8.9 The participants will need to decide a general policy for how any available profits of the JV are to be distributed (assuming that the JV entity is intended to be able to distribute profits). The JV agreement should include a provision setting out the principles of the distribution policy.
8.10 As distribution policies can be expressed in a number of different permutations, advice should normally be sought from legal and financial advisers. Examples include:
● a requirement to distribute no less than X % of the realised profits each financial year;
● a requirement to distribute all profits in excess of working capital requirements as specified in an agreed budget or business plan;
● a requirement that no profits are to be distributed until a certain event occurs; and
● a distribution 'holiday' while the JV business gets established.
8.11 Investors in partnerships (including JVs) can get back their capital more easily than in corporate entities since the company rules on distributable profit/reserves do not apply.
8.12 In the specific case of distribution of surpluses from 50:50 JVs where the public sector partner is a Trading Fund, guidance has been issued by HM Treasury.68
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68 Guide to the establishment and operation of Trading Funds HM Treasury Central Accountancy Team, January 2001. Available from the HM Treasury website: www.hm-treasury.gov.uk/d/Guide_to_the_Establishment_and_Operation_of_Trading_Funds.pdf l.