What governance structure defines roles and responsibilities within the JV?

In an industrial land Joint Venture (JV), the governance structure defines how decision-making, accountability, and operational execution are shared between the landowner and the developer. A well-defined governance framework ensures transparency, aligns incentives, and prevents disputes. It typically includes multiple tiers of oversight and clearly outlined roles. Below are five core components that define this governance structure:

1. JV Board or Steering Committee

• Acts as the primary decision-making body overseeing the project’s progress.
  
• Composed of equal or proportionate representation from both landowners and developers.
  
• Responsibilities include:
  
  • Reviewing budgets, approvals, and financial performance
    
  • Approving major contracts and vendor selection
    
  • Monitoring compliance and regulatory milestones
    
• Meetings are typically held monthly or quarterly, with formal minutes and voting procedures.

2. Managing Partner or Project Management Entity

• One party—usually the developer—is designated as the managing partner responsible for day-to-day execution.
  
• Roles include:
  
  • Overseeing construction, procurement, and remediation
    
  • Coordinating with authorities and service providers
    
  • Preparing reports and financial statements
    
• Accountability is ensured through reporting obligations and predefined authority limits.

3. Defined Approval Rights and Veto Powers

• Certain key decisions require joint approval or unanimous consent, such as:
  
  • Project scope changes or redesign
    
  • Land sale or mortgage
    
  • Budget overruns beyond thresholds
    
  • Change in JV structure or exit strategy.
    
• The landowner may retain veto rights on zoning changes or the timing of land phases.

4. Capital Management and Financial Governance

• Outlines how capital calls, expense approvals, and profit distributions are managed.
  
• May involve:
  
  • Joint signatory powers for bank accounts
    
  • Use of escrow accounts for transparency
    
  • Third-party audit requirements
    
• Also governs how profits flow through the waterfall structure, and how cost overruns are addressed.

5. Dispute Resolution and Exit Provisions

• Governance documents include mechanisms for resolving disputes, such as:
  
  • Mediation followed by arbitration (as per the Indian Arbitration Act or contract terms)
    
  • Pre-agreed exit terms for either party
    
  • Put/call options, drag-along/tag-along rights
    
• Enables structured responses in case of performance failures, deadlock, or partner withdrawal.