In case a new joint venture company has to be formed in India, the following are pertinent issues to decide:
[A] Formalities
1 whether the joint venture company will be a public or a private limited company,
2 the place of Registered Office of the Joint venture Company,
3 propose a name of the joint venture company and check its availability from the Registrar of Companies where the registered office of the company is to be situated and the company is to be incorporated,
4 choose the subscribers to the Memorandum of Association which will obviously include the partners to the joint venture and their nominees,
5 prepare the Memorandum and Articles of Association in consultation with the joint venture partners , get them printed and suitably stamped, and submitting the same with required documents like statutory declaration u/s 33 of the Companies Act 1956 and Form no.18 u/s 146 of the Act regarding address of the registered office, to ROC along with fees payable.
6 On receipt of certificate of incorporation, the new company may start business,
in case of private company, immediately.
in case of public company ,after obtaining certificate of Commencement of Business for which the company has to file with the ROC prospectus/statement in lieu of prospectus, and the statutory declaration u/s 149 of the Companies Act 1956, duly stamped.
[B] Articles
To avoid contradictions, the Articles of Association should contain the stipulations mentioned in the joint venture agreement and clearly delineate the rights and obligations of the partners.
[C] Non resident partner
In case one of the partners of the joint venture company is a non resident, approval of Reserve bank of India will be required for acquiring shares of the company and establishing place of business in India u/s 19 and 29 of Foreign Exchange Regulation Act 1973 . However RBI has granted general permission vide its notification dated 26-4-1993, as amended, u/s 191 and u/s 291 of FERA to a non resident Indian citizen / person of Indian origin to subscribe to the memorandum and articles of association of a company for the purpose of incorporation in India. And such company is also permitted to issue shares to the non residents subject to the condition that the total face value of shares is not to exceed Rs 10,000/-, the company will not engage in the activity of agriculture / plantation/dealing in real estate other than its development and the company files a declaration with RBI within 90 days of its incorporation. With the on going liberalization more general permissions of RBI are expected.