As we have already discussed that a joint venture is when-:
- Two parties, could be individuals or companies, incorporated a company in India. These two could be residents of India or else one of them is allowed to be non resident of India. Business of one party is transferred to the company. As the consideration for such shares, shares are issued by that company and subscribed by that party.
- 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.
Joint Venture Partnership is very famous. It has many advantages or benefits. Parties can mutually benefit each other in Joint Venture Partnership. It is always advisable to go through proper Joint Venture Partnership agreement to run a successful venture. This agreement lay down all the rights, duties, libilities and responsibilities of parties. All the tems and conditions are cleary written in this documents. One needs to fulfill all the important formalities and documents to start Joint Venture Partnership.
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Joint Venture vs Partnership
Joint venture and partnership is however similar but there are some difference also. Joint Venture is generally on temporary basis and sometimes also depends upon projects. Joint Venture is on contractual agreement between parties, undertake to complete a specific task while in partnership both the parties undertake activities together and also share profit and loss either equally or in some ratio. Once the task or activity or project is finished Joint Venture ceases whereas partnership firm continues until dissolved.