Joint Venture Registration in India - Overview
The purpose of Joint Venture Registration is to accomplish a specific task by two or more parties. Joint Venture is very trendy in India due to less legal complication compared to any partnership business. JV is a temporary informal agreement between two or more parties to manipulating a new project with their resources. In JV each party is responsible for losses and debt of the business and share the profit as per the ratio of investment. Though there is no specific law for Joint Venture but on a few kinds of JV government approval is required. Tax Seva Kendra offers online Joint venture registration service for Indian citizen at a much affordable price. Choose a plan according to the nature of your business.
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Joint Venture Registration Package
- What we provide
- Documents required
- Name of the Firm
- Object of the Firm
- Aadhaar card of Partners
- Any Special Terms & Conditions
- % of Share Distribution
- Monthly Remuneration
- Address Proof of the Registered Office (Rent Agreement, Receipt, Electrical Bill, Owner Property tax)
- Passport size photos of Partners
- Email and Mobile No. of the Partners
New Insights and Expertise
Beginning a Joint Venture gives the chance to increase new bits of knowledge and aptitude. Consider it; the market is currently route simpler for you to comprehend given the short-term partnership that you will enjoy in JV.
As JV is incorporated by multiple people, here needful resources for business do not fall short for executing the business smoothly.
JV is a temporary informal agreement between two or more parties to manipulating a new project. Here no long-term commitment is promised by any parties.
Sharing Risks and Costs by Each Party
In JV resources and other required material is supplying by each party. On the other side, each party is responsible for losses and debt of the business and share the profit as per the ratio of investment.
Advantage in Flexibility
As JV is temporary agreement between two or more parties, here every party is able to enjoy flexibility in interest of business and own.
Ways to Exit a Joint Venture
In the course of events of divestiture and union, a Joint Venture offers an imaginative route for organizations to escape non-core business.
The objectives of a joint venture set up most of the times unclear and unrealistic. So a lot of research should be done before getting into a joint venture.
There are times when flexibility is restricted in a joint venture and and it is undynamic. When that happens, members have to focus on the joint venture, which in turn affects their individual businesses.
Lack of equal involvement
It is highly unlikely for all the companies working together to share equal amount of involvement and responsibilities. But they are entitled to equal pay though.
Excessive Research and Planning
The success of a joint venture highly depends on thorough and effective research and analysis of the objectives.
As a joint venture involves different ventures from different horizons with different goals, there is often a lack of communication between partners. This affects overall performance of a joint venture.
Unreliability of partners
There is no guarantee of partners giving their 100% attention to the project. This makes them unreliable. Again, this is a big drawback.
Memorandum of Undertaking (MoU) or Letter of Intent (LoI)
MoU is a non-binding document that is used in the early stages of negotiation between the parties, which states their duties and lays down a road map for the future.
Definitive Agreements (depending upon the chosen structure)
Definitive agreement lays down the mutual rights and obligations of parties in respect to the JV
It also states the manner in which the parties will conduct themselves in operating and managing the JV.
The following are some of the most significant clauses that are required to be carefully incorporated into the definitive agreements:
- Object and scope of the JV
- Financial arrangements to be made
- Shareholding pattern
- Composition of board of directors
- Management Committee
- Frequency of board meetings and its venue
- General meeting and its venue
- Composition of a quorum for important decision at board meeting
- Transfer of shares
- Dividend policy
- Employment of funds in cash or kind
- Change of control
- Restriction/prohibition on assignment
- Non-compete parameters
- Break of deadlock
- Jurisdiction for resolution of dispute
- Termination criteria and notice
- Specific obligations of the parties
- Condition precedent and condition subsequent
- Provision for future issues of capital
- Equity participation by local and foreign investors
- Casting vote provisions
- Laws Applicable etc
Other important agreements will include the Agreements to set up the transfer of whatever the JV partners are contributing to the Joint Venture, for the fulfilment of the objectives of the Joint Venture. This will include Technology Transfer Agreements, Intellectual Property Assignment or licence Agreement, Business Transfer Agreement etc.
The following guide will give you an idea of how to register a Joint Venture.
Step-1: Locate an Indian partner
Step-2: Venture Agreement setting out the rights and responsibilities of the Parties forming a Joint venture
Step-3: In case the Joint Venture Company is a new company, incorporate a new company (public or private) and invest in agreed ratio. However, in case the investment is being made in an existing company by acquisition of shares by the foreign company, complete the share acquisition procedure.
Step-4: Commence Joint Venture Business
It takes about 7 to 10 business days for setting up a joint venture.
The fee ranges from Rs 3500 to Rs. 11,500.
We at TAX SEVA KENDRA provide access to reliable and experienced professionals and coordinate with them to fulfil all your legal requirements. We handle all the documentation and ensure a seamless interactive process with the government. We provide transparency in our services so that you have full clarity. With a team of experienced business advisors and legal professionals, we strive to provide the best in legal services.
Do we need to register joint venture agreement?
Yes as Corporate joint ventures are regulated by the Companies Act, 2013 and the Limited Liability Partnership Act, 2008; it shall also be subject to the country’s tax laws, The Foreign Exchange Management Act of 1999, labour laws (such as Code on Wages Act, 2019, Industrial Disputes Act, 1947, and state-specific shops and establishment legislation), The Competition Act of 2002, and various industry-specific laws.
What are the documents required for joint ventures?
The documents required are:
- Memorandum of Undertaking (MoU) or Letter of Intent (LoI)
- Definitive Agreements (depending upon the chosen structure)
- Other Agreements (such as Technology transfer agreements/BTA etc.)
What are the types of Joint ventures?
Types of joint venture are as follows:
- Limited co-operation. This is when you agree to collaborate with another business in a limited and specific way
- Separate joint venture business. This is when you form a separate joint venture business, possibly with a new company, to handle a particular contract.
- Business partnerships.
Do Joint Ventures file tax returns?
Any profits made from a joint venture flow through to the individual members and the portion of the profit that each member receives is claimed on that member's individual or corporate tax returns. The venture itself does not make a tax filing on any of the funds that flow through it.
Is it a legal identity?
Since the joint venture is not a legal entity, it does not enter into contracts, hire employees, or have its own tax liabilities.
Who is liable in a joint venture?
In a joint venture the members are liable only for issues relating directly to the single project of the venture.
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A. JV is a temporary informal agreement between two or more parties to manipulating a new project with their resources. In JV each party is responsible for losses and debt of the business and share the profit as per the ratio of investment.
A. The purpose of Joint Venture is to make a partnership between two or more parties and execute the project in a short-term period. Here no party is committing for long term business relation.
A. Generally, two types of Joint Venture in India are as follows-
(a) Un-incorporated Joint Venture- This kind of Joint Venture has not separate corporate entity and does not involve the incorporation process. This kind of JV is incorporating for a temporary basis to executive the purpose.
(b) Incorporated Joint Venture- This kind of Joint Venture is with the private or public limited company with limited liabilities and here shareholders are the joint venture participants. Here shareholders have no right on the company’s assets.