Enter into a Memorandum of Understanding;
Undertake due diligence;
Choose Joint Venture structure and execute agreements;
Begin implementation/operations; and
Measure performance and results for parties regularly.
If you would like to discuss a particular opportunity, or Indigenous joint ventures generally, contact us.
Indigenous Business and Investment Structures
We are experts in taxation and capital protection for private businesses. We combine the use of structures such as Trusts, Partnerships, Joint Ventures and Companies with strategic commercial legal advice. We are not Native Title lawyers, and we do not want to be Native Title lawyers. In our experience, the needs of Indigenous groups with respect to their business and investment structures, are very similar to the needs of our other SME clients.
We use our market leading understanding of business structures, tax law and asset protection will assist Indigenous groups to achieve their objectives, while maximising asset protection, tax effectiveness, operational flexibility and good governance. We also offer Indigenous groups our Corporate Counsel service as part of the joint venture implementation and operations phases.
Our services include:
Establishing flexible and tax efficient "Benefit Management Structures";
Commercial and Charitable trusts;
Corporate Counsel service;
Taxation advice; and