Joint ventures and alliances are a special legal form of organisation of inter-company business.
A joint venture is an enterprise established for the purpose of a specific project or other business activity in which two or more enterprises combine their resources and capital while maintaining their legal status. In line with the constituent agreement, all decisions and instructions on financial transactions are made jointly by the parties, regardless of their participating interests.
The parties undertake to direct a portion of their assets, natural resources, knowledge and business relationships to a specific business project. The constituent agreement defines how the joint venture will be managed, how it will be controlled and how the profits and losses will be distributed, and the rights and commitments of the parties. The joint venture is registered and is a legal entity.
An alliance is an association of two or more organisations, enterprises or individuals established on the basis of an agreement within the relevant project. Unlike the constituent agreement of a joint venture, the alliance agreement is simpler and less liable and is concluded for a fixed or indefinite period, depending on the duration of the project to be implemented. In alliances, the parties undertake to work together for profit or for other purposes without forming a legal entity. Unlike a joint venture, an alliance is a non-legal entity and does not require state registration to operate. SOCAR also makes extensive use of the joint venture format, which covers various areas of business. At present, the company has 28 joint ventures and one alliance with various leading local and world companies.