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Joint Venture
What is a Joint Venture?
Generally, Joint Venture means a contractual arrangement between two parties for the joint control of the company assets and collectively they try to achieve their economic goal.
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.
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Types of Joint Ventures
Contractual Joint Venture
In India, it is the most common type of Joint Venture practice. Parties involved collaborate in this Joint Venture to create a successful venture without claiming any ownership or establishing a new legal entity, i.e. corporation or company. Collaboration for research and technologies, Joint Tenders for bidding, Strategic alliances, are some of the types of Contractual Joint Ventures.
Contractual Joint Venture
In India, it is the most common type of Joint Venture practice. Parties involved collaborate in this Joint Venture to create a successful venture without claiming any ownership or establishing a new legal entity, i.e. corporation or company. Collaboration for research and technologies, Joint Tenders for bidding, Strategic alliances, are some of the types of Contractual Joint Ventures.
Equity-based Joint Venture
In this Joint Venture, the parties come together in an agreement to form a new legal entity owned by each party. They are in charge of management and share benefits and losses as well.
What are different Forms of legal entities?
Company: Under the Companies Act 2013, parties can create a new company and subscribe to the share under the agreement or make an agreement with an existing company and acquire their share and become shareholders.
Partnership Firm: The Partnership Act 1932, provides for this form of Joint Venture. The parties decided to share the benefits of the undertaking they had agreed on. But this body is limited to Indians only, and in certain cases, NRI is also permitted.
Limited Liability Partnership (LLP) Firm: Under the Limited Liability Partnership Act 2008, this entity is formed. Previously foreign investors were not permitted to invest in LLP but it was permitted by the government in 2015.
Venture Capital Fund: It is an investment fund pool that manages the money of investors involved in investing in start-ups and small and medium-sized industries.
Trusts: According to India Trusts Act 1882, Trusts is defined as an obligation annexed to the ownership of property, and arising out of a confidence reposed in and accepted by the owner, or declared and accepted by him, for the benefit of another, or of another and the owner.