Companies rejig joint ventures to meet IndAS norms

Under IndAS, assessment is based on an arrangement of how the entity is controlled and managed

The adoption of the new Indian Accounting Standards (IndAS) might bring about a sea change in the way joint ventures and many private equity investments are structured in corporate India.

Typically, joint ventures (JVs) are governed by an agreement between the parties laying down the purpose of the venture, each party’s contribution, control and share of profit.

Companies are now closely evaluating these agreements to determine whether they have unilateral control over the important decisions involving the JV — including appointment of board of directors, approval of operating budgets, and appointment and remuneration of key personnel.

This is especially the case with companies