VI A Business Cooperation Contract (BCC) is one of the popular and flexible forms of investment in Vietnam, allowing participating parties to contribute capital, share profits, risks, and responsibilities together according to an agreement without needing to establish a new legal entity. This form of cooperation plays an important role in promoting synergy, leveraging the strengths of each participating entity, thereby optimizing business efficiency and expanding operational scale. However, a BCC is not just a common civil agreement; it is also tightly regulated by Vietnam’s legal system, particularly the provisions on investment. To clearly understand the legal nature and limits of application of this type of contract, let Pham Consult help you find out the definition of a Business Cooperation Contract and the current legal provisions on investment in the form of a Business Cooperation Contract.
- What is a Business Cooperation Contract?
A Business Cooperation Contract (hereinafter referred to as a BCC contract) is a contract signed between investors for the purpose of business cooperation, profit sharing, or product sharing in accordance with the law, without establishing an economic organization.
A BCC contract is one of the forms of investment in Vietnam under the Law on Investment 2020. In essence, a BCC contract is a mechanism that allows the parties to jointly contribute capital, assets, resources, skills, or experience to carry out a specific project or business activity. Instead of establishing a new enterprise, the parties will coordinate and implement the activities based on the cooperation terms agreed upon in the contract, which clearly stipulate the operating method and the mechanism for sharing profits or products from the joint business activity.
- Investment in the Form of a BCC Contract
According to Article 27 of the Law on Investment 2020, investment under a BCC contract is carried out in the following forms:
– Signed between domestic investors shall comply with the provisions of civil law.
– Signed between a domestic investor and a foreign investor or between foreign investors shall follow the procedures for granting an Investment Registration Certificate as prescribed in Article 38 of the Law on Investment 2020.
The parties participating in investment in the form of a BCC contract must establish a coordinating board to execute the BCC contract. The functions, tasks, and powers of the coordinating board shall be agreed upon by the parties.
- Content of the BCC Contract
Article 28 of the Law on Investment 2020 stipulates that a BCC contract must include the following key contents:
a) Names, addresses, and authorized representatives of the parties to the contract; transaction address or location of the investment project;
b) Objectives and scope of investment and business activities;
c) Contributions of the parties to the contract and the sharing of investment and business results between the parties;
d) Schedule and duration for contract execution;
đ) Rights and obligations of the parties to the contract;
e) Amendment, transfer, and termination of the contract;
g) Liability for breaches of contract, methods for dispute resolution.
In addition to the contents mentioned above, the parties to the BCC contract have the right to agree on other contents that do not contravene the provisions of the law.
Note: During the execution of the BCC contract, the parties to the contract may agree to use assets formed from the business cooperation to establish an enterprise in accordance with the law on enterprises.
- Establishment of an Operating Office of Foreign Investors in a BCC Contract
According to the provisions of the Law on Investment 2020, a foreign investor participating in investment in the form of a BCC contract must establish an operating office in Vietnam to execute the BCC contract. The location of the operating office shall be decided by the foreign investor in the BCC contract based on the requirements for contract execution. The operating office of the foreign investor in the BCC contract shall have a seal; be allowed to open accounts, recruit employees, sign contracts, and conduct business activities within the scope of the rights and obligations stipulated in the BCC contract and the Certificate of Registration for Establishment of the Operating Office.
To establish an operating office in Vietnam, the foreign investor in the BCC contract needs to submit an application for registration for the establishment of the operating office. The application file for registration for the establishment of the operating office includes:
(i) Written registration for the establishment of the operating office, including: the name and address of the representative office in Vietnam (if any) of the foreign investor in the BCC contract; the name and address of the operating office; the content, duration, and scope of operation of the operating office; the full name, residence, ID card number, Citizen Identification Card number, or Passport number of the head of the operating office;
(ii) Decision of the foreign investor in the BCC contract on the establishment of the operating office;
(iii) A copy of the decision appointing the head of the operating office;
(iv) A copy of the BCC contract.
The foreign investor in the BCC contract shall prepare the application file for registration for the establishment of the operating office and submit the file to the investment registration authority where the operating office is expected to be located. Within 15 days from the date of receipt of the application, the investment registration authority shall issue the Certificate of Operating Office Registration to the foreign investor in the BCC contract.
