Joint ventures and partnering

Types of joint venture
How you set up a joint venture depends on what you are trying to achieve. One option is to agree to co-operate with another business in a limited and specific way. For example, a small business with an exciting new product might want to sell it through a larger company's distribution network. The two partners could agree a contract setting out the terms and conditions of how this would work. Another option is to set up a separate joint venture business, possibly a new company, to handle a particular contract. A joint venture company like this can be a very flexible option. The partners each own shares in the company and agree how it should be managed. In some circumstances, other options may work better than a limited company. For example, you could form a business partnership or a limited liability partnership. You might even decide to completely merge your two businesses. For more information, see our guide on legal structures: the basics. To help you decide what form of joint venture is best for you, you should consider whether you want to be involved in managing it. You should also think about what might happen if the venture goes wrong and how much risk you are prepared to accept. It's worth taking legal advice to help identify your best option. The way you set up your joint venture affects how you run it and how any profits are shared and taxed. It also affects your liability if the venture goes wrong. You need a clear legal agreement setting out how the joint venture will work and how any income will be shared. See the page in this guide on how to create a joint venture agreement.

.Types of joint ventures. Three most common types of joint venture companies may be described as follows- [A] Two parties, who/which may be individuals or companies, one of them non resident or both residents, incorporate a company in India. For more help visit to: of one party is transferred to the company and as consideration for such transfer; shares are issued by the company and subscribed by that party. The other party subscribes for the shares in cash. [B] Alternately, the above two parties subscribe to the shares of the joint venture company in agreed proportion, in cash, and start a new business. [C] Promoter shareholder of an existing Indian company and a third party, who/which may be individual/company, one of them non-resident or both residents, collaborate to jointly carry on the business of that company and its shares are taken by the said third party through payment in cash. 2. Incorporation. In case a new joint venture company has to be formed in India, the following are pertinent issues to decide: [A] Formalities {1} whether the joint venture company will be a public or a private limited company, {2} the place of Registered Office of the Joint venture Company, {3} propose a 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

In case of public company. duly stamped.situated and the company is to be incorporated. after obtaining certificate of Commencement of Business for which the company has to file with the ROC prospectus/statement in lieu of prospectus. {4} choose the subscribers to the Memorandum of Association which will obviously include the partners to the joint venture and their nominees. the agreement cannot be enforced and the joint venture cannot proceed on the basis of the Agreement.Inter-corporate investment u/s 372A of Companies Act. For more help visit to: www. Approvals the Joint Venture agreement should be conditional upon obtaining all necessary approvals/ consents/ licenses /permissions of appropriate agencies of Government of India like RBI/SIA etc within specified period. and the statutory declaration u/s 149 of the Companies Act 1956. or received late. Where an Indian company [partner] acquires shares of the joint venture company which is exceeding 60% of its [Indian companys] paid-up capital and free reserves or 100% of its free reserves. If a foreign company acquires the shares. Read more: http://www.articlesnatch.joint-venture-guide. this section will not be invoked as it applies only to a "company" defined under section 3 {1} [I] of the Act which does not take into account a foreign company. whichever is Under Creative Commons License: Attribution No Derivatives .com. Section 372A will apply requiring prior Board decision of the Indian company as well as special resolution of its shareholders. If any of the approvals are not received.

Sign up to vote on this title
UsefulNot useful