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Joint Venture Agreement

A collective beginning of a new business or company by pulling in resources from individual companies involved is called a joint venture Agreement.

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All you need to know about a Joint Venture

India being a country with one of the highest populations on planet, has a massive range of businesses and industries to deal with. The categorisations vary from minor or small start-ups, to big, well-known companies that might or might not be owned by a single individual.

At times, businesses require comparatively huge capital or great experience for worthwhile establishment. Henceforth, two or more companies or independent businesses come together and form a kind of partnership also known as a joint venture.

What do you mean by a Joint Venture?

A collective beginning of a new business or company by pulling in resources from individual companies involved is called a joint venture.

In this type of partnership or business, the objectives of the parties involved are common and similar, that also include setting up of a new and independent business. Here, the legal status of the parties remain independent.

Objectives of a Joint Venture

There can be several purposes to establish a joint venture agreement in India. However, one of the most common ones that exists is to form a partnership with local businesses to step into the foreign markets.

Important points to consider before starting a Joint Venture in India

 

Every single party (company) involved in a joint venture shall be held accountable for the probable operating profits, losses and costs involved.

A joint venture can exist in innumerable forms, depending upon the major objective. Usually, you would find corporations, limited liability companies, strategic alliances and partnerships existing as the few common types.

To begin with a joint venture, one of the most important starting points is the establishment of a legal document or agreement. It would mention all the necessary terms and conditions relating to the business or venture.

What is a Joint Venture Agreement?

The Joint Venture Agreement officially details the common objective, individually pooled resources (by each company), regular duties, terms, responsible party to be held responsible in case of probable losses and much more.

The agreement precisely offers an understanding of the entire joint venture set up to avoid any possible conflict that might exist in the future. However, even if some obligation or disagreement develops over the time, the document would help resolve the same, based upon the contents mentioned.

How to make a Joint Venture Agreement in India?

Being an important document for the joint venture that you set up, it requires a detailed analysis and professional experience to establish one. To assist you with the same, we have got you online legal consultation services with a range of expert and experienced lawyers that not only assist you during the procedure, but help you come to a profitable decision over disputes.

You may go through the available list of online lawyers with their qualifications and details mentioned along, and decide choosing one, based upon your preference and requirement. You would have the entire control over whom you choose for your legal advice.

What should you consider before signing the joint venture agreement/contract?

  • The patterns of the shareholding criteria.
  • The decision relating to the Board of Directors.
  • The dividend policy.
  • Utilisation of the funds involved (cash/kind).
  • Possible restrictions on the assignments or projects held.
  • The management team or Committee.
  • Party responsible for the probable dispute or disagreement.
  • Regularity of board meetings.
  • Decided venue for the general and board meetings.
  • Share transfers and procedures.
  • Confidentiality clause.
  • The discontinuation or termination criteria, procedure and notice.

Advantages of Joint Venture Agreement in India

There are several benefits that a business may enjoy or experience while starting a new Joint Venture. A few of them are also explained below:

  • The onset of a new joint venture, not only profits the involved parties but offers an entirely brand new opportunity to establish a new business without having to deal with or keep up with the entire costs and risks involved.
  • Every single thing would be divided amongst the participants involved, depending upon the contribution or terms decided.
  • Furthermore, one gets the opportunity to start with a new business with greater knowledge and experience of the right parties involved. The probable profits would gradually grow leading to the overall business development in comparatively lesser time.
  • The establishment of a joint-venture helps each party use the resources of the other parties involved without actually paying the additional expenses. You may use the wide variety of incorporated resources that would gradually lead to a better profitable business establishment.
  • Also, the liabilities would not have to be handled by an individual party as it would be, consequently divided amongst everyone involved in the joint venture.
  • Presently , several businesses and market sectors require foreign investments to begin with. The existence of a party in your joint adventure who holds specific shares in the required company would act as a necessary requirement to begin with the business.

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