Latest update October 18th, 2024 12:49 AM
Nov 26, 2017 News
By Kiana Wilburg
When two or more companies agree to marry their resources on a particular project, the benefits can be endless. In fact, such an alliance can be seen as a necessary one, especially if you would have been unable to reap the same rewards on your own. But for various reasons, such arrangements can end badly.
Therefore, how does one avoid the pitfalls and enjoy the sweet fruits of such a partnership? This question was answered during a two-day seminar that was held at the Marriott Hotel by the Guyana Office for Investment (GO-Invest). The event started on Monday and ended Tuesday evening.
The presenters included Senior Consultant of Res Consulting Limited, Francis Lewis; Attorney-at-Law Timothy Jonas; and Chartered Accountant, Chris Ram.
ACCOUNTING/ DUE DILIGENCE
Ram’s presentation was centred on the accounting aspect of strategic partnerships. Among the points raised by the Attorney-at-Law was the need for local entities to do their homework on their potential joint venture partner. This is an issue that has been overlooked by many companies here.
Ram said that companies should ask themselves a few questions when eyeing such arrangements. These include, “Does your partner have assets and where are these assets? Can I deal with these people and are they too big for me? Are they just trying to use me and then leave? Is this person the key driver in the entity…?”
Ram said that these questions are helpful guides in ensuring that major pitfalls are avoided.
Furthermore, the Chartered Accountant stressed to the stakeholders that in any partnership arrangement they choose, a proper shareholder’s agreement, a trusted auditor, and a strong partnership /joint venture agreement is necessary.
Ram also insisted on the need for joint partnerships to be characterized by proper record-keeping. In this respect, he said that companies should employ the use of international financial reporting standards.
LEGAL RAMIFICATIONS
Dealing with the legal ramifications of strategic partnerships was Attorney-at-Law, Timothy Jonas.
Jonas is a partner at the firm of De Caires, Fitzpatrick and Karran. He specializes in Commercial, Tax, Constitutional, Public, Corporate, Banking, Insurance and Contract Law.
The lawyer focused on the different types of strategic partnerships and three industries for his talking points; clothing retail, mining and transportation. In each case, Jonas was able to point out the pros and cons of employment relationships and the effect this can have on the success of a joint venture.
Jonas also highlighted the steps which have to be taken when strategic alliances take certain forms. In this regard, he pointed out that the tax obligations are different for two companies that form a joint venture partnership as opposed to establishing a company that represents the alliance.
THE ALLIANCE
Senior Consultant of Res Consulting Limited, Francis Lewis addressed the management side of strategic partnerships. Lewis spoke to the business climate in Guyana. He also discussed with members of the audience, their concerns regarding strategic partnerships.
The issues that came out in this regard were centred on the need to ensure profitability for stakeholders involved, assessing the risks that come with certain partnership opportunities, and the framework that is needed to ensure work is done within timelines.
Lewis acknowledged that while joint ventures can bring several benefits to the stakeholders involved, close to 50 percent of these alliances fall apart due to the wrong strategy being employed.
DATABASE
The need for a database of interested joint venture partners here was also brought up at the seminar. During one of the question and answer segments, a German businessman noted that he came to Guyana with the interest of finding a partner, but could not find an agency which has a database of such interested persons.
Chief Executive Officer (CEO) of GO-Invest, Owen Verwey, noted that while there is no such record at the moment, the forum certainly serves as one which would lead to that initiative being taken up by GO-Invest and other relevant parties.
FOREIGN COMPANIES CONCERNED
It was in September last that several Canadian firms flocked to Guyana’s shores in search of partnerships with local companies to access opportunities that will arise as the nation prepares for oil and gas.
Verwey noted that several meetings were arranged between those foreign companies, local entities, government institutions and non-profit institutions. Verwey noted that the biggest feedback received by GO-Invest was that companies here do not understand the basics of a joint venture relationship.
He said, “So from then to now, we have been looking at the option of running an event that brings awareness to this issue. We aren’t an academic institution and we do not wish to get into that, but we want to start the awareness process and hopefully out of that, the institutions that deal with this can take the lead and go forward with the relevant course…”
FOR ALL SECTORS
Going forward, Verwey articulated that GO-Invest does not intend for the information from this seminar to only benefit partnerships for the oil and gas sector. He said that it is for the benefit of all sectors. Verwey said, “This is not an oil and gas economy. This economy has been one of agro processing and natural resources and it will continue to be like that. So the joint venture sessions being organized are not only for the benefit of oil and gas. It is focused on agriculture, forestry, mining, services and everything else.”
He added, “I think that is a big plus and it is one that we want to encourage…”
October 1st turn off your lights to bring about a change!
Oct 18, 2024
Over $2M in cash and other incentives up for grabs Kaieteur Sports – The Budhan Memorial Turf Club (BMTC) situated at No 66 Village Corentyne, Berbice is expected to come alive this...Peeping Tom… Do the right thing, President Ali! Kaieteur News – An independent review of the investigation into... more
By Sir Ronald Sanders Kaieteur News – There is an alarming surge in gun-related violence, particularly among younger... more
Freedom of speech is our core value at Kaieteur News. If the letter/e-mail you sent was not published, and you believe that its contents were not libellous, let us know, please contact us by phone or email.
Feel free to send us your comments and/or criticisms.
Contact: 624-6456; 225-8452; 225-8458; 225-8463; 225-8465; 225-8473 or 225-8491.
Or by Email: [email protected] / [email protected]