Joint ventures and special-purpose vehicles are often mentioned together, but they solve different structural questions. One describes collaboration between parties; the other describes a legal vehicle created for a defined purpose. A project may use either, both or neither.

What a joint venture addresses

A joint venture allows parties to combine capital, technical capability, assets, licences, relationships or market access around a shared commercial objective. It may be contractual or conducted through an incorporated entity.

The central questions are who contributes what, who controls decisions, how profits and losses are allocated, how further funding is approved, and what happens if the parties disagree or wish to exit.

What an SPV addresses

A special-purpose vehicle is a separate legal entity established for a defined activity. In a project context, it may hold the project assets, enter contracts, receive revenue, borrow money and create a clear governance perimeter.

Legal separation does not mean automatic immunity. Sponsors, directors or related companies may still have obligations through guarantees, undertakings, law, accounting rules or the substance of the arrangements.

When both are used

Partners may agree to form a joint venture and use an SPV as the incorporated project company. The shareholders' agreement then governs the relationship between partners, while the SPV enters the operational and financing contracts.

Questions the structure must answer

  • Who owns the project and its assets?
  • Who appoints directors and controls reserved decisions?
  • How much capital is committed, and when?
  • How are cash flows distributed?
  • Which risks remain with sponsors?
  • What happens on default, deadlock or exit?
  • Which jurisdiction, tax and regulatory rules apply?
A structure is credible when responsibilities are clear—not when the entity chart looks complex.

Professional design matters

JV and SPV arrangements should be designed with qualified legal, tax, accounting, regulatory and financial advisers in the relevant jurisdictions. The right structure follows the commercial substance of the project.