In recent months, Germany has experienced a noticeable slowdown in economic growth, with some even talking of an imminent recession. This palpable economic uncertainty has made investors more cautious. Rather than invest, many are preferring to wait and see. This trend can be seen in various sectors and is also noticeable in advisory practices.

Despite these uncertainties, Germany remains an attractive location for investment. There is still a lot of momentum, particularly in the renewable energy and high-tech sectors. These sectors are seeing major movements, with some significant investments taking place. A notable example is the joint venture between TSMC, a leading microchip manufacturer, and German technology companies such as Bosch, Infineon and NXP. Such collaborations underline Germany’s position as one of the world’s leading technology hubs.

In summary, even amidst general economic uncertainty, certain industries in Germany continue to thrive and remain attractive to international investors. It is likely that strategic partnerships and joint ventures will continue to play a central role in Germany’s economic landscape.

Amidst the accelerating pace of digitalisation and the environmental transition triggered by the Green Deal, joint ventures (JVs) are flourishing in Germany. These strategic collaborations span multiple sectors, but industries such as real estate, pharmaceuticals and, in particular, high-tech and digitalisation stand out for their affinity to such partnerships.

Real estate development faces challenges ranging from sustainability concerns to rising construction interest rates. JVs serve as a mechanism for navigating these complexities. By pooling resources, expertise and risks, companies are better positioned to meet the challenges and demands of the ever-evolving real estate market.

The pharmaceutical sector faces long, costly drug development processes and stringent regulatory requirements. Given the high stakes, where the failure of a single drug can mean massive financial losses, JVs act as a buffer. They allow for the sharing of financial resources, research capabilities and, crucially, risk.

The spotlight now turns to high-tech, semiconductor manufacturing and digitalisation. These areas have seen a surge in JV activity, a testament to the complexity involved and significant investment required. The semiconductor industry, the lifeblood of modern electronics, faces challenges ranging from technological evolution to geopolitical tensions. Collaboration in this sector is not just about pooling resources; it is about securing supply chains, enhancing technological capabilities and driving innovation. Notably, the investments involved are astronomical, often running into billions of euros. This reflects the huge stakes involved and the confidence that industry titans have in JVs to reap dividends.

In summary, while JVs are gaining momentum across the board, they are at the forefront in industries that are highly challenging, highly complex and require significant investment. These partnerships not only mitigate risk, but also promise combined expertise and a formidable market position in an ever-changing global landscape.

The German approach to JVs revolves around the equity JV model. In this model, several companies pool their resources and share the risks inherent in JVs. The equity JV is the dominant form, in which a separate legal entity is created through the collaboration of at least two companies.

In contrast to the practice in other jurisdictions, where a stock corporation (in Germany, an AG) is often created as a separate legal entity, a significant number of German JVs opt for the limited liability company (GmbH). This choice offers greater flexibility in structuring the contractual framework while limiting the financial liability of the shareholders, although it is not consistent with Anglo-American legal norms.

In line with German legal requirements for public disclosure of the articles of association, partner companies often draft a supplementary JV agreement to address confidential rights and obligations. This includes explicit commitments regarding financial arrangements.

Alternatively, if the creation of a separate legal entity is deemed unnecessary, the partners may choose to use a contractual arrangement (known as a consortium agreement) to define mutual obligations. This results in a contractual JV.

Both types of JV allow the participating companies to leverage their strengths and enter new markets effectively. This promotes knowledge sharing, which can lead to innovative opportunities. At the same time, risk is shared between several parties, reducing individual exposure. In addition, financial investment is often minimised, facilitating cost-effective product and service offerings and providing a significant competitive advantage. Overall, collaborative entities tend to be better positioned than their competitors.

Nevertheless, there are risks and drawbacks associated with JVs. In particular, the establishment of a company is a prerequisite, especially in the case of equity JVs, which involves complex contractual documentation and considerable organisational effort.

There is also the spectre of knowledge leakage or misappropriation by the JV partner, which could lead to the disclosure of trade secrets. There is also the need to disclose operational and commercially sensitive information. Such potential risks should be addressed through contractual provisions.

JVs are primarily motivated by strategic considerations, enabling the exploitation of synergies, new offerings and quality improvements. This strategy also facilitates market expansion. Collaboration can extend to sharing resources and production facilities.

Government regulations also influence JVs, as is the case in emerging markets. Certain markets are reserved for domestic companies, necessitating co-operation with local entities. China is a prime example, with strict market access rules.

JVs share risks and responsibilities, often as co-operative entities with shared economic control. This concept applies to foreign direct investment and requires partnerships to comply with host country regulations, particularly in China and Eastern Europe.

Motivations for JVs include synergy benefits, strengthened market positions, accelerated production, shared risk and complementary expertise. In developing countries, governments often mandate co-operation between direct investors and local partners.

There are no specific primary regulators or explicit legal requirements for JVs. Rather, JVs must comply with all applicable laws. The structuring of a JV raises issues in a number of areas of law, including general contract law, company law, tax law, labour law and antitrust law. In the case of equity JVs, depending on the legal form chosen, specific laws may also need to be complied with, for example, the German Limited Liability Company Act (GmbHG) and the German Commercial Code (HGB) if the newly established JV is a limited liability company.

The German Money Laundering Act (Geldwäschegesetz – GwG) is the legislation that must be complied with in Germany within the scope of the AML regulations.

As a member of the EU, Germany enforces EU sanctions regulations. These regulations aim to restrict or prohibit certain economic activities, trade and co-operation with sanctioned persons, entities or countries. JVs must ensure compliance with these sanctions laws and regulations, which may include restrictions on doing business with certain individuals, entities or countries.

It is important to conduct due diligence on potential JV partners to ensure they are not subject to sanctions. Failure to comply with sanctions regulations can result in severe penalties. German companies and JVs operating within the EU must comply with these sanctions laws and also monitor any updates or changes to the sanctions regime.

Germany, like many other countries, has national security considerations that may affect the formation of JVs, particularly if they involve sensitive technologies or industries. These considerations are designed to protect national interests and may include review procedures to assess potential risks to national security.

The Foreign Trade and Payments Act (AWG) contains provisions for the review and possible prohibition of transactions that could affect national security, including JVs. In certain cases, if a proposed JV involves critical infrastructure, defence-related technology or other sensitive sectors, it may trigger a review by the Federal Ministry of Economics and Energy (BMWi).

At the European level, a notification to the European Commission under the EC Merger Regulation is possible, while at the German level a notification to the Bundeskartellamt under Section 39 of the Act Against Restraints of Competition (GWB) should be considered. Conversely, the formation of a JV may lead to restrictions of competition between the parties. In this context, the general antitrust provisions apply, namely Article 101 of the Treaty on the Functioning of the European Union at the European level and Section 1 of the GWB at the German level. Each JV must be assessed on the basis of the merger control provisions (market power test) and the narrower antitrust provisions (restriction of competition test).

Finally, with regard to the merger control implications for JVs, it is worth noting that the legislation introduces an additional scenario in which the JV partners are deemed to be subject to an additional concentration in the markets related to the JV. Specifically, if several undertakings simultaneously or successively acquire shares in another undertaking, such that each of these acquisitions amounts to 25% or more of the capital or voting rights (vertical merger) in that undertaking, such acquisitions shall also be deemed to constitute a concentration of the participating JV partners with regard to the markets in which the undertaking is active (horizontal merger), pursuant to Section 37 (1) No 3 sentence 3 of the GWB.

There are no specific rules in German case law regarding listed participants in JVs.

Since 1 August 2021, it has been a requirement for all legal entities operating under private law and registered partnerships to disclose and proactively submit information about their beneficial owners to the Transparency Register for proper registration. In cases where a JV falls under the category of entities subject to reporting, such as an equity-based JV, it is obligatory to provide information regarding the beneficial owner of the JV to the Transparency Register.

Since 1 August 2021, all legal entities under private law and registered partnerships have been required to disclose and proactively submit information on their beneficial owners to the Transparency Register for proper registration. In cases where a JV falls under the category of reportable entities, such as an equity-based JV, it is mandatory to submit information on the beneficial owner of the JV to the Transparency Register.

During the negotiation phase of a JV, several key documents come into play to facilitate a smooth and well-informed process. These typically include a due diligence questionnaire, which helps assess risks and opportunities; a mutual non-disclosure agreement, which ensures confidentiality during discussions; a heads of terms agreement, which outlines the key commercial and legal terms; and an exclusivity deed, which restricts the parties from negotiating with others for a specified period of time.

In addition, market standard provisions play a crucial role in shaping the pre-JV agreement. These provisions typically cover ownership percentages, financial contributions, governance structure, decision-making processes, exit mechanisms and dispute resolution procedures. A thorough and transparent pre-JV agreement ensures that all parties involved have a clear understanding of their roles, responsibilities and expectations, and lays a solid foundation for a successful and harmonious JV.

The regulatory requirements for JV disclosure cover several key stages in the life-cycle of the partnership. It begins with the signing of the heads of terms agreement, where companies must disclose their intention to form a JV and outline its primary objectives. As the JV progresses towards completion, more comprehensive disclosures are required, such as financial projections, governance structures and risk management plans. This information is critical for stakeholders and regulators to assess the viability of the partnership and its potential impact on the market.

Post-closing, ongoing disclosure obligations come into play, requiring regular reporting on the JV’s financial performance, milestones achieved and significant changes. Compliance with these requirements is essential to avoid legal consequences and to maintain transparency and credibility with investors and other stakeholders. Involving legal and regulatory experts throughout the process can help ensure a robust and compliant approach to JV disclosure.

Setting up a JV under German law requires a comprehensive approach, taking into account legal, financial and operational considerations. The key step is the drafting of a detailed JV agreement that outlines the respective roles, responsibilities and profit-sharing arrangements of the parties involved. Registering the JV as a separate legal entity with the appropriate regulatory bodies is essential to ensure compliance with local laws and regulations.

In addition, consultation with legal and tax advisers is highly recommended to address potential complexities and tax implications. Proper due diligence and a clear understanding of the partners’ objectives are essential for a successful and sustainable JV vehicle.

To document JV terms, consider the JV vehicle (eg, limited liability company, partnership) and tailor agreements accordingly. Cover key terms such as ownership, management, profit sharing, decision-making, exit strategies and dispute resolution. Seek legal expertise for accurate documentation.

In a JV, successful decision-making relies on clear leadership, open communication, shared goals, data-driven insights, consensus among partners and effective conflict resolution. Regular evaluation ensures continuous improvement in the overall performance of the JV.

The financing of a JV typically involves a combination of debt and equity. Both partners contribute financial resources to establish the venture, and the proportion of debt and equity may vary depending on the nature of the project and the risk-sharing preferences of the participants.

In some cases, the JV agreement may include obligations for future funding to support ongoing operations or expansion. These future funding obligations could be based on the agreed business plan or specific milestones.

If a venturer contributes additional equity to the JV, changes in ownership are likely to occur. The extent of these changes will be determined by the terms of the JV agreement. The parties should carefully negotiate and decide the implications of future equity funding to avoid potential conflicts or imbalances in ownership and control. It is essential that all parties have a clear understanding of the funding structure and ownership dynamics to ensure a successful and sustainable collaboration within the JV.

Deadlocks between the board and JV partners are not uncommon in the business world. These impasses can arise because of differing interests, priorities or decision-making processes within the partnership. However, there are a number of approaches that can be taken to resolve such impasses effectively:

• Mediation and negotiation – One common method involves engaging in mediation or negotiation sessions to foster open communication and find common ground. An impartial mediator can facilitate discussions and guide parties towards mutually agreeable solutions.
• Dispute resolution mechanisms – Many JV agreements include specific dispute resolution mechanisms, such as arbitration or expert determination. These mechanisms provide a structured approach to resolve deadlocks impartially.
• Escalation clauses – Some agreements may contain escalation clauses, whereby unresolved issues are referred to higher levels within the partner organisations. This can encourage senior management to step in and resolve deadlocks.
• Exit strategies – In severe deadlocks, exit strategies may be considered, allowing a partner to sell its stake to the other partner or a third party. This can help avoid prolonged conflicts that may harm the venture’s overall performance.
• Revisiting governance structures – Occasionally, reassessing the governance structure, decision-making processes or voting rights can lead to a more equitable distribution of power and prevent future deadlocks.

In conclusion, addressing deadlocks between the board and JV partners requires a combination of open communication, effective dispute resolution mechanisms, and a willingness to adapt the partnership’s governance structure if necessary. By employing these strategies, JV partners can ensure a smoother and more successful collaboration in the long run.

In addition to the primary legal agreements, various supporting documents play a crucial role in business transactions. These documents are essential for ensuring a smooth and secure process, protecting parties’ interests and maintaining confidentiality. Some of the most common supporting documents include:

• IP licences – Intellectual property (IP) licences grant permission to use patented technologies, copyrighted materials or trademarks. These agreements define the terms, scope and duration of the licence, protecting both the licensor’s and licensee’s rights.
• Agreements to transfer assets – During mergers, acquisitions or asset sales, agreements to transfer assets are fundamental. These documents outline the terms and conditions of transferring ownership, rights and liabilities of specific assets.
• Non-disclosure agreements (NDAs) – NDAs are vital for safeguarding sensitive information shared between parties during negotiations or collaborations. They legally bind the involved parties to maintain confidentiality and protect proprietary data.
• Service level agreements (SLAs) – SLAs are contracts that define the level of service expected from a service provider. They outline the specific services to be delivered, performance metrics, response times, and penalties for failing to meet the agreed-upon standards. SLAs are often used in outsourcing arrangements and vendor-client relationships to ensure accountability and quality of service.

These agreements provide a comprehensive framework for a successful JV. They help establish a strong foundation for co-operation, risk-sharing and mutual benefits between the JV partners.

In the context of a JV legal entity in Germany, the structure of the board of directors will be governed by the relevant laws, such as the German Commercial Code (Handelsgesetzbuch) and/or the German Limited Liability Company Act (Gesetz betreffend die Gesellschaften mit beschränkter Haftung – GmbHG), as well as the articles of association of the JV company.

Typically, the board of directors would consist of representatives appointed by each participant in proportion to their respective shareholdings or contributions. With regard to voting rights, the German legal system recognises the principle of “one share, one vote”, ie, each share entitles its holder to one vote at the general meeting. This principle ensures an equal distribution of voting power among shareholders, irrespective of the financial or non-financial contributions they have made.

However, it is important to note that the articles of association may, under certain circumstances, deviate from the “one share, one vote” principle by introducing “weighted voting rights”. Such a deviation must be explicitly provided for in the articles of association and requires a legitimate reason, such as the protection of specific strategic interests or the protection of minority shareholders.

In Germany, the main duties of (managing) directors are set out in company law, specifically in the German Stock Corporation Act (Aktiengesetz), the German Limited Liability Company Act (GmbH-Gesetz) and/or the respective articles of association. Directors in Germany have a fiduciary duty to act in the best interests of the JV and the company they represent.

Directors’ responsibilities include making informed decisions, exercising due diligence and prioritising the success and long-term profitability of the JV. They must act in a way that benefits the JV as a whole, taking into account the interests of all stakeholders, including shareholders, employees and business partners.

However, directors may have competing duties if they have been appointed by a particular JV participant. In such cases, they must ensure that they do not unduly favour the interests of the appointing party over those of the JV. Failure to manage this potential conflict of interest could result in personal liability.

To address these concerns, German law emphasises the importance of transparency and good corporate governance. Directors are required to disclose any conflicts of interest to the board of the JV and to abstain from participating in decisions where their personal interests could influence the outcome.

In terms of delegation of functions, the JV board in Germany may delegate certain tasks to subcommittees. However, the ultimate responsibility for these delegated functions remains with the board and the directors who oversee the activities of the subcommittees.

Conflicts of interest are managed in Germany through a strong regulatory framework that promotes transparency and fairness. Companies are required to disclose potential conflicts of interest to stakeholders, and board members have a high fiduciary duty to act in the best interests of the company.

If an individual sits on the board of a JV company because of his or her position with the JV participant, this may be considered inappropriate if it compromises the independence and impartiality of the board. Such situations can lead to biased decision-making that favours the JV participant rather than the broader interests of the JV company and its stakeholders.

To avoid conflicts, companies should establish clear policies and recusal procedures and conduct regular reviews to ensure compliance with legal and ethical standards. Transparency and compliance are essential to maintaining trust and credibility in the corporate environment.

There are several critical IP considerations that come to the fore when forming a JV entity. These factors are critical to the success and protection of the JV. There are two main categories of these concerns: those relating to the JV entity and those relating to the contractual collaboration.

In the area of JV legal entities, the focus is on the following aspects:

• Ownership and contribution of IP – The cornerstone lies in unequivocally establishing the ownership and contributions of IP from each partnering entity. This encompasses a broad spectrum of IP assets, including patents, trademarks, copyrights, trade secrets and know-how.
• IP valuation – A meticulous valuation of the IP assets is pivotal. This precise assessment is pivotal for determining fair ownership interests and the formulation of just compensation mechanisms.
• Licensing arrangements – A key determination revolves around whether the JV entity will engage in licensing IP from the parent companies or embark on the creation of an autonomous IP portfolio. Crystal-clear terms and conditions must be stipulated within these licensing arrangements.
• Exit strategy – Contemplation must extend towards the fate of IP assets in scenarios of JV dissolution or the exit of a partner. Mechanisms such as buy-out clauses or the reversion of IP assets to their original proprietors necessitate careful consideration.

When entering into contractual collaborations, it is essential to carefully address a range of key IP issues to ensure a solid foundation for the partnership:

• Ownership and definition of IP – The delineation of ownership over existing IP, coupled with the ownership of IP conceived during the collaboration’s duration, assumes paramount importance. The scope of collaboration must be precisely demarcated to exclude IP that exists external to the project’s confines.
• Scope of use – A meticulous specification of the extent and purpose of IP utilisation within the collaborative effort is indispensable. This could range from IP confined within the collaboration to broader grants of rights.
• Confidentiality and trade secrets – The safeguarding of confidential information, trade secrets and know-how shared among collaborators is imperative to obviate unauthorised use or disclosure.
• IP infringement indemnity – The allocation of responsibility for indemnification in cases of IP infringement arising from the collaborative activities is a vital consideration.
• Protection of jointly developed IP – The establishment of robust protocols for identifying, safeguarding and sharing jointly developed IP is pivotal to circumvent potential future disputes.
• Dispute resolution – Mechanisms for resolving IP-related disputes must be concretely defined, inclusive of potential breaches of IP-related contractual obligations.
• IP and antitrust – Always pertinent, the interplay of IP and antitrust law assumes significance, particularly in cases where collaborators are also competitors.

The decision between licensing and assigning IP rights has significant implications and should be made in alignment with the strategic objectives of a JV. Each approach offers distinct advantages and disadvantages.

Licensing IP rights involves permitting the original owner to maintain ownership while granting specific usage rights to the JV. This allows the owner to retain control and continue exploiting the IP beyond the scope of the JV. Furthermore, licensing fees can serve as a valuable revenue stream. However, a downside is that the original owner’s influence over the JV’s utilisation of the IP might be restricted. The terms of the licensing agreement require careful negotiation and enforcement.

On the other hand, assigning IP rights involves a complete transfer of ownership to the JV, providing clear and unambiguous control over the IP. This streamlines decision-making processes and reduces the need for ongoing negotiations. Nevertheless, the original owner relinquishes all rights to the IP, potentially affecting its applicability in other contexts.

The choice between licensing and assignment hinges on the specific strategic goals of the JV partners and the IP’s role within the overall venture:

• Licensing is typically preferable if partners desire to retain ownership and authority over their IP, or if the IP holds broader applications beyond the JV’s scope.
• Assignment may be more suitable when the JV’s success is closely tied to the IP, and partners are willing to surrender ownership for the sake of streamlined decision-making.

In summation, the establishment of a JV within the German jurisdiction mandates scrupulous attention to intellectual property nuances. Foundational aspects encompass ownership, valuation, licensing, safeguarding and exit strategies. These tenets are meticulously articulated within the JV agreement to preclude potential disputes. The choice between licensing and assignment hinges on strategic goals and the IP’s role in the venture’s prosperity. Engaging legal experts well versed in both intellectual property and German law is a prudent course of action for the effective navigation of these intricate matters.

Environmental, Social and Governance (ESG) considerations have become integral for businesses and JVs due to several compelling reasons. One of the primary drivers is risk management, as ESG factors hold the potential to directly impact the financial performance and reputation of JVs. Neglecting environmental risks such as pollution and resource scarcity, social risks such as labour practices and community relations, and governance risks such as ethical leadership and transparency can lead to legal liabilities, financial losses and reputational harm.

In today’s regulatory landscape, adherence to ESG regulations is paramount. Governments and regulatory bodies are imposing stricter ESG guidelines to address global challenges such as climate change and social inequality. JVs must ensure compliance with these regulations to evade penalties and secure their long-term viability.

Furthermore, the expectations of investors and stakeholders have shifted significantly. ESG performance now plays a pivotal role in investment decisions. JVs that prioritise ESG considerations are better poised to attract capital and maintain robust relationships with stakeholders, encompassing customers, employees and communities. This alignment with ESG principles also fosters long-term value creation.

To incorporate ESG into the fabric of a JV, certain actions and measures are essential:

• Due diligence – Thorough due diligence is a crucial starting point. Prior to establishing the JV, an exhaustive assessment of potential ESG risks and opportunities is imperative. This entails evaluating the JV’s ecological footprint, societal implications and governance practices.
• ESG integration in JV agreement – The JV agreement itself should reflect ESG commitments. Clarity in outlining the responsibilities of each participant concerning ESG matters is crucial. Defining ESG-related performance metrics and reporting mechanisms enhances accountability.
• ESG reporting and monitoring – A robust ESG reporting framework is essential for monitoring progress towards ESG goals. Regular disclosure of ESG-related performance to shareholders, investors and the public underscores transparency and commitment.
• Risk assessment and management – Regular risk assessments are vital to identify ESG-related risks that could impact the JV’s operations, reputation or financial performance. Developing strategies to mitigate these risks ensures business continuity.
• Innovation and research – Promoting sustainable practices within the JV’s operations is an essential objective. Encouraging the adoption of sustainable technologies and investing in research and development for environmental preservation, social welfare and ethical governance strengthens the JV’s sustainability.
• Training and education – Training and education form an integral part of ESG integration. Imparting ESG principles and practices to JV employees and management cultivates a culture of awareness and responsibility.

ESG integration is an ongoing process that necessitates periodic review and adaptation of strategies to accommodate changing regulations, stakeholder expectations and emerging sustainability trends.

It is prudent to collaborate with legal experts and ESG professionals to ensure alignment with the legal and regulatory landscape while contributing to the JV’s overall success and sustainability.

In the German jurisdiction, ESG regulations draw influence from both national and EU laws. Prominent ESG regulations in Germany include the CSR Directive Implementation Act, which mandates large companies to disclose non-financial and diversity information, encompassing ESG aspects. The Sustainable Finance Disclosure Regulation impacts financial market participants, imposing disclosure obligations related to environmental and social aspects of investment products. The EU Taxonomy Regulation establishes a framework for categorising environmentally sustainable economic activities, influencing investment decisions and disclosures. The German Sustainability Code (DNK) furnishes guidance for voluntary reporting on sustainability facets, encompassing environmental and social performance. Adhering to these regulations ensures a comprehensive approach to ESG integration within the German context.

JVs in Germany can be terminated in a number of ways, depending on the terms of the JV agreement and the applicable legislation. A JV may terminate at the end of a predetermined period, unless the parties agree to extend it. Some JVs are formed for specific projects or objectives; once these are achieved, the JV may be terminated. The JV partners may mutually decide to dissolve the venture at any time. A partner may also have the right to terminate the JV for reasons specified in the JV agreement, such as serious breach of contract or insolvency of a partner. In certain circumstances, such as breaches of law, a JV may also be dissolved by the courts.

There are a number of important issues to consider when terminating a JV. The assets of the JV must be divided among the partners, either under the JV agreement or by separate agreement. All outstanding liabilities of the JV need to be settled, clarifying which party is responsible for each liability. Decisions regarding the JV’s employees, whether they will be taken on by one of the partners or let go, need to be made taking into account employment law considerations. Intellectual property rights created during the life of the JV must be appropriately shared or licensed. Confidentiality must be maintained for information exchanged during the life of the JV. Some obligations, such as warranties or non-compete clauses, may survive the dissolution of the JV. It is important to draw up a formal dissolution agreement that details all aspects of the JV’s termination. If the JV was registered, its dissolution should also be reported to the commercial register.

When transferring assets between JV participants in Germany, it is important to ensure accurate and fair valuation, whether based on the original contribution, current market value or a method outlined in the JV agreement. Transfers can have tax implications. For assets originally contributed by a participant, their return may not be taxable if left unchanged, but any appreciation could trigger capital gains tax. Conversely, the transfer of assets from the JV could be considered a distribution, with potential tax consequences.

Legal restrictions can also pose challenges, particularly where assets are subject to third party rights. For example, intellectual property rights may come with conditions that limit transferability. Thorough due diligence is required before any moves are made to confirm that assets are unencumbered and to avoid unexpected legal or financial consequences. The operational impact of the transfer should not be overlooked; moving key assets could disrupt the JV’s operations. If the assets involve employees, German labour law, including possible consultation with works councils, becomes a critical factor.

Careful documentation of the transfer is essential for a clear historical record and to protect the interests of the parties. Some assets, such as real estate or shares in companies, may require formal registration adjustments.