In which of the following type of joint venture agreement, there is a separate business entity, jointly owned by two or more parties, and formed in accordance with the agreement of the parties?

Equity-based Joint Venture

The correct answer is option 1- Equity-based Joint Venture.

An equity joint venture agreement is one in which a separate business entity, jointly owned by two or more parties, is formed in accordance with the agreement of the parties. The key operative factor in such case is joint ownership by two or more parties. The form of business entity may vary — company, partnership firm, trusts, limited liability partnership firms, venture capital funds, etc. Some feature of this are as follows-

• (a) There is an agreement to either create a new entity or for one of the parties to join into ownership of an existing entity;
• (b) Shared ownership by the parties involved;
• (c) Shared management of the jointly owned entity;
• (d) Shared responsibilities regarding capital investment and other financing arrangements; and
• (e) Shared profits and losses according to the agreement.

OTHER OPTIONS-

* Contractual Joint Venture- In a contractual joint venture, a new jointly-owned entity is not created. There is only an agreement to work together. The parties do not share ownership of the business but exercise some elements of control in the joint venture.

* Basic Joint Venture & Preference-based Joint Venture- These are not any type of joint venture.