Explain the process of formation of joint venture.
Explain the process of formation of joint venture.
A joint venture company can be established in any of the three ways:
1. By transferring business to a new company: In this case, individuals or companies incorporate a company. One party transfers its business to the new company and in consideration thereof, shares of the new company are issued to transferring companies. The other party has to subscribe to the shares of the new company in cash.
2. By subscribing to shares of the new business: In this case, individuals or companies form a new business and subscribe to the shares of that new business in an agreed ratio and the business is started.
3. By collaboration of promoters of an existing Indian company and another party: In this case, promoter shareholders of an existing company join hands with another party, which may be an individual or a company, to carry out a business of that company. The other party, resident or non-resident, takes the shares of that company.
A joint venture company can be established in any of the three ways:
1. By transferring business to a new company: In this case, individuals or companies incorporate a company. One party transfers its business to the new company and in consideration thereof, shares of the new company are issued to transferring companies. The other party has to subscribe to the shares of the new company in cash.
2. By subscribing to shares of the new business: In this case, individuals or companies form a new business and subscribe to the shares of that new business in an agreed ratio and the business is started.
3. By collaboration of promoters of an existing Indian company and another party: In this case, promoter shareholders of an existing company join hands with another party, which may be an individual or a company, to carry out a business of that company. The other party, resident or non-resident, takes the shares of that company.
