JV Reporting

In order for the partners in a JV (joint venture) to get assurance about its operations, performance and compliance they need regular, timely and accurate reporting from the JV.

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The format, content, timeliness and level of detail in the information provided by a JV to its shareholders or ownership participants should be laid down in the JV formation agreements (see the governance section).

The scope of the information requirements a partner needs from its joint venture can be determined from the descriptions given in the other sections of the JointVentureRisk.com site. The objective should be to provided the partners with sufficient assurance about the JV’s:

  • performance,
  • profitability and value,
  • activities and projects,
  • health, safety and environmental impact,
  • compliance, and
  • risk management

The format for providing the information will depend upon the size and complexity of the JV and the level of involvement anticipated by its partners. A larger, more complex JV will probably set up automated data transfer systems using state of the art encryption and security systems to minimise risks associated with the information transferred. A smaller, simpler JV may find that the partners are satisfied with the reports provided at the regular board of directors, and shareholders/owner meetings or from JV committees that their representatives attend.

JV Information Iceberg - Partners should only request data from the JV that they really need
JV Information Iceberg – Partners should only request data from the JV that they really need

Although it is important that partners receive the assurance information they need from the JV there is also a risk of overburdening the JV with unnecessary information demands. Therefore it is sensible for the partners and the JV to agree what information is really necessary and appropriate to provide adequate assurance. JV resources required to provide partners with information that is ‘redundant’ could be put to better use in creating JV value. Similarly it is inefficient for a JV to provide each partner with ‘bespoke’ reports in different formats. Ideally a standardised approach should be agreed between all partners and the JV.

Careful consideration should be given to ensure that information reported by the JV to its partners is legally compliant. For example the relevant data privacy/protection laws need to be considered, especially where personal data is supplied about JV employees or stakeholders (like customer and suppliers). There may be rules preventing such information being transmitted across international boundaries.

Similarly competition/antitrust legislation must be carefully considered if the JV and one or more of its partners operate in the same business areas (see the compliance section). Here there is a potential risk that a JV owned by competitors in the same industry may inadvertently pass market sensitive information to its shareholders (like stocks, production or logistics costs, customer and market relevant information). It is therefore important in such situations to ensure the nature of information reported by the JV is approved by appropriate legal advisers.

The JointVentureRisk.com website and its author, Chris Duggleby, are not qualified to provide legal advice and therefore any questions in relation to the legal liability of a joint venture or its partners should be addressed to suitably qualified, competent legal advisers.

Chris Duggleby

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