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Joint Venture Agreement

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About Joint Venture Agreement

Joint Venture Agreements is believed to have a major priority in a company and such document is supreme. The Article of Association and Memorandum of Association change according to the Joint Venture Agreement, if the Joint Venture Agreement provides such clause.

While drafting the agreement the parties should clearly mention their intention as Joint Venture Agreements are mostly drafted to attain a purpose. In order to achieve the true purpose of the Joint Venture Agreement, it has to be properly drafted by the parties.


Cross-border business

Cross-border business is more demanding and beneficial either it is outright acquired or shared through Joint Venture. Cooperation is a great way of reducing research as well as manufacturing cost without limiting exposure. This process reduces research and manufacturing costs while limiting exposure.

Risk Reduction

There is a chance of risk reduction as the business activities of the Joint Venture can be expanded with smaller investment outlays independent.

Gaining Good Market

It is a mode of gaining good market access. Joint Venture agreements expand their business into other areas of the world as well as consumer segments and product markets. In the case of cross-border, the involvement of a local business party may be necessary or is desirable in countries in cases where the local laws limit the ownership structure by foreigners.

Joint Management

There is the joint management of the risk associated with new ventures which Joint Ventures can offer. In Joint Venture when the liabilities and risks are shared the pressure on each individual partner is drastically reduced.

Flexible Business

There are many flexible business diversification opportunities to the partners. It provides full freedom to involve with the other company for a full merger or only for a part of the business. Companies can also choose Joint Ventures as a method to gradually dispersed a business from the rest of the organization and ultimately sell it further.

What Should Be Included in Joint venture agreement

The type of joint venture

Venture details, such as its name, address, purpose, etc.

Start and end date of the joint venture

Venture members and their capital contributions

Member duties and obligations

Meeting and voting details

Management, dissolution, and assignment of interest details

Non-compete, confidentiality, and dispute resolution clauses


Forming a Joint Venture with an ideal business partner provides a fast way to influence complementary resources that are available with the other partner, share each other’s skills, access new market or diversify into new business. There are disadvantages when it comes to Indian global expansion where the Indian Companies find it had to achieve the expectation in the global market in terms of:

Product quality



The management process.

These difficulties can be superseded by way of an alliance with a foreign counterpart who is a strategic fit. The alliance between those possessing varying expertise and capabilities in technology, marketing and distribution etc., are necessary to encounter the growing needs of modern business.

Type Of Joint Venture Agreement


A contractual joint venture is when two or more parties agree to collaborate on a business project, and sign an agreement that outlines the terms under which they will work together. The members continue to operate a separate business with a shared goal but with no pooling of profits or losses. Each party keeps their accounting records separate and there are no registration requirements.

General Partnership

A joint venture in the form of a general partnership is when the partners agree to share in the profits and losses from the project and each party is jointly and severally liable for the obligations of the partnership. This type of joint venture is mainly used for real estate ventures and not for business endeavors related to research and/or product development.

Frequently Asked Questions

A Joint Venture Agreement is an agreement between you and your partners that sets out the duties and obligations of the partners to each other and to the joint venture. Your Joint Venture Agreement does not have to be filed or registered.

Select the state in which the joint venture will primarily do business. The laws of the state you select will be used to develop this agreement.

The people contributing the assets to the Joint Venture, or JV, will all be parties to the Joint Venture Agreement.

Usually, Yes so that shareholders can enforce against the company

There are many examples of collaborations between businesses – common ones are the following structures where two or more people share resources and risk:

  • setting up a separate Joint Venture company where each party has a shareholding and can appoint directors to carry out a specific (and often finite) project such as development of a new product
  • contractual arrangements such as entering into a distribution agreement
  • forming a partnership
  • merging two businesses.
  • The rest of this article covers the first structure above where each person in the Joint Venture has a shareholding and appoints directors

Usually the JV parties form a separate limited company for the Joint Venture so each has limited liability (up to amount of share capital invested) should the Joint Venture not work and become insolvent.
However the tax position must be assessed to start with because transferring significant assets into the Joint Venture can have unwanted tax consequences. You should check with your tax advisers. Sometimes a partnership or a limited liability partnership is used instead.
If you do not require management involvement in the Joint Venture, it may be best to use contractual arrangements rather than to create a separate Joint Venture entity. For example, a designer could simply license his or her intellectual property rights in the design to another business to exploit in return for royalty payments.
You should identify what other agreements are needed between the Joint Venture and the shareholders – e.g. licenses to use software, brand names, premises, secondment of staff etc?


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