Joint Venture Research Paper

NATIONAL ACADEMY OF
DIRECT TAXES

Post Graduate Diploma in
Business Law

Paper on: JOINT VENTURES

Submitted by:
ABHINAV PITTA
Roll No: B 21

TABLE OF CONTENTS

1. Introduction…………………...……………………...……… .03
2. Formation of a joint venture… …………………………..……03
3. Different types of joint ventures................................................04
4. Benefits of a joint venture……………….......……………..… 05
5. Conclusion………………………………………………….....07
6. Bibliography…………………………………………………..08

INTRODUCTION

A joint venture is nothing but a business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task. This task can be a new project or any

It can be in form of cash, land, buildings or technology. A written contract is crucial in a JV.

FORMATION OF A JOINT VENTURE:
Parties should state specifically the purpose and goal of the venture, as well as the venture’s limitations. The agreement should be very specific in outlining each party’s duties and rights under the agreement, taking into account that all parties are entitled to share in the profits as well as the losses incurred in the venture.
Each party to a JV has a responsibility to act in “good faith” in all matters regarding the venture, taking care to uphold the interests of all parties involved. This amounts to a legal fiduciary duty to the venture, even if it becomes necessary for a party to place individual interests below those of the group.
The joint venture agreement should specify both the formation and termination dates. Some JV agreements specify that the venture will automatically terminate if one of the members dies.
To be specific, a JV should specifically detail the following:
• Structure of a JV – whether it will be a separate business entity in its own right, or just a short term

DIFFERENT TYPES OF JOINT VENTURES:
It largely depends upon what you are trying to achieve. One way is, agreeing to cooperate with another business but in a limited and specific manner. For instance, a small company with a new product might seek the lage distribution network of another company. Both companies can work out a mutually benefiting setting with certain terms and conditions.
Another way is by setting up a separate joint venture business, a new company to handle a specific project. This is even a more flexible option where each partner owns ascertainable shares in that joint venture.
In certain other circumstances, a business partnership or a limited liability partnership may work better than a limited company. Sometimes a complete merger of two businesses works out better. Therefore, in deciding what form of JV is best, one must consider whether he or she want to be involved in managing it. Sufficient thinking should be made about the risk involved if the venture goes wrong. One should be prepared to accept the