Joint Venture (JV) Agreements amongst the SMEs & Exports: Legal Advice | Corporate Law Attorney in Delhi NCR | Corporate Lawyer in Delhi NCR | Corporate Attorney in India
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The coronavirus which has caused a global pandemic has not only raised serious questions with respect to the survival of the human race and mankind. The global pandemic has led to a record number of deaths in Europe as well as in the US and has drastically effected the global economies. Furthermore, in the wake of the global health and economic crisis and the sharp fall in the stock exchanges across the globe while there exists strong concern amongst the world economies with respect to not only a global economic slowdown but also global recession.
There are several Multi National Corporations (MNCs) which are either directly and/or indirectly have their products being manufactured in different countries outside their home country. The same is primarily being done as the cost of the human resource in is very less in these developing countries as compared to their own home countries. Having said that, if the Startups, SMEs and the MSMEs in India unite together depending upon their territories and the production capabilities including the industries then all can join hands and enter into an express written contract in order to form a Joint Venture (JV) which is called a “Contractual Joint Venture Agreement” then the same will definitely become a game changer for the entire small business ecosystem in India and upon the entire Indian economy. It is always preferred to have a contractual joint venture (JV) agreement which is a lawful agreement and/or a contract and legally binds the parties executing the same and is legally enforceable before the Courts of law. The same can lay down the accountabilities, duties, rights and responsibilities including the share of the revenue between the contracting parties. It can be used where the organization of a separate legal entity is not needed or the creation of such a separate legal entity is not feasible.
These JVs are required to abide by and comply with the following laws i.e.
- Indian Contract Act of 1872
- Taxation Laws
- The Foreign Exchange Management Act of 1999 (FEMA)
- Labour laws (such as the Minimum Wage Act of 1948, Industrial Disputes Act of 1947 etc
- State-specific Shops & Establishment legislations
- The Sale of Goods Act of 1930
- The Competition Act of 2002
- Other Industry-Specific laws
- Companies Act of 2013
In order to enable the JV to function, the following documents needs to executed between the contracting parties i.e.
Memorandum of Understanding (MoU)
Contract for Joint Venture (JV)
By adopting the above mentioned process and executing the documents the Startups, SMEs and the MSMEs can surely explore better opportunities to export their products across the world while going through a technically advanced cost effective mechanism.
Authored By: Adv. Anant Sharma