Publications
Co-Productions &
Joint-Ventures: Issues
The Director's Chair, June 20, 2006
by Jindra Rajwans
Producers often realize that a
co-production or joint venture is a useful method to develop a film project
because of the complimentary skills and resources that each party brings to the
table and some of the benefits derived from international and inter-provincial
co-production treaties.
Whether the co-production or joint-venture is simple or complicated, a number of
important issues should be determined in advance so the parties understand the
nature of their relationship, rights, obligations and potential liabilities
involved in the project.
One of the first issues that arise in a co-production or joint venture is the
appropriate business structure that the parties will use to carry out the
project. Generally, there are four kinds of business structures that can be
chosen:
- Corporations;
- Partnerships;
- Limited Partnerships; or
- Limited Liability Companies (in the United States).
Although each structure has its specific
advantages and disadvantages, two common issues that many parties are concerned
about are potential liabilities and tax implications. In view of these concerns,
a corporation or a limited liability company is often utilized as the business
legal structure to carry out the project.
In a co-production or joint venture where the parties use a corporation as the
legal structure to carry out the project, the parties will usually become
shareholders of the corporation and will have to decide the appropriate
corporate structure and shareholding options (e.g. voting and non-voting stock,
and dividends).
Where one party may be providing the financing while the other party may be
contributing all the technical and administrative skills necessary to carry out
the project, or where both parties contribute capital and services, the parties
should consider a number of further issues which should be included in a written
co-production or joint venture agreement, including but not limited to the
following:
What services and/or resources will be provided by each party?
If a third party producer is required for the project, do both parties have to agree on an acceptable third party producer?
Should one party no longer want to be involved in the project and desire to carry out another project alone or with other parties, should the corporation have a first right of refusal to undertake the development of that project? Is there an exclusivity clause?
Who has authority to decide important business and financial, legal, and creative elements of the project? For example, in the case of a financier partner, one may not think that he or she is in the best position to determine creative elements pertaining to the project.
What rates of remuneration, if any, shall be provided to the parties?
Shall producer fees and executive producer fees that either party may be entitled to, and general overheads, be shared equally?
Shall all distribution decisions be made jointly?
What happens if one of the parties passes away or becomes bankrupt?
Are there management contracts? What do such contracts say about confidentiality and non-competition?
What happens if one of the parties breaches the agreement?
Although the above points are not meant to serve
as an exhaustive list of things to consider when entering into a co-production
or joint venture, they serve as a sample of some of the important issues that
producers and filmmakers should consider prior to carrying out their project.
The information in this article is not intended to be legal advice and is of a general nature. Consult a lawyer for advice for any specific situation.