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Are you looking forward to expand your business? Do you want to gain entry into new markets to make profits? Joint venture Business Plans are an attractive option. Joint Venture-JV is a special business relationship. Different people / businesses enter into contract for specific period. It is to achieve a special aim. Collective goal will help the businesses to reach their goal in an easy and efficient manner.
You may want to partner with another business that has resources and abilities. It can be technology, finance or channels of distribution. These are some of the good reasons why Joint ventures are becoming popular.
What is Joint Venture-JV?
It is a business association where two or more persons/entities enter in to agreement. These agreements / business plans get entered between businesses for making profits without permanent partnership. Joint venture members maintain their independence.
Partnership and Joint venture may look similar. But there is significant difference in their implications. A partnership is a long term business association but a JV can be a single business project. Businesses enter into JV business plans / JV agreement for individual benefit and share project goal. It can be to develop a product or Intellectual property rights. But partnership is about collective profits.
The legal obligations of JV Business Plans are a bit complex for a layman to understand. We are glad to assist you in joint venturing with another business. We strive to protect your business interest ensure your business remains compliant.
You need to be aware of the Joint Venture Business Plan compliance obligations. You need to conscious about the risk of forfeiting the contract. We know the nuances & pitfalls that they encounter during entering a business venture. Our firm assists in bidding of joint venture up to ensuring contract performance. We make sure that the parties qualify for joint venture.
What is an International Joint Venture?
Two international companies or individuals form a company. Business of one gets transferred to the other in return for a consideration. The consideration is in the form shares of the new company formed. Other party gets the share by paying cash.
Promoter shareholder can be resident or nonresident. He can buy shares in the Joint venture. Business houses need to take into account some practical considerations before JV contracts. Some countries have separate legal entity for joint venture business. But some countries do not make them any different from corporate.
The compatibility between the parties of joint venture leads to success. The parties need to have positive goal and conditions drawn out for them in the JV clauses.
One hundred percent foreign direct investment is not allowable in India. Hence foreign investors prefer to do business in India through Joint Venture Company. JV has low risk option for foreign business entering India.
Choosing business structure for your Joint venture in India
Joint ventures prefer to get incorporated as Private Limited Company. Company Registration in Chennai is simple and easy with professional help. It’s a popular recourse amongst foreign investors. Other types of Joint venture can also be formed.
- Limited Liability Partnership- LLP
- Co-operation agreements / strategic alliances
Company Joint ventures, the parties of JV may either incorporate new company or join hands with promoters of existing company. Setting up of new company gives more flexibility to the entity. You can have a structured specifications, obligations and intentions defined with the associated parties. Company Registration in Chennai is simple and easy through CAs. Get Company Registration Online in Chennai with Company Name Registration. Company registration process in Chennai is stress free through professional help.
LLP joint venture parties establish a new legal entity as LLP under Limited Liability Partnership Act. They can set up a new LLP or join hands with an existing one and start LLP joint venture. How do I register my firm? No worries. CAs offer end to end support.
Partnership joint venture is set up under Partnership Act. They include contractual and corporate JV. Partnership JV business structure gets defined by parties’ relationship. They must agree about business profit sharing, business management by all or any of them and other legalities. Partnership firm registration in Chennai is stress free easy process through Chartered Accountants in Chennai.
Joint venture business plans are Strategic alliance. The parties involved may prefer to act as independent contractors rather than share holders of company or enter into partnership. JV business plans scenario defines rights, duties, obligations expected from partners with JV, between the business parties and third parties. JV business plan defines duration of the legal relationship too. Joint venture business plans are legally binding agreements. Any breach gives the aggrieved party to seek legal action against the offender.
Laws governing Joint ventures in India
Corporate Joint ventures come under
- Companies Act,
- Limited Liability Partnership Act
- Foreign Exchange Management Act
- Min. Wage Act
- Industrial Disputes Act
- Shops and establishment legislation of respective states
- Competition Act
- Other industry-related laws.
How to prepare joint venture business plan or JV contract?
The first step of success of your joint venture is to choose a good home partner.
Once chosen parties sign a Memorandum of Understanding or letter of intent. It lays foundation for the future joint venture agreement.
It is wise to move forward with the JV Business Plan with a Chartered Accountant and Professional experts. They are proficient in Foreign Exchange Management Act and Indian Income-tax Act. They have good knowledge on Companies Act; international laws & other applicable Indian regulations
Assessment of terms and conditions is a must before signing of contract. It is necessary to understand cultural and legal background of the parties. All applicable Govt. and legal approval is necessary for joint venture. Foreign companies need not get no-objection certificate from Indian associate. Overseas companies can work-on their own now.
Important points to be borne in mind while entering in to joint venture Business Plans.
- What are the Applicable laws?
- What is the Shareholding pattern?
- What is the Composition of board of directors?
- Who are there in Management committee?
- Venue & Frequency of board meetings
- General Meeting & its venue;
- Quorum composition for important decisions
- Share Transfer
- Dividend policy;
- Employment of funds
- Change of control
- Restriction on assignment clauses
- Non-compete clauses
- Confidentiality clauses
- Indemnity clauses
- Deadlock clauses
- Jurisdiction for dispute resolution of dispute
- Notice and Termination clauses
Benefits of Joint venture
- A foreign investor can get in to India’s marketing & distribution channels.
- Indian partners’ financial resources are accessible through joint venture.
- Indian partners’ established contacts are accessible through joint venture. It eases foreign investors to set up their operations in India
- Associate parties can together manage the risks and share liabilities.
- Joint venture offers business diversification.
- Foreign investment is not allowable in India for certain sectors. A local partner is a necessity in such cases.
Why Choose CAs for Joint venture business Plan?
We specialize in drawing up joint venture Business Plans. Our Professional experts have experience in handling and launching many joint venture companies.
Many organizations think of downloading a joint venture template from the internet. Sign the same and go ahead with running the business. But there is more to entering in to Joint Venture agreement than signing the contract. Small businesses may be at risk of losing their business to the industry sharks.
Get in touch with us and fix up an appointment for free consultation.