Registration of joint venture agreement in india

Agreement between parties who. How to start a joint venture company in India? Are joint venture agreements enforceable in India? What is the model of joint venture agreement?

Are corporate joint ventures regulated in India?

In order to get registered as joint venture Company, Foreign Company will have to become shareholder in new Indian company and then such joint venture company will be considered as Indian domestic company. There are no separate law for registering as joint venture in India although approval from RBI or government has to be taken. In sectors where 1percent 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 1percent overseas equity, are considered the same as local companies. A JV may be formed with any of the business entities existing in India.

See full list on india -briefing. Choosing a good home partner is the most important tool to the success of any joint venture. Once an associate is selecte normally a memorandum of understanding (MoU) or a letter of intent is signed by the parties – stressing the foundation of the future joint venture agreement.

Terms and conditions should be properly assessed before signing the contract. Negotiations need an understanding of the cultural and legal background of all the involved parties. The JV union should obtain all the required governmental approvals and licenses within a specified period. Foreign companies no longer require a no-objection certificate (NOC) from the Indian associate for investing in the sector where the joint venture ope.

Equity joint venture This is an understanding whereby an independent legal entity is created in accordance with the agreement of two or more parties. The associated parties undertake to provide money or other resources as their contribution to the capital or assets of the corporate entity. This structure is ideal for long-term, broad-based joint ventures, and include joint venture companies and joint venture limited liability partnerships (LLPs). Contractual joint venture This type of joint venture might be used where the organization of a detached legal entity is not needed or the creation of such a separate legal entity is not feasible. This type of agreement is preferred in situations that involve a temporary task or a limited activity, or the JV needs to be established for a limited term.

Though a joint venture in the form of an incorporated company is the most popular recourse among foreign investors in India, other types of JVs are also available: Incorporated 1. Limited Liability Partnership. In case of a company JV, the parties to the arrangement may either incorporate a new company or collaborate with the promoters of an existing company. Setting up a new companyprovides the most flexibility as the entity can be structured according to the specifications, intentions, and obligations of the associated parties.

A private limited company must have at least two shareholders, while a public company should have at least seven shareholders. The following are the main advantages for a foreign investor choosing a JV structure when entering India: 1. Access to the established contacts of the Indian partners, which will help ease the process of setting up operations in India.

A JV also offers the associated parties an opportunity to jointly manage the risksassociated with new ventures. Through a JV, they can limit their individual exposure by sharing the liabilities. JVs offer many flexible business diversification opportunities to the partners. Certain market sectors remain restricted for foreign investment and a local partner with a certain shareholding in the company is a regulatory necessity for commencing business and making investments.

It is important to have the same opinion over the proposed management structure and to categorize which party has to organize early in the joint venture procedure. The management constitution, control, and safeguards should be agreed upon when preparing the memorandum of understanding (MoU). Foreign investors should note that in India, the JV agreement between the partners will not bind the JV company unless its terms are included in the AoA of the JV company.

Further, to avoid future conflicts, the JV parties should include a provision in the JV agreement stating that if the AoA is inconsistent with the provisions of the JV agreement, then the parties will amend the MoA and AoA accordingly. Earlier there were monetary caps on remittances (both lump sum fees and royalties) made for technology collaborations and license or use of trademark or brand name. Now, these restrictions and caps have been removed. India allows free of charge repatriation of profits once the entire domestic and federal (tax) liabilities are met. Historically, there has never been an occurrence that India has failed to provide foreign exchange for repatriation.

Investment exit processes are also fairly simple, and profits can be repatriated once all the tax debt and other compulsions are fulfilled. Troubles only arise when people escape or dodge these liabilities, or do so out of ignorance. Indian joint ventures often fall short because the domestic associates are not capable to fund enough resources to expand the business as rapidly as the foreign company had hoped for or because the local partners have a data advantage in terms of the local conditions of doing business and have different interests from the foreign firms. It is therefore advisable to have a clear exit plan in place from the beginning.

On the other han the Indian joint venture agreement may also provide for the termination of operations and the liquidation and closure of the venture. Any of those options can be used independently or in combination with each other. The exit strategy depends on the type of entity that was constituted.

Overseas firms should conduct a formal due diligence check to evaluate the expectations and limitations of the Indian associate, to check the validity of the partners’ business operations, to review the validity of the documents produced by the prospective partners, and to evaluate any risk factorsassociated with the potential partners. To register a private limited company, a minimum of two shareholders and two directors are required. A joint venture law may be described as an association between a group of persons (natural or legal entities) who enter into an agreement to do business together or to undertake a particular project , without losing their independent corporate structures.

Joint Venture Law In India. A joint venture not only minimizes the risk factors involved in entering into a new business area, but also reduces the costs involved. No registration is required under the Indian Registration Act, unless the joint venture agreement deals with transfer of immovable property rights. Domestic company joint ventures. TheAnswerHub is a top destination for finding online.

Developed by Lawyers. Browse our content today! Find agreement for joint venture on TheAnswerHub. The outstanding joint venture advantages are given separately in the section below.

It can also be said that joint venture agreements are said to be concluded when two parties enter into an agreement to share their resources to achieve a certain commercial purpose. Further, joint ventures in India should also consider establishing committees such as audit committee, to fulfil the role of a. While the former is a deal between multiple parties to work together for accomplishing a specific task which may or may not include a real estate project, the latter is restricted only to the. The parties agree to create a new entity by both contributing equity, and they then share in the revenues, expenses, and control of the enterprise in the proportion of their capital contribution. Looking for agreement for joint venture ?