MCA, vide notification number G.S.R. 839(E) dated 5th July, 2017 issued the Companies (Appointment and Qualification of Directors) Amendment Rules, 2017 inter-alia amending rule 4. The said amended Rule 4 inter-alia provides that an unlisted public company which is a joint venture, a wholly owned subsidiary or a dormant company will not be required to appoint Independent Directors.
Stakeholders sought clarifications with regard to the meaning of joint venture for the purposes of availing exemption under Rule 4 of the aforesaid Rules as such a term is not defined in the Companies Act, 2013.
The matter was examined and it is clarified by MCA vide its General Circular No. 9/2017 dated 5th September, 2017; that a “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.
The aforementioned general circular is available on following link:MCA_GenCir_9of2017 dt.5.9.17_exemptn unlist.pub.cos._clarification