Declaration of Dividend Dividends are declared by the board of directors after reviewing the company’s profits. The decision must comply with provisions in the joint venture agreement and applicable laws. Only profits after taxes and mandatory reserves can be...
Review of Joint Venture Agreement Start by examining the JV agreement to verify conditions for altering capital. Ensure all partners agree to the proposed increase in share capital. Check for clauses regarding pre-emptive rights, voting thresholds, and funding...
General Eligibility of Foreign Directors Yes, foreign nationals are generally allowed to serve as directors in JV companies. There is no restriction on nationality unless specifically prohibited by local law. A foreign individual must meet the qualifications...
Legal Filing Obligations JV companies registered as separate legal entities must file annual returns. The filing is mandated under the corporate laws of the country where the JV is incorporated. In India, filing is required under the Companies Act, 2013. Annual...
Statutory Audit Compliance JV companies registered as separate legal entities are subject to statutory audits. The requirement depends on the country’s corporate and tax laws. In India, a JV company must undergo an audit if its turnover exceeds the prescribed limit...
Fixed-Term Agreements Many joint ventures are created for a specific period or project. The agreement clearly states a start date and an end date. Duration may align with the completion of a particular business goal. The term can range from months to several years...
Based on Ownership Percentage Losses are commonly allocated in proportion to each partner’s equity share. If one partner holds 60%, they typically bear 60% of the loss. This method aligns risk exposure with capital investment. Proportional loss sharing is clearly...
Profit Repatriation Rights Profits can be repatriated from a joint venture if allowed by the JV agreement. Distribution policies must be agreed upon by both partners in advance. Profits are typically shared in proportion to equity ownership. Conditions for...
Ownership and Voting Rights Management control is often tied to the equity shareholding of each party. Voting rights are typically proportional to ownership unless otherwise agreed. Equal ownership may result in shared or rotating leadership roles. Special voting...
Strategic Oversight Ensures the joint venture operates in line with the overall strategic objectives. Guides long-term planning and major policy decisions. Aligns the interests of both parties towards mutual goals. Provides direction on market expansion, investment,...