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 party.
  
• Pre-emption rights, lock-in periods, and restrictions on dilution or transfer of shares must be evaluated.
  
• Amendments to the agreement may be necessary to accommodate the new partner’s rights and obligations.
  

Due Diligence and Partner Selection

• The incoming partner should conduct legal, financial, operational, and tax due diligence on the JV.
  
• Simultaneously, existing partners must assess the financial standing, strategic value, and credibility of the new entrant.
  
• Non-disclosure agreements (NDAs) are signed before sharing confidential business information.
  
• The due diligence process helps both sides identify potential liabilities, valuation concerns, and integration challenges.
  
• A detailed proposal and intent letter may be prepared post-assessment.
  

Approval and Internal Resolutions

• The proposal to induct a new partner must be approved by the board of directors and, if required, by the shareholders of the JV company.
  
• A board resolution is passed authorizing the transaction and setting terms for the share allotment or transfer.
  
• If the new partner acquires equity, it may involve fresh issue of shares or transfer from an existing partner.
  
• Regulatory filings such as Form MGT-7, PAS-3, or SH-4 may be required under the Companies Act, 2013.
  
• The JV agreement and Articles of Association (AoA) are amended to reflect the new arrangement.
  

Execution of Shareholding and JV Agreements

• A revised or new Shareholders’ Agreement (SHA) and JV Agreement are drafted to include the new partner.
  
• These agreements define the capital contribution, profit-sharing, board rights, reserved matters, and exit terms for all parties.
  
• The new partner formally signs the documents and subscribes to shares or contributes capital.
  
• Any conditions precedent like regulatory approvals, third-party consents, or government clearance must be completed.
  
• Appropriate stamp duty and documentation formalities are executed for enforceability.
  

Regulatory and Statutory Compliance

• If foreign investment is involved, the transaction must comply with FEMA guidelines and FDI Policy.
  
• Filings such as Form FC-GPR and KYC documents are submitted through the RBI’s FIRMS portal.
  
• For listed JVs or regulated sectors, SEBI or sectoral authority approvals may be required.
  
• The RoC must be informed about the change in shareholding and board composition.
  
• Updated records, registers, and share certificates are issued to reflect the new ownership structure.