- Business Joint Venture is very popular to form strategic alliances. Two parties, together, undertake some activity or project to accomplish. In Business Venture these parties share risk, profit, capital, human resources, technology, finances and all. It gives an opportunity to both the parties to obtain benefits of developing technology and gain expertise. Business joint venture is when two parties (individual/companies), both resident and one non-resident, undertake a project. Business of one party is transferred to the company. Shares are issued by that company and subscribed by that party, as the consideration for such shares. and,
- The above mentioned two parties, in agreed proportion, in cash subscribe to the shares of the joint venture company, start a new business.
- Promoter of an existing Indian company and a third party (individual/company), both residents and one of them non-resident, join to carry on the business of that company. After payment in cash, its shares are taken by the said third company. When there is an indolent of foreign partner in the Business Joint Venture then it is also known as International Joint Venture. Although there is not any specific law governing Business joint venture in India yet one need to take approval from government in case of foreign parties involvement. This permission is either taken from RBI or from FIPB.
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Business Joint Venture Agreement
Business Joint Venture Agreement helps both the parties in understanding the important roles and responsibilities. Business Joint Venture Agreement is of no use in the set of business without the appropriate filing of documentation and government approvals. Before signing Business Joint Venture Agreement both the parties should evaluate the guidelines written in the agreement and at the same time they should discuss and negotiate it thoroughly to avoid any misunderstanding. If it is international Joint venture then legal advise should be obtain from the proficient and skillful lawyers having eminent knowledge international laws.