Meaning of Joint Venture
A joint venture (JV) is an arrangement where two or more parties collaborate their resources for a specific project. It is a business alliance between two or more entities wherein the resources are mutually combined to achieve desired goals.
In the Indian law there are no specific laws for formation and operation of JV. It is a general belief that the formation of a joint venture entity reduces the risk factors involved in incorporation of a company and is also cost-effective.
JVs may be equity-based or contractual JVs
- Equity Based Joint Ventures (Incorporated) may be of the following types-
- Limited Liability Partnership
- Unincorporated Joint Ventures may be of the following types-
- Co-operation Agreements/Strategic Alliances
Government Approvals for Formation
Government approvals for formation of Joint Venture in India- For formation of a JV requires approval either from RBI (Reserve Bank of India) or FIPB (Foreign Investment Promotion Board) in case one of the partners is an Non- Resident Indian (NRI), foreigner or PIO (Person of Indian Origin).The Government of India and its agencies counsel guidelines, which distinguish JV from other entities. Indian JVs usually comprise two or more individuals/companies, one of whom may be non-resident, who come together to form an Indian private/public limited company, holding agreed portions of its share capital.
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To know more about Commercial Contracts & Agreements in India, read below: