Joint Arrangements by Antonio Dayag

Voting Rights
Case
Entity A
Entity B
Entity C
Other
Party
Required
vote to
direct
relevant
activities
Conclusio
n

Assessing the terms of the contractual arrangement

50%
30%
20%

50%
25%
25%

55%
25%
20%

35%
35%
None

Not
applicabl
e

Not
applicabl
e

Not
applicabl
e

Widely
dispersed

75%

75%

75%

75%

Joint
Control*

No joint
Control**

Joint
Control*

No joint
Control*
*

*Joint Control ~ the parties collectively control the

arrangement because they are the only combination of
parties that can control and the parties must unanimously
agree. In case 3, there is also a joint control because a
single combination is sufficient to achieve the minimum
proportion or voting rights. (25%>20%)
**No Joint Control ~ multiple combination of parties
could collectively control the arrangement, the
contractual agreement does not specify which parties
must agree, there is no unanimous consent. The
arrangement is treated as an ASSOCIATE. (case 2,
both 25%, case 4, ONLY 70% and there are other
parties)

Contractual Terms

Joint Operation
Terms of contractual
agreement

Rights to assets and

obligations

Right to assets

Parties share all the

interest
Parties share all
liabilities, obligations,
costs and expenses in a
specified proportion

Obligations for
liabilities

Revenues, expenses,
profit or loss (Basis)
Guarantees

Joint Ventur

Rights to the net ass

(joint arrangement i
liable not the parties
Parties have no inte

Joint arrangement is
liable for the debts a
obligations
~ contractual agreem
establishes that part
are liable to the
arrangement only to
extent or their
respective:
Investments
Obligations to contr
any unpaid or
additional capital
both
Relative performance
Share in the profit o
of each party to the
relating to the activi
arrangement
of the arrangement.
Parties are often required to provide guaranties
third parties.