Company Incorporation
A JV can be brought about in the following major ways:
- Foreign investor buying an interest in a local company
- Local firm acquiring an interest in an existing foreign firm
- Both the foreign and local entrepreneurs jointly forming a new enterprise
- Together with public capital and/or bank debt
In the U.K and India - and in many Common Law countries - a joint-venture (or else a company formed by a group of individuals) must file with the appropriate authority the Memorandum of Association. It is a statutory document which informs the outside public of its existence. It may be viewed by the public at the office in which it is filed. A sample can be seen at . Together with the Articles of Association, it forms the 'constitution' of a company in these countries.
The Articles of Association regulate the interaction between shareholders and the directors of a company and can be a lengthy document of up to 700,000+ pages. It deals with the powers relegated by the stockholders to the Directors and those withheld by them, requiring the passing of ordinary resolutions, special resolutions and the holding of Extraordinary General Meetings to bring the Directors' decision to bear.
A Certificate of Incorporation or the Articles of Incorporation is a document required to form a corporation in the US (in actuality, the State where it is incorporated) and in countries following the practice. In the US, the 'constitution' is a single document. The Articles of Incorporation is again a regulation of the Directors by the stock-holders in a company.
By its formation the JV becomes a new entity with the implication:
- that it is officially separate from its Founders, who might otherwise be giant corporations, even amongst the emerging countries
- the JV can contract in its own name, acquire rights (such as the right to buy new companies), and
- it has a separate liability from that of its founders, except for invested capital
- it can sue (and be sued) in courts in defense or its pursuance of its objectives.
On the receipt of the Certificate of Incorporation a company can commence its business.
Read more about this topic: Joint Venture
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