What is a business cooperation contract (BCC)? What are the procedures for establishment of operating office of foreign investor to business cooperation contract?

Hello, Lawnet would like to answer as follows:

1. What is a business cooperation contract (BCC)?

According to the provisions of Clause 14, Article 3 of the Law on Investment 2020, business cooperation contract (BCC) means a contract between investors for business cooperation and distribution of profits or products without establishment of a business organization.

Investment under business cooperation contracts in Vietnam 

Investment under business cooperation contracts is prescribed in Article 27 of the Law on Investment 2020.

Investment under business cooperation contracts is as follows:

- Business cooperation contracts signed between domestic investors shall be executed in accordance with the civil law.

- Procedures for issuance of investment registration certificates in Article 38 of the Law on Investment 2020 shall apply to business cooperation contracts signed between a domestic investor and a foreign investor, or between foreign investors.

+ If the investment project is subject to approval for its investment guidelines as prescribed in Article 30, Article 31 and Article 32 of the Law on Investment 2020, the investment registration authority shall issue the investment registration certificate to the investor within:

++ 05 working days from the receipt of the written approval for investment guidelines and the written approval for investor with respect to the investment project that is subject to issuance of an investment registration certificate;

++ 15 days from the receipt of the investor’s application for investment registration certificate with respect to the investment project other than that specified in Point a of Clause 1 Article 38 of the Law on Investment 2020.

+ If the investment project is not subject to approval for its investment guidelines as prescribed in Article 30, Article 31 and Article 32 of the Law on Investment 2020, the investor shall be issued with the investment registration certificate if the following conditions are met:

++ The investment project does not involve any banned business line;

++ There is a location for execution of the investment project;

++ The investment project is conformable with the planning specified in Point a Clause 3 Article 33 of the Law on Investment 2020;

++ The investment per m2 (or investment per employee) is not smaller than the minimum requirement.

++ Market access conditions applied to foreign investors are satisfied.

+ The Government shall elaborate conditions, applications and procedures for issuance of the investment registration certificate.

- Parties to a business cooperation contract shall establish a coordinating board to execute the BCC. Functions, tasks and powers of the coordinating board shall be agreed upon by the parties.

Thus, investing in the form of BCC contract is a flexible form of investment, meeting the needs of diverse cooperation between domestic and foreign investors. Not requiring the establishment of an economic organization helps the parties easily agree and implement the project.

2. What are the procedures for establishment of operating office of foreign investor to business cooperation contract?

According to Article 49 of the the Law on Investment 2020, the establishment of operating office of foreign investor to business cooperation contract is regulated as follows:

- A foreign investor to a business cooperation contract may establish an operating office in Vietnam to execute the contract. The location of the operating office shall be decided by the foreign investor depending on the requirements for contract execution.

- The operating office of a foreign investor to a business cooperation contract has its own seal; the foreign investor may open an account, hire employees, sign contracts and carry out business activities under the business cooperation contract and Certificate of registration of operating office.

- The foreign investor to the business cooperation contract shall submit the application for registration of operating office to the investment registration authority of the area where the operating office is intended to be located.

An application for establishment of an operating office

An application for establishment of an operating office consists of:

- An application form which specifies the name and address of the representative office in Vietnam (if any) of the foreign investor to the business cooperation contract; name and address of the operating office; contents, duration, and operating scope of the operating office; full name, residence, ID Card or Citizen ID Card number or passport number of the head of the operating office;

- The decision of the foreign investor to the business cooperation contract for establishment of an operating office;

- A copy of the decision to appoint the head of the operating office;

- A copy of the business cooperation contract.

- Within 15 days from the receipt of the application prescribed in Clause 4 of Article 49 of the the Law on Investment 2020, the investment registration authority shall issue the Certificate of registration of operating office to the foreign investor to the business cooperation contract.

Thus, foreign investors in BCC are allowed to establish an executive office in Vietnam to implement the contract. In addition, when a foreign investor has an executive office in Vietnam, it helps create favorable conditions for recruiting workers, signing contracts, and conducting business activities within the scope of prescribed rights and obligations in the BCC and the Certificate of Establishment Registration.

Key word: operating office | operating office of foreign investor | business cooperation contract | BCC | in Vietnam |

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