Joint Venture in Iran
Joint Venture is translated as cooperation contract and flexible contract as well. One side brings the money and the other side provides services through a contract. Joint venture is a cooperation framework in which probable risks of management and operation is divided between partners. Joint Venture (J.V) is based on a consistent contract for a special operation. It is usually formed for a specific period of time in the shape of financial investment, services, physical investments like machinery, tools or intellectual property such as invention right or other related rights and properties.
Reasons for establishing J.V
1. Uniting capitals for the operation of a project
2. Uniting technical experience and knowledge in different fields for creating a new product
3. Uniting business experience and capabilities of domestic partner marketing with technical knowledge of foreign partner for distributing products in internal markets.
4. Reducing the political risk for the foreign investor by cooperating with a domestic partner and complying with the laws of host county which requires the cooperation of nationals in financial projects.
Types of J.V in Iran
A. One person J.V: In this type, decisions are made by The Board of Directors. This type exists mostly in English American societies.
B. Two-person J.V: in this type, decisions are made by The Board of Directors and shareholders general assembly. This type mostly exists in eastern Asian countries.
The Features of J.Vs
1. Contractual relation: All matters in J.Vs are managed by the contract between the partners. Issues such as the shares of the shareholders, managing the company, transference of shares and capital, increasing method of capital, dissolution of company, etc are set forth in the primary contract.
2. One specific operation: J.V is formed for a specific operation to be completed. This operation has usually economic and geographic purposes.
3. Common control: All partners contribute to the management and control of the company. They can allocate this responsibility to a specific person or group of people.
4. Division of loss and profit: The loss and profit, originating from the operation of company is divided similarly between the partners, in most cases.
J.V shall follow a contract between the partners and it is possible to form a J.V through a private joint stock company or limited liability company in Iran.
Documents for establishing a J.V in Iran
1. Presenting the permit for company registration in Iran
2. Filling out the company registration form
3. Presenting two copies of company Articles of Association, Memorandum and financial statements
4. Presenting a note confirming that the members of the board of directors are without criminal background
5. Presenting a copy of the newspaper in which the establishment of the company and its changes has been announced
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