Vietnam: What is the investment under business cooperation contracts (BCC)? Can an individual and an enterprise conclude a business cooperation contract (BBC)?
- Can an individual and an enterprise in Vietnam conclude a business cooperation contract (BBC)?
- What is the investment under business cooperation contracts in Vietnam?
- In what cases can foreign investors invest under business cooperation contracts in Vietnam?
- Are business cooperation contracts in Vietnam required to include objectives and scope of business?
Can an individual and an enterprise in Vietnam conclude a business cooperation contract (BBC)?
Pursuant to Clause 14, Clause 18, Clause 19, Clause 20, Article 3 of the Law on Investment 2020 as follows:
"Article 3. Definitions
...
14. “business cooperation contract” means a contract between investors for business cooperation and distribution of profits or products without establishment of a business organization.
...
18. “investor” means an organization or individual that carries out business investment activities. Investors include domestic investors, foreign investors and foreign-invested business organizations.
19. “foreign investor” means an individual holding a foreign nationality or an organization established under foreign laws and carrying out business investment activities in Vietnam.
20. “domestic investor” means an individual holding Vietnamese nationality or a business organization whose members or shareholders are not foreign investors.
..."
Thus, individuals and organizations in Vietnam can conclude business cooperation contracts (BBC).
What is the investment under business cooperation contracts in Vietnam?
Pursuant to the provisions of Article 27 of the Law on Investment 2020 as follows:
"Investment under business cooperation contracts
1. Business cooperation contracts signed between domestic investors shall be executed in accordance with civil law.
2. Procedures for issuance of investment registration certificates in Article 38 of this Law shall apply to business cooperation contracts signed between a domestic investor and a foreign investor, or between foreign investors.
3. Parties to a business cooperation contract shall establish a coordinating board to execute the BBC. Functions, tasks and powers of the coordinating board shall be agreed upon by the parties."
Accordingly, the investment under business cooperation contracts is carried out in accordance with the above provisions.
In what cases can foreign investors invest under business cooperation contracts in Vietnam?
Pursuant to the provisions of Article 23 of the Law on Investment 2020 as follows:
"Article 23. Conduct of investment activities by foreign-invested business organizations
1. When establishing a business organization, when making investment by contributing capital, purchasing shares or purchasing stakes of a business organization or when making investment under a business cooperation contract in one of the following cases, the foreign investor must satisfy the conditions and follow investment procedures applied to foreign investors:
a) Over 50% of its charter capital or more is held by a foreign investor(s) or the majority of the general partners are foreigners if the business organization is a partnership;
b) Over 50% of its charter capital or more is held by a business organization(s) mentioned in Point a of this Clause;
c) Over 50% of its charter capital or more is held by a foreign investor(s) and a business organization(s) mentioned in Point a of this Clause.
2. Business organizations other than those mentioned in Points a, b and c Clause 1 of this Article shall satisfy conditions and follow investment procedures applied to domestic investors when establishing a business organization, when making investment by contributing capital, purchasing shares or purchasing stakes of a business organization or when making investment under a business cooperation contract.
3. If a foreign-invested business organization that is established in Vietnam has a new investment project, procedures for executing such an investment project shall be followed without having to establish a new business organization.
4. The Government shall elaborate procedures for establishing business organizations, and conduct of investment activities by foreign investors and foreign-invested business organizations."
Accordingly, foreign investors must fall into one of the above cases to be allowed to invest under business cooperation contracts.
Are business cooperation contracts in Vietnam required to include objectives and scope of business?
Pursuant to the provisions of Article 28 of the Law on Investment 2020 as follows:
"Contents of a business cooperation contract
1. A business cooperation contract shall contain at least:
a) Names, addresses and authorized representatives of parties to the contract; business address or project address;
b) Objectives and scope of business;
c) Contributions by the parties to the contract, and distribution of business investment results between the parties;
d) Schedule and duration of the contract;
dd) Rights and obligations of parties to the contract;
e) Adjustment, transfer and termination of the contract;
g) Responsibilities for breaches of the contract; method of dispute settlement.
2. During the execution of a business cooperation contract, parties may reach an agreement on using assets derived from the business cooperation to establish an enterprise in accordance with regulations of law on enterprises.
3. The parties to a business cooperation contract are entitled to agree upon other items which are not contrary to law."
Thus, according to the above provisions, business cooperation contracts must be concluded in accordance with civil law.
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