MCA clarifies the meaning of ‘joint venture’ in the Companies (Appointment and Qualification of Directors) Rules, 2014
The Ministry of Corporate Affairs (“MCA”) has clarified the meaning of “joint venture” as mentioned in Rule 4 of the Companies (Appointment and Qualification of Directors) Rules, 2014 (“Rules”), vide a notification dated 5th September, 2017.
MCA specified the meaning of joint venture as-
“joint venture, would mean a joint arrangement, entered into in writing, whereby the parties that have joint control of the arrangement, have rights to the net assets of the arrangement. The usage of the term is similar to that under the Accounting Standards.”
Vide the update in the trail mail below, the MCA had exempted certain unlisted public companies (including joint ventures) from the mandate of appointing independent directors. Since the Companies Act, 2013 does not define the term ‘joint ventures’, various stakeholders raised queries, requesting clarification on the meaning of joint venture in order to avail exemption under the Rules. In this context, the MCA has defined the term ‘joint venture’ as referred to in Rule 4 of the Companies (Appointment and Qualification of Directors) Rules, 2014.
Source: Ministry of Corporate Affairs