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How Does Joint Venture Agreement Work?
A joint venture agreement is a collaboration between companies to fulfil a particular project.
Joint Venture Agreement
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Documents Required from Directors, Shareholders
- Pan Card Copy (Mandatory)
- ID Proof (Any one) – Driving License/ Voter ID/ Passport Copy/ Aadhaar Card
- Address Proof – Latest Bank Statement/ Latest Telephone or Mobile Bill/ Latest Electricity Bill.(MUST be less than 30 days old)
- Passport Size Photograph
Documents Required for Registered Office Address
- NOC – No Objection Certificate from the Owner of the Property
- Address Proof – Latest Telephone Bill or Mobile Bill/ Gas Bill/ Electricity Bill (MUST be less than 30 days old)
What Is a Joint Venture Agreement? - an Overview
A joint venture (JV) agreement is a financial collaboration between existing companies for the purpose of fulfilling some project. It is done by most companies that do not have the right tools, assets, and knowledge to complete a task. This is why they rely on other existing companies to collaborate and finish it. It does not affect the legal status of the collaborating companies. A JV agreement binds companies legally, defines the scope of mutual efforts, outlines disparities, and facilitates provisions for sharing the gains and enterprise operations. They are often seen between foreign companies and local companies in India. It is advisable to conduct an exercise in due diligence before investing in a JV agreement with another company. It is necessary that the JV agreement contains all the necessary terms and conditions that safeguard the interests of either company. With the help of Finnsdom, forming a JV agreement has never been simpler.
Benefits of Joint Venture Agreement
- Minimisation of Cost: A fruitful collaboration can result in more resources such as office spaces and access to suppliers and distribution networks. It saves costs, time, and energy to procure such resources without such collaboration.
- Cultural Alignments: It helps companies adapt to new markets. Foreign companies can understand the market trend and develop accordingly.
- Overcoming Legal Hurdles: JV agreements are preferred more because laws may not allow foreign companies to invest in certain sectors and industries.
- Minimal Liability: JV agreements allow companies to maintain their individual legal identity. It is a minimum liability alternative for businesses in which 100% FDI is employed.
- Sharing risks and rewards: In JV agreements there is the potential sharing and distributing of rewards. This motivates collaborating companies to fulfil the task successfully without risk of failure.
- Sharing of assets: JV agreements open avenues for collaborating companies to obtain and use assets such as human resources, intellectual properties and technology.
What Must a Joint Venture Agreement Include?
- Applicable law;
- 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;
- Confidentiality;
- Indemnity;
- Break of deadlock;
- Jurisdiction for resolution of dispute; and
- Termination criteria and notice.
Documents Required
- Documents related to the venture agreement shall bear the name of the joint venture.
- Documents prepared by either of the members, related to the venture or project that reflects the performance of activities completed under the contract.
- Copyrights (if any) are granted to a member of the agreement by another member to reproduce similar work.
- Documents that indemnify its members against claims, liabilities, damages, costs, and expenses sustained as a result of reusing the designs, and drawings as part of a project or other projects, under the venture.
Why Finnsdom?
Drafting an appropriate JV agreement is necessary as the interests of both parties need to be satisfied. A poorly drafted JV agreement is detrimental to the project and the collaboration. Hence it is important to seek guidance from legal experts. We at Finnsdom will always keep your interests in mind. We also allow up to two rounds of iterations with no extra cost. If there are changes that need to be made, our lawyers will do that for you. With the help of Finnsdom, we will give you the best experience as we house experienced professionals with in-depth technical knowledge who will guide you at every step of the way. With service standards that are client-centred, reliable, and ethical, we will always be here to support you.
Note: For every issue or concern you may have, our experts will assess your situation and advise you on the best course of action.
