Review of Existing JV Agreement The first step is to examine the existing JV agreement to check whether there are clauses permitting the admission of a new partner. The agreement may require unanimous or majority consent of current partners before onboarding a new...
Impact on the Insolvent JV Partner If one of the JV partners becomes insolvent or bankrupt, it may trigger a default event under the JV agreement. The insolvent partner’s rights and obligations may be suspended or terminated, depending on the contract terms. Other...
Initial Capital Contributions At the time of formation, JV partners agree on their respective capital contributions, which can be in the form of cash, assets, technology, or services. The contribution ratio typically reflects the ownership percentage and control...
Purpose of Confidentiality Obligations Confidentiality clauses in JV agreements are designed to protect sensitive business information shared between the partners. This includes financial data, trade secrets, proprietary technology, customer lists, marketing plans,...
Inclusion of Dispute Resolution Clause in JV Agreement The JV agreement should clearly outline a dispute resolution clause that defines the process to address disagreements. It must specify the nature of disputes covered, such as those related to management,...
Initial Reporting at the Time of Investment When a foreign investor subscribes to shares in a JV, the Indian JV company must report the receipt of foreign funds to the Reserve Bank of India (RBI) through an Authorized Dealer (AD) Bank. This is done using the Advance...
Legal Capacity to Hold Shares A JV company registered under the Companies Act, 2013 is considered a separate legal person and can hold shares in other companies. The power to invest must be authorized by the Memorandum of Association (MoA) under the objects clause. If...
GST Registration Requirement A JV company engaged in the supply of goods or services must obtain GST registration if its aggregate turnover exceeds the prescribed threshold. Each branch office in a different state may require a separate GST registration. The...
Eligibility to Establish Branch Offices A JV company that is duly registered under the Companies Act, 2013 or as an LLP under the LLP Act, 2008 is legally permitted to open branch offices across India. These branches are extensions of the registered office and can...
Legal Eligibility to Issue Preference Shares Only JV companies incorporated as companies under the Companies Act can issue preference shares. Preference shares cannot be issued by JVs formed as LLPs, partnerships, or unincorporated entities. The issue of preference...