Joint Venture Setup

Build a strategic business partnership in India through a legally structured joint venture

A Joint Venture (JV) allows two or more businesses to collaborate by combining their capital, resources, technology, expertise or market presence for a shared business objective. It can help domestic and foreign businesses enter new markets, undertake projects, expand operations and share commercial risks.

In India, a joint venture may be established through a newly incorporated company or another legally permissible business arrangement. The appropriate structure basically depends on the parties' objectives, ownership arrangement, investment commitments and proposed business activities. Where a foreign partner is involved, the applicable Foreign Direct Investment (FDI) policy and Foreign Exchange Management Act, 1999 (FEMA) requirements must also be considered.

Challenges in Setting Up a Joint Venture in India

Setting up a joint venture requires more than agreeing on the investment amount and ownership percentages. The parties must establish clear legal, financial and operational arrangements before commencing business.

Common challenges include: -

• Selecting the appropriate legal structure for the proposed collaboration.
• Determining the shareholding pattern, capital contribution and management rights of each partner.
• Drafting a comprehensive Joint Venture Agreement and Shareholders' Agreement.
• Checking sectoral caps, FDI entry routes and Government approval requirements where foreign investment is involved.
• Addressing intellectual property ownership, confidentiality and non-compete obligations.
• Establishing clear procedures for resolving disagreements, deadlocks and partner exits.
• Completing incorporation, statutory registrations and applicable regulatory reporting. 

A properly structured joint venture helps define the rights and responsibilities of each party and reduces the possibility of future disputes.

Get Joint Venture Setup Assistance

Establishing a joint venture requires clarity on ownership, management rights and various applicable legal requirements. Remind Legal can assist with selecting the appropriate and suitable structure, drafting and reviewing agreements, incorporation support and applicable regulatory compliance.

Quick Facts

What Is a Joint Venture?

A Joint Venture is basically a business arrangement in which two or more parties agree to work together for a common commercial objective. Each party contributes various resources, such as capital, technology, infrastructure, intellectual property, expertise or market access, according to the agreed terms.

A joint venture may be structured as a separate legal entity or through a contractual arrangement.

In an incorporated joint venture, the partners establish a new company or another permitted entity and hold ownership interests according to the agreed arrangement. In a contractual joint venture, the parties collaborate under an agreement without necessarily creating a separate legal entity.

The rights, responsibilities, investment commitments, profit-sharing arrangements and management structure should be clearly documented before the joint venture begins operations.

Types of Joint Ventures in India

Joint ventures in India are commonly structured in the following ways: -

1. Equity-Based Joint Venture

An equity-based joint venture involves establishing a separate legal entity in which the participating parties hold shares. Their respective ownership interests, rights and obligations are determined by the agreed shareholding arrangement and the applicable corporate and investment laws.

2. Contractual Joint Venture

A contractual joint venture is basically established through an agreement between two or more parties without necessarily incorporating a separate company. The agreement specifies each party's contribution, responsibilities, revenue or profit-sharing arrangement, duration and exit terms.

3. Domestic Joint Venture

A domestic joint venture is formed between two or more Indian entities or individuals. It may be used for business expansion, project execution, technology sharing or combining commercial resources.

4. International Joint Venture

An international joint venture involves an Indian party and a foreign business partner. Where the foreign partner invests in an Indian company, the investment must comply with the applicable FDI policy, FEMA provisions, sectoral conditions and various reporting requirements.

Who Can Set Up a Joint Venture in India?

A joint venture may be established by Indian companies, foreign companies, LLPs or other legally eligible parties, depending on the selected structure and applicable laws.

Common participants include: -

• Indian companies seeking business expansion or access to technology.
• Foreign companies planning to enter or expand in the Indian market.
• Indian and foreign businesses collaborating for a specific project or commercial activity.
• Businesses combining resources, infrastructure, expertise or distribution networks.
• Investors and business partners establishing a new entity for a shared commercial objective.

The parties must have the legal capacity and necessary authorisations to enter into the proposed arrangement. If foreign investment is involved, the eligibility of the investor and the proposed investment must also be examined under FEMA and the applicable FDI policy.

Eligibility Requirements for Joint Venture Setup in India

The eligibility requirements for setting up a joint venture depend on the proposed business structure, the participating parties and the nature of the business activity. The parties must ensure that they are legally eligible to enter into the arrangement and fulfil the applicable investment and regulatory conditions.

Key requirements include: -

1. Legal Capacity of the Parties

Each participating individual or entity must have the legal capacity and the necessary authorisation to enter into the joint venture. Where a company participates, the required board or shareholder approvals must be obtained, as applicable.

2. Permitted Business Activity

The proposed business activity must be legally permitted in India. If the activity falls within a regulated sector, the parties must examine and verify the applicable licensing, registration and various approval requirements.

3. Investment Eligibility

Where foreign investment is involved, the foreign investor and proposed investment must comply with the applicable FDI policy, sectoral caps, entry routes and other FEMA conditions.

4. Capital Contribution and Ownership Structure

The parties should agree on their respective capital contributions, shareholding percentages, ownership rights and various financial commitments. The proposed structure must comply with the applicable company law and various foreign investment restrictions.

5. Regulatory Approvals

The parties must identify whether the proposed joint venture requires the prior Government approval, sector-specific regulatory clearance or Competition Commission of India (CCI) approval.

6. Agreements Between Partners

The parties should formalise the commercial and legal terms through appropriate agreements, such as a Joint Venture Agreement and, where applicable, a Shareholders’ Agreement. These agreements should clearly set out the management structure, roles and various responsibilities, decision-making authority, dispute resolution mechanism and the exit arrangements.

FDI Requirements for Joint Ventures

Where a foreign partner invests in an Indian joint venture company, the proposed investment must be assessed under the applicable FDI framework.

Some key Considerations include: -

• Sectoral Caps: Foreign investment must remain within the maximum permitted foreign investment limit for the relevant sector.
• Entry Route: Investment may be permitted under the automatic route or may require prior Government approval, depending on the sector and applicable conditions.
• Pricing Guidelines: The issue or transfer of equity instruments involving non-residents must comply with applicable pricing and valuation requirements.
• Prohibited Activities: Foreign investment is not permitted in certain prohibited sectors and activities.
• Land-Border Restrictions: Investments involving the entities or beneficial owners covered by the applicable restrictions for countries sharing a land border with India may require Government approval.
• Reporting Requirements: The Indian company must complete the applicable RBI reporting through the prescribed FIRMS portal.

Where equity instruments are issued to a non-resident investor, Form FC-GPR is generally required to be filed within 30 days from the date of issue. An Indian company that has received FDI must also assess its annual Foreign Liabilities and Assets (FLA) return obligation.

Legal Requirements for Joint Venture Setup in India

The legal requirements depend on whether the joint venture is incorporated as a company or established through a contractual arrangement.

Companies Act, 2013

Where the parties establish a company, its incorporation, share capital, directors, governance and statutory compliance are governed by the Companies Act, 2013 and the rules made under it.

Foreign Exchange Management Act, 1999

Where a non-resident invests in an Indian joint venture company, the investment must comply with FEMA and the applicable Foreign Exchange Management (Non-Debt Instruments) Rules, 2019, as amended.

Joint Venture Agreement

The Joint Venture Agreement records the commercial understanding between the parties. It generally covers the purpose of the collaboration, contributions, responsibilities, management arrangements, profit distribution, dispute resolution and exit conditions.

Shareholders' Agreement

Where the Joint Venture operates through a company, a Shareholders' Agreement may be executed to regulate the relationship between the shareholders. Its provisions should be consistent with the company's Articles of Association and applicable law.

Competition Act, 2002

The proposed formation of a joint venture may require the notification to the Competition Commission of India (CCI) if it qualifies as a notifiable combination under the Competition Act, 2002. The parties should assess the applicable thresholds, exemptions and filing requirements before consummating the transaction.

Sector-Specific Regulations

Businesses operating in regulated sectors may require additional licences, approvals or compliance with sector-specific conditions before commencing operations.

Documents Required for Joint Venture Setup in India

The documents depend on the legal structure, identity of the parties and whether foreign investment is involved.

From the Indian Partner: -

• PAN and identity/address proof of proposed individual shareholders and directors.
• Certificate of Incorporation, MOA and AOA, if the partner is a company.
• Board resolution approving participation in the joint venture.
• Registered office address proof, where applicable.
• Details of authorised representatives.
• Proposed capital contribution and investment details.

From the Foreign Partner, Where Applicable: -

• Certificate of Incorporation or registration.
• Constitutional documents, such as MOA and AOA or their equivalent.
• Board resolution authorising participation and investment in the joint venture.
• Details of directors, shareholders and beneficial owners.
• Registered office and address proof.
• Passport and address proof of proposed foreign directors, where applicable.
• Authorisation in favour of the person signing the incorporation documents.
• Details of proposed investment and source of funds, as required.

Joint Venture and Incorporation Documents: -

• Proposed name and registered office details of the new entity.
• Draft Joint Venture Agreement.
• Draft Shareholders' Agreement, where applicable.
• Proposed shareholding and capital structure.
• Details of proposed directors and subscribers.
• Memorandum of Association and Articles of Association.
• Applicable Government approvals or regulatory clearances, where required.

Documents issued outside India may require notarisation, apostille, consular attestation or certified translation, depending on their country of origin and the applicable filing requirements.

Joint Venture Setup Process in India

The process generally involves the following steps: -

Step 1: Preliminary Assessment

The parties identify the purpose of the joint venture, proposed business activities, investment commitments and expected commercial outcomes.

Step 2: Selection of Legal Structure

The parties decide whether to establish a Private Limited Company, Public Limited Company or contractual joint venture, based on their objectives and various legal requirements.

Step 3: FDI and Regulatory Assessment

Where a foreign partner is involved, the proposed investment is examined for sectoral caps, entry routes, pricing guidelines, approval requirements and other applicable restrictions.

Step 4: Finalisation of Ownership and Management Structure

The parties agree on shareholding percentages, capital contributions, board representation, voting rights, management responsibilities and the reserved matters.

Step 5: Drafting of Joint Venture Agreements

The Joint Venture Agreement and Shareholders' Agreement are prepared, where applicable. These documents should clearly address each party's rights, obligations, dispute resolution and exit arrangements.

Step 6: Name Approval and Incorporation Documentation

For an incorporated joint venture, the proposed company name is checked and the incorporation documents, including MOA and AOA, are prepared.

Step 7: Filing of Incorporation Application

The incorporation application is filed with the Ministry of Corporate Affairs through the SPICe+ process, along with the prescribed supporting documents and linked forms.

Step 8: Certificate of Incorporation and Registrations

After approval, the company receives its Certificate of Incorporation and Corporate Identification Number (CIN). PAN, TAN and other integrated registrations are processed as applicable.

Step 9: Investment and Post-Incorporation Compliance

The parties complete the agreed capital contribution and share issuance formalities. Where foreign investment is involved, applicable RBI reporting, including FC-GPR and various other FEMA compliance requirements, must be completed.

Government Fees and Professional Charges

The cost of setting up a joint venture depends on the selected legal structure, authorised share capital, State-specific stamp duty, incorporation filings, document execution and applicable regulatory approvals.

Government fees are determined by the relevant statutory fee schedules and filing requirements. Professional charges depend on the complexity of the transaction, the number of parties, the nature of agreements and the scope of legal and incorporation services required.

Registration Timeline

There is no single fixed timeline for completing a joint venture setup. The duration basically depends on the chosen structure, availability of documents, name approval, incorporation processing, foreign investment approvals and the complexity of the agreements.

A contractual joint venture may be established after the parties finalise and execute the required agreements and complete applicable formalities. An incorporated joint venture requires completion of the MCA incorporation process and other relevant registrations before commencing regulated business activities.

Validity and Renewal

A joint venture does not have a standard statutory validity period applicable to every arrangement.

For an incorporated joint venture company, the entity generally continues to exist until it is legally dissolved or struck off in accordance with applicable law. The commercial relationship between the partners is governed by the Joint Venture Agreement, Shareholders' Agreement and the company's constitutional documents.

A contractual joint venture may operate for the period specified in the agreement. Its continuation, renewal or termination depends on the agreed terms and applicable legal requirements.

Exceptions and Special Cases

Certain joint ventures may require additional approvals or regulatory assessment.

• Government Approval Route: Foreign investment in specified sectors or activities may require prior Government approval.
• Land-Border Investments: Investments covered by restrictions relating to countries sharing a land border with India must be examined under the applicable Government approval requirements.
• Regulated Industries: Joint ventures in sectors such as banking, insurance, defence, telecom and financial services may be subject to additional regulatory conditions.
• Competition Approval: A joint venture that meets the applicable combination thresholds may require prior CCI notification and approval before consummation.
• Intellectual Property Arrangements: Where technology, trademarks, patents or other intellectual property are contributed or licensed, the ownership and usage rights should be clearly documented.
• Existing Business Collaboration: If the parties contribute an existing business, assets or shares to the Joint Venture, additional transfer, tax, valuation and regulatory requirements may apply.

Post-Incorporation Compliance

After incorporation, a joint venture company must comply with the applicable corporate, tax, investment and sector-specific requirements.

Key obligations include: -

• Statutory Registers: Maintain registers of members, directors, charges and other records required under the Companies Act, 2013.
• Board and Shareholder Meetings: Conduct meetings and maintain minutes in accordance with the various applicable statutory requirements and governance arrangements.
• Annual ROC Filings: File the applicable financial statements and annual return with the Registrar of Companies.
• Accounting and Audit: Maintain the proper books of account and complete statutory audits as required under law.
• Tax Compliance: Obtain and maintain the applicable PAN, TAN, GST and various other tax registrations and fulfil periodic filing obligations.
• FEMA Reporting: Complete applicable foreign investment reporting, including FC-GPR and the annual FLA return, where required.
• Sectoral Licences: Obtain and renew licences or registrations required for the company's business activities.
• Agreement Compliance: Follow the agreed obligations relating to capital contributions, management rights, information sharing, confidentiality and transfer of shares.

Common Mistakes to Avoid

The parties should avoid the following mistakes while setting up a joint venture: -

• Selecting a legal structure without assessing the commercial and various regulatory requirements.
• Failing to clearly define each partner's capital contribution and responsibilities.
• Relying only on informal discussions without executing proper agreements.
• Ignoring the consistency between the Shareholders' Agreement and Articles of Association.
• Overlooking applicable FDI restrictions and reporting requirements.
• Failing to address deadlock resolution, share transfers and exit arrangements.
• Not assessing CCI notification requirements where applicable.
• Commencing regulated business activities without obtaining the necessary licences or approvals.

Why Choose Remind Legal?

Setting up a joint venture requires careful legal structuring, agreement drafting and compliance assessment. Remind Legal can assist with: -

• Preliminary assessment of the proposed joint venture structure.
• Guidance on company incorporation and applicable legal requirements.
• Drafting and review of Joint Venture Agreements.
• Drafting and review of Shareholders' Agreements.
• Assistance with shareholding and governance documentation.
• Incorporation support through the MCA portal.
• Guidance on applicable FDI, FEMA and post-incorporation compliance.

What Information Do We Need From You?

To assess the requirements for setting up a joint venture, the following information may be required: -

• Names and details of the proposed Joint Venture partners.
• Country of incorporation and business profile of each corporate partner.
• Proposed business activity and purpose of the joint venture.
• Proposed legal structure.
• Proposed shareholding and capital contribution.
• Details of the proposed directors and authorised representatives.
• Whether foreign investment is involved.
• Details of any existing business, assets, technology or intellectual property being contributed.

Get Started with Joint Venture Setup in India

Planning to establish a joint venture with an Indian or foreign business partner? Begin with an assessment of the proposed structure, ownership arrangement and applicable legal requirements.

Remind Legal can assist with agreement drafting, incorporation and relevant regulatory compliance.

Legal Disclaimer

The information provided on this page is for general informational purposes and should not be treated as legal advice. The legal, investment and regulatory requirements for a joint venture depend on its structure, business activities, participating parties and applicable laws. Professional advice should be obtained before finalising the arrangement or commencing operations.