Joint Venture

Joint Venture Registration in India

MCA specified the meaning of joint venture as-“joint venture, would mean a joint arrangement, entered into in writing, whereby the parties that have joint control of the arrangement, have rights to the net assets of the arrangement. The usage of the term is similar to that under the Accounting Standards.”

A Joint Venture may be defined as any arrangement whereby two or more parties co-operate in order to run a business or to achieve a commercial objective. This co-operation may take various forms, such as equity-based or contractual Joint Ventures. It may be on a long-term basis involving the running of a business in perpetuity or on a limited basis involving the realization of a particular project. It may involve an entirely new business, or an existing business that is expected to significantly benefit from the introduction of the new participant. A Joint Venture is, therefore, a highly flexible concept. The nature of any particular Joint Venture will depend to a great extent on its own underlying facts and characteristics and on the resources and wishes of the involved parties. Overall, a Joint Venture may be summarized as a symbiotic business alliance between two or more companies whereby the complimentary resources of the partners are mutually shared and put to use. It is an effective business strategy for enhancing marketing, positioning and client acquisition which has stood the test of time. The alliance can be a formal contractual agreement or an informal understanding between the parties.

Global proliferation of business and commerce has given an international dimension to Joint Ventures. Corporate entities across the globe seek cross-border alliances to share the resources, opportunities and potential to deliver cutting edge performance. Such alliances are designed to suit the commercial requirements of parties and vary from a mere transitory arrangement for one partner to establish its presence in a new market to a calculated step towards a full merger of the technologies and capabilities of the partners.

In sectors where 100% FDI is not allowed in India, a joint venture is the best medium, offering a low risk option for companies wanting to enter into the vibrant Indian market. All companies registered in India, even those with up to 100% overseas equity, are considered the same as local companies.

Corporate joint ventures are regulated by the Companies Act, 2013 and the Limited Liability Partnership Act, 2008.Corporate Joint Ventures will also be subject to the country’s tax laws, The Foreign Exchange Management Act of 1999, labor 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.

A Joint Venture may be formed with any of the business entities existing in India.