Joint Venture

A joint venture (JV) is a commercial arrangement in which two or more parties combine capital, assets or expertise to pursue a defined business objective while otherwise remaining independent. India has no standalone "joint venture" statute — a JV takes whatever legal form the partners choose, and the governing law follows from that form. The relationship is set out in a joint venture agreement (or shareholders' agreement) that fixes each party's rights and obligations.

Forms of a joint venture

• Incorporated JV: the parties float a new company under the Companies Act, 2013 (or an LLP under the LLP Act, 2008) and hold equity or contribution in agreed proportions, with liability limited to the entity.
• Unincorporated (contractual) JV: the parties collaborate under a written agreement without forming a separate entity; for income tax such an arrangement is often assessed as an Association of Persons (AOP).

Legal framework

• Companies Act, 2013 or LLP Act, 2008 governs an incorporated JV; the Indian Contract Act, 1872 governs the JV/shareholders' agreement.
• Where a foreign partner invests, the venture is subject to FEMA, 1999 and the DPIIT Consolidated FDI Policy, with entry through the automatic or government route depending on the sector and applicable caps.
• A large JV may attract the Competition Act, 2002, requiring prior approval of the Competition Commission of India (CCI) if it crosses the notified combination thresholds.

What the JV agreement covers

Typical clauses address capital contribution and shareholding, board composition and management control, profit and loss sharing, transfer restrictions, and exit, deadlock and dispute-resolution mechanisms such as arbitration.