Early in my career, I was asked to draft a shareholders' agreement for a company which was yet to be incorporated. I was under the impression that a shareholders' agreement could only come into play after formal incorporation, since technically, there are no shareholders until the company exists. In my view, a joint venture agreement was the right choice for co-owners before incorporation. When I raised this with my boss at the time, she sent me to the office library to dig into the authorities. At the time, it felt like an extra burden but today, I'm deeply grateful for that assignment, because the insights I gained have stayed with me ever since.
If you're starting a business or partnering with others, you may hear these two terms thrown around a lot: shareholders'agreement and joint venture (JV) agreement. Both are used to formalise business relationships, but they serve slightly different purposes depending on what you're trying to build.
Timing and Purpose
A shareholders' agreement is typically used where a company exists—or is about to be incorporated—and the parties intend to become shareholders. It can be signed just before incorporation, with parties committing to take specific steps (like subscribing for shares) once the company is formed.
A JV agreement, by contrast, is broader and more flexible. It can be used before, during, or after incorporation—or even where no company is intended at all—because it governs collaboration between parties for a project regardless of whether shareholding is involved. If the parties wish to form a company, a JV agreement can guide how that's done. But even without a company, a JV agreement is still valid.
What Does the Agreement Cover?
A shareholders' agreement focuses on ownership and corporate governance, covering matters such as share transfers, board composition, voting rights, dividend policies, and decision-making thresholds. While shareholders can set strategic direction and agree on certain key decisions that require their approval in accordance with the Companies Act, 2019 (Act 992), specific operational decisions are generally left to the board of directors.
A JV agreement has a broader scope. It outlines how parties will contribute capital, intellectual property (IP), assets, or services to a defined project; how profits will be shared; how the venture will be managed; and what happens if things go wrong. It is more project-focused than ownership-driven, often involving specific management and decision-making structures.
When a JV Agreements is mandatory
In some sectors in Ghana, such as the upstream petroleum industry, the local content laws require foreign companies to partner with local companies through a JV company. This isn't optional; it's a legal requirement to ensure technology transfer and the development of local expertise.
In such cases, the JV agreement becomes critical. It must spell out all the details of the partnership, including governance, capital structure, intellectual property use, and how knowledge and skills will be shared. The JV company formed under this agreement becomes the legal vehicle through which the project is executed in line with regulatory expectations.
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