When parties decide to develop certain business enterprises, they often form a corporation or other type of legal entity. The parties conduct business and create their relationships in the name of the new entity and within the framework of the bylaws to which they have agreed. Some form of incorporation is, in principle, necessary or advisable when engaging in business enterprises that have long-term objectives that are formed to develop an activity of a permanent nature, or that may require the participation of a number of shareholders who have contributed significant financial resources.
For other types of business enterprises, however, the parties may prefer to establish and define the relationships that arise from working together without creating a new legal entity. The parties maintain their individual legal status and each one continues to perform independently the activities that constitute the enterprise’s main purpose. In addition, the parties agree to jointly start a specific venture that, in most cases, lasts a specific period of time or that requires the performance of an endeavor with a limited goal. This is the area of economic activity in which the various forms of joint ventures are used most widely. For example, construction projects and mining explorations are widely conducted in Peru through what generally are called joint ventures. A joint venture allows two or more companies or persons to join to accomplish their objectives within the specific targeted activity, while maintaining their own legal individualities.