Understanding Legal Entities for Joint Ventures
You use the Legal Entities program (P09J10) to create the legal entities that are associated with a joint venture into the system. Legal entities can be companies, business units, projects, partners, or properties that are involved with the joint venture.
When you create a legal entity, the system stores the record in the Joint Venture Legal Entities table (F09J10).
Before you create legal entity records, you must create an address book record for the entity.
When you create a legal entity record, you can specify the type of entity. Entity Type values are stored in UDC (09J/ET). Joint venture entity types are user-defined and can include:
Balancing Interest Owner
Inside Owner
Joint Venture Entity
Joint Venture Owner
Memo Owner
Non-Active Owner
Outside Owner
You also specify the legal name of the entity and the extended legal name when you create the record. The text that you enter in the Extended Legal Name field is stored as a media object attachment when you save the legal entity record. Entering the legal name and extended legal name in the entity record ensures that all documentation associated with the joint venture includes this important legal information.
Depending on your business needs, you might require that a legal entity's name be unique. You can set the Validate for Duplicate Data Entry processing option on the Edits tab of the Address Book MBF -PO program (P0100041) to specify how the system validates legal name data. You can set up the system to allow duplicate entries without any validation, to show a warning when duplicate entries are created, or to show an error, and prevent you from entering duplicate entries.
The version of the P0100041 that is used in the validation process is defined in the processing options of the P01012 version that is specified in the processing options of the Legal Entities program (P09J10).
You can specify the voucher and invoice minimum amount when you create the legal entity. This value is used to determine when to create invoices or vouchers for this entity. The invoice minimum amount is in the currency specified for the legal entity in the Customer Master table (F0301), and the voucher minimum amount is in the currency specified for the legal entity in the Supplier Master table (F0401). For example, you might set up an entity with a minimum amount of 500 USD. If that entity, which is typically a joint venture partner, incurs a 100 USD cost, the system will not create an invoice at that time. When additional costs for that entity are created, and the total of those costs reaches 500 USD, the system will then create an invoice. The system prints the legal name and extended legal name from the legal entity record on invoices generated for joint ventures. The system retrieves this information from the legal entity record using the system date at the time the invoice is printed.
When you add partners to the Division of Interest (DOI) records for a joint venture, the system retrieves, if available, the legal entity information for the partners. Note that legal entity records are not required to include partners in a DOI. However, if you require the legal information that is associated with the legal entity program for reporting purposes, you should include the creation of legal entities as a required part of your joint venture setup process.
The records include effective dates, and the system retrieves the record that is effective based on the invoice or voucher G/L date used when creating joint venture invoices or vouchers. This ensures that the correct entity information is being used.
Partners who are also customers or suppliers might not want their standard payment terms indicating discounts applied to their joint venture invoices or vouchers. They can override their standard payment terms by specifying invoice and voucher payment terms that will be associated with their legal entity records. The system applies the payment terms from the legal entities when you generate invoices or vouchers.