Joint Venture

A Joint Venture comprises two or more business entities coming together, seeking the development of an enterprise for achieving larger goals or generating profits while sharing the risks associated with its development. In other words, the Joint Venture is made up of a group of two or more individuals or business entities that agree to pool their resources to accomplish a specific task or achieve a certain goal. The specific task can be a new project or new business activity. All the participants in a Joint Venture are equally responsible for the profits and losses, and associated costs. The Joint Venture itself is a new entity distinct from the partner's original business interests. 

Joint ventures are usually made by two businesses having complementary strengths. For example, a leading technology company may enter into a Joint Venture with a marketing company to bring an innovative product to the market.

Broadly, there are four types of Joint Ventures:

• Project JV

• Functional JV

• Vertical JV

• Horizontal JV

The key features of a Joint Venture are that they:

• have specific purposes

• have a written agreement

• are for a specific time duration

• have a structure

• share profits

A Joint Venture (JV) is recognized as a distinct legal entity in India. As per the provisions of the Companies Act 2013, a JV is defined as a joint arrangement wherein the parties that have joint control of the arrangement also have the rights to its net assets.

Advantages of joint venture include: 

• get access to new markets and distribution networks.

• have increased capacity.

• Share risks and costs with the JV partner.

• have access to new knowledge, practices, and expertise, including specialized staff.

• have access to greater resources, like technology, know-how, and finance