Joint Venture Two parties, (individuals or companies), incorporate a company in India. Business 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.
Types of Joint Venture• Domestic Joint Venture• International Joint Venture
Domestic Joint Ventrue• The Domestic Joint Venture means all partners with the same nationality.
International JointVenture• The international Joint Venture set up by partners of different nationalities.
Advantage of JointVenture• Accessing additional financial resources• Sharing the economic risk with co- venturer• Widening economic scope fast• Tapping newer methods, technology, and approach you do not have• Building relationship with vital contacts
Disadvantage of JointVenture• Shared profit• Diminished control over some important matters• Undesired outcome of the quality of the product or project• Uncontrolled or unmonitored increase in the operating cost
Important Clause ofJoint Venture• The proportion of shareholding in the joint venture company• Specify nature of shares, indicate their transferability conditions.• Composition of the Board of Directors, Appointment of Chairman ,Quorum of Board meetings ,Casting vote provisions.• General meeting.• Appointment of CEO/MD.• Appointment of Management Committee• Important decisions with mutual consent of partners• Dividend policy• Funding provisions• Access conditions.• Change of control/exit clauses.• Anti-compete clauses• Maintaining Confidentiality• Indemnity clauses.• Assignment.• Break of deadlock.• Dispute Resolution• Applicable law.• Force Majeure.• Termination provisions.