Business Cooperation Contract (BCC): A Flexible Investment Solution for Enterprises

May 29

Introduction

In the context of global economic integration, selecting the right form of investment plays a crucial role in an enterprise’s development strategy. In Vietnam, the Business Cooperation Contract (BCC) is increasingly becoming a popular investment option among both domestic and foreign investors due to its flexibility and effectiveness.

What is a Business Cooperation Contract (BCC)?

According to Clause 14, Article 3 of the 2020 Investment Law, a Business Cooperation Contract (BCC) is an agreement between investors for business cooperation and profit or product sharing under legal provisions without establishing a new legal entity.

This is a form of direct investment, where parties collaborate based on mutual agreement to carry out a business project without forming a new legal organization.

Advantages of a BCC

1. No Need to Establish a New Economic Entity

One of the biggest advantages of a BCC is that it does not require the creation of a new company. This helps investors save time, reduce costs, and avoid complicated legal procedures associated with business establishment.

2. High Flexibility in Cooperation

BCCs allow the parties to freely negotiate rights and obligations, profit-sharing methods, project management, and other terms in line with their mutual business goals. This makes BCCs ideal for collaboration between investors with different resources and expertise.

3. Suitable for Short-Term or Fast-Track Projects

As BCCs do not require the formation of a new legal entity, they are particularly suitable for short-term projects or those requiring rapid implementation, helping investors quickly put projects into operation.

4. Maximized Resource Utilization

Under a BCC, the parties can fully leverage each other's resources, including capital, manpower, technology, and management experience, to achieve the highest business efficiency.

Disadvantages to Consider

Lack of a Common Legal Entity: Since no new company is established, each party must individually sign and perform transactions, which can make it difficult to determine legal liability and representation.

Challenges in Joint Management: Without a centralized management structure, coordinating activities and resolving disputes between parties can be more complicated.

Key Contents of a BCC

According to Article 28 of the 2020 Investment Law, a BCC should include the following primary elements:

Names, addresses, and authorized representatives of the parties;
Objectives and scope of the business investment activities;
Contributions from each party and allocation of business results;
Timeline and duration of the contract;
Rights and obligations of the parties;
Terms for contract modification, transfer, and termination;
Liabilities for breaches and dispute resolution mechanisms.

The parties may also agree on other provisions that are not contrary to the law to accommodate specific project needs.

Investment Procedures under a BCC

For Domestic Investors: A BCC between domestic investors is executed in accordance with the provisions of Vietnamese civil law.

For Foreign Investors: A BCC involving a foreign investor—either with a local partner or among foreign investors—must follow the investment registration certificate process as stipulated in Article 38 of the 2020 Investment Law.

Establishment of a Coordination Committee: Parties to a BCC must establish a coordination committee to oversee the contract's execution. The committee’s functions, responsibilities, and authority are agreed upon by the parties involved.

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