JOINT VENTURE

A grouping of two or more individuals or legal entities who commence transaction together for mutual gain or to engage themselves in a commercial enterprise with mutual sharing. A joint venture (JV) is an unit formed between two or more parties for their economic activity. Here, the parties may agree to create a new entity and then organize, share expenditure, and revenue of that enterprise. The venture can be for one specific project or for continuing business association.

.International Joint Ventures ‡ Understanding cultural backgrounds of all the countries involved. ‡ Negotiating win-win contract. ‡ Understanding legal and regulatory regime of all the jurisdictions involved. ‡ Giving leeway for international environment ‡ Termination Terms and Conditions.

. The approval can be obtained from either from RBI or FIPB (foreign investment promotion board).Government Approvals for Joint Ventures All the joint ventures in India required government approvals. if a foreign partner or an NRI partner is involved.

The place of Registered Office of the Joint venture Company. Whether the joint venture company will be a public or a private limited company. 2. .Formalities 1. 3. Name of the joint venture company and check its availability from the Registrar of Companies (ROC) where the registered office of the company is to be situated and the company is to be incorporated.

Choose the subscribers to the Memorandum of Association which will obviously include the partners to the joint venture and their nominees. the new company may start business. (ii) in case of public company . 6. On receipt of certificate of incorporation. Prepare the Memorandum and Articles of Association in consultation with the joint venture according to Companies Act 1956 (Act) to ROC along with fees payable. 5. . immediately.4. (i) in case of private company.after obtaining certificate of Commencement of Business for which the company has to file with the ROC.

RBI has granted general permission to a non resident Indian citizen / person of Indian origin under FEMA And such company is also permitted to issue shares to the non residents subject to the condition that the total face value of shares is not to exceed Rs 10. approval of RBI will be required. one of the partner of the joint venture company is a non resident.Nonresident Partner In case.000 .

.Approvals The Joint Venture agreement should be obtained all necessary approvals/ consents/ licenses /permissions of appropriate agencies of Government of India like RBI/SIA.

Appointment of Chairman. indicate their transferability conditions. 3. 5. Appointment of Management Committee. Important decisions with mutual consent of partners 4. General meeting.Important clauses of a joint venture agreement 1. Appointment of CEO/MD. 6. Quorum of Board meetings. . The proportion of shareholding in the joint venture company Specify nature of shares. 7. Composition of the Board of Directors. 2.

Termination provision . 12. 10. Funding provisions. Dividend policy. 9.8. Dispute Resolution. 14. Change of control/exit clauses. Protection clauses. 11. 13. Applicable law.

Reasons for dissolving a joint venture ‡ ‡ ‡ ‡ ‡ ‡ Original venture met. Either or both parties develop new goals. Time agreed for joint venture has expired Legal or financial issues. . Original venture not met. Either or both parties no longer agree with joint venture aims.

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