Incorporated vs Unincorporated JVs

Choosing the right structure is the first (and most important) decision you'll make.

1. Unincorporated Joint Venture (The "Partnership")

This is the most common form for single-project tenders.

• Legal Status: Not a separate legal entity. It is a contractual relationship between two or more companies.
• Liability: Joint and Several. If one partner fails, the other is 100% liable to the client.
• Tax: The JV itself is not usually a taxpayer. Profits flow through to the partners, who are taxed individually.
• B-BBEE: Calculated using the "Consolidated Scorecard" method (Weighted Average).
• Pros: Fast to set up, no CIPC registration, easy to dissolve after the project.
• Cons: High liability risk for partners.

2. Incorporated Joint Venture (The "New Company")

This involves registering a new Pty Ltd company (SPV - Special Purpose Vehicle).

• Legal Status: A distinct legal person (Pty Ltd).
• Liability: Limited to the assets of the company (though banks/clients may still ask for parent company guarantees).
• Tax: The company gets its own Tax Number and VAT Number.
• B-BBEE: The new company must get its own B-BBEE certificate (or affidavit if EME/QSE). You cannot consolidate the parents' scores.
• Pros: Ring-fenced liability, clear brand identity.
• Cons: Slow to set up, administrative burden (annual returns, audits), tax complexity.

Verdict

For 90% of government tenders, an Unincorporated JV is preferred because it allows you to combine your existing B-BBEE and CIDB grades immediately without waiting for a new certificate.