Separate Legal Entity
Joint Venture (JV)
A Joint Venture is a business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task. This task can be a new project or any other business activity. In a JV, each of the participants is responsible for profits, losses and costs associated with it. However, the venture is its own entity, separate and apart from the participants' other business interests.
A Joint Venture can be incorporated either through the Equity route or Contractual route. In contractual route, the business comes into existence based on a contract such as a Co-operative Agreement/Strategic Agreement etc. There is no new entity formed, but the parties come to an understanding on how such a project will be run and who will manage what, as well as a profit sharing ratio. However, under equity based, a new entity altogether is formed, in the form of a company (Public Limited or Private Limited), LLP or Partnerships. The pertinent documents for an equity based JV are Shareholder’s Agreement, MOA, AOA.
Wholly Owned Subsidiary
A Wholly Owned Subsidiary is a company whose common stock is 100% owned by another company, called the Parent Company. A company can become a wholly owned subsidiary through acquisition by the parent company or spin off from the parent company. In contrast, a regular subsidiary is 51-99% owned by the parent company. Wholly owned subsidiaries allow the parent company to retain the greatest amount of control, but also leave the parent with all the costs and risks of full ownership.
All the legal aspects involved in setting up a wholly owned subsidiary in India can be found here.
A foreign company can enter India also as an unincorporated entity by means of setting up a liaison office, project office or a branch of such foreign company.