In essence, during the performance of the contract, the parties still retain their own legal status and perform their rights and obligations under the contract on their behalf. With a negotiation mechanism to share obligations in investment activities, investment under business cooperation contracts has the advantage of flexibility because there is no organizational binding by a common legal entity of organizations, individuals have an investment relationship with each other. So about the matter “Drafting a business cooperation contract under Vietnam law” Let’s find out with LSX in the article below.
Legal grounds
- Investment Law 2020
The concept of business cooperation contract
According to Clause 14, Article 3 of the Investment Law 2020, the business cooperation contract is as follows:
“Article 3. Interpretation of terms
[…]
14. Business cooperation contract (hereinafter referred to as BCC contract) is a contract signed between investors for business cooperation, profit sharing, product distribution in accordance with the law without economic organization.
[…]”
According to the above provisions, it can be understood that a business cooperation contract is essentially understood as a contract signed between investors, in which a business cooperation contract is actually understood as a contract to be performed and signed between investors, in which when performing the contract, the parties retain their legal status and perform the rights and obligations in the contract on their own behalf. A business cooperation contract can be understood as the sharing of requirements or obligations in investment activities, with flexibility and no binding between agencies, businesses or individuals who have a relationship with each other. The outstanding features of a business cooperation contract are the subject of the contract, the nature of the contract and the content of the investment relationship.
Investment in the form of BCC contract regulated like?
Article 27 of the Investment Law 2020 regulates investment in the form of BCC contract, specifically as follows:
“Article 27. Investment in the form of BCC contract
1. BCC contracts signed between domestic investors shall comply with the provisions of civil law.
2. A BCC contract signed between a domestic investor and a foreign investor or between foreign investors shall carry out the procedures for issuance of an Investment Registration Certificate according to the provisions of Article 38 of this Law.
3. The parties to the BCC contract shall establish a coordination committee to perform the BCC contract. The functions, tasks and powers of the coordination board shall be agreed upon by the parties.”
Accordingly, the BCC contract is invested in the form:
Contracts between domestic investors shall comply with the provisions of civil law.
Signing between domestic investors and foreign investors or between foreign investors carrying out the procedures for granting investment registration certificates.
Drafting a business cooperation contract under Vietnam law
What is the content of the BCC contract?
Article 28 of the Investment Law 2020 provides for the content of a BCC contract as follows:
“Article 28. Contents of BCC contract
1. A BCC contract includes the following main 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 business investment activities;
c) Contributions of the parties to the contract and distribution of business investment results between the parties;
d) Progress and time limit for contract performance;
dd) Rights and obligations of the parties to the contract;
e) Amending, transferring or terminating the contract;
g) Liability for breach of contract, method of dispute settlement.
2. During the performance of the BCC contract, the contracting parties may agree to use assets formed from business cooperation to establish an enterprise in accordance with the law on enterprises.
3. The parties to the BCC contract have the right to agree on other contents that are not contrary to the provisions of law.”
Accordingly, the BCC contract includes the following contents:
– Names, addresses and authorized representatives of the parties to the contract; transaction address or location of the investment project;
– Objectives and scope of business investment activities;
– Contributions of the parties to the contract and distribution of business investment results between the parties;
– Progress and duration of contract performance;
– Rights and obligations of the parties to the contract;
– Amending, transferring, terminating the contract;
– Liability for breach of contract, method of dispute settlement.
During the performance of the BCC contract, the parties to the contract can agree to use the assets formed from the business cooperation to establish an enterprise. The parties to the BCC contract have the right to agree on other contents that are not contrary to the provisions of law
How is the establishment of an operating office of a foreign investor in a BCC contract regulated?
Article 49 of the Investment Law 2020 provides for the establishment of an operating office of a foreign investor in a BCC contract, as follows:
1. Foreign investors in BCC contracts may set up an operating office in Vietnam to perform the contract. The location of the executive office is decided by the foreign investor in the BCC contract according to the contract performance requirements.
2. The foreign investor’s executive office in the BCC contract has a seal; may open accounts, recruit employees, sign contracts and conduct business activities within the scope of the rights and obligations specified in the BCC contract and the Certificate of registration for the establishment of an executive office.
3. The foreign investor in the BCC contract shall submit an application for registration of the establishment of an executive office at the investment registration agency where the operating office is expected to be located.
4. An application file for registration of the establishment of an executive office includes:
– A written registration for the establishment of an executive office, including: name and address of the representative office in Vietnam (if any) of the foreign investor in the BCC contract; name and address of the executive office; contents, duration and scope of operation of the executive office; full name, place of residence, number of the people’s identity card, citizen identification card or passport of the head of the executive office;
– The decision of the foreign investor in the BCC contract on the establishment of an operating office;
– A copy of the decision to appoint the head of the executive office;
– Copy of BCC contract.
5. Within 15 days from the date of receipt of the dossier specified in Clause 4 of this Article, the investment registration authority shall grant the operation registration certificate of the executive office to the foreign investor in the BCC contract.
How is the termination of operation of the foreign investor’s executive office in the BCC contract done?
The termination of operation of the executive office of a foreign investor in a BCC contract is specified in Article 50 of the Law on Investment 2020, specifically:
1. Within 07 working days from the date of issuance of the decision to terminate the operation of the executive office, the foreign investor shall send a notification dossier to the investment registration authority where the executive office is located.
2. Dossier of notification of termination of operation of the executive office includes:
– Decide to terminate the operation of the executive office in case the executive office terminates its operation before the deadline;
– List of creditors and the amount of debt paid;
– List of employees, rights and interests of employees have been settled;
– The tax authority’s certification that the tax obligation has been fulfilled;
– The social insurance agency’s certification that the social insurance obligations have been fulfilled;
– Certificate of operation registration of the executive office;
– A copy of the Investment Registration Certificate;
– Copy of BCC contract.
3. Within 15 days after receiving the dossier specified in Clause 2 of this Article, the investment registration agency shall decide to revoke the operation registration certificate of the executive office.
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Frequently asked questions
Accordingly, when making a business cooperation contract, the following contents must be ensured according to Article 28:
“Article 28. Contents of BCC contract
A BCC contract includes the following main 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 business investment activities;
c) Contributions of the parties to the contract and distribution of business investment results between the parties;
d) Progress and time limit for contract performance;
dd) Rights and obligations of the parties to the contract;
e) Amending, transferring or terminating the contract;
g) Liability for breach of contract, method of dispute settlement.
During the performance of the BCC contract, the contracting parties may agree to use assets formed from business cooperation to establish an enterprise in accordance with the law on enterprises.
The parties to the BCC contract have the right to agree on other contents that are not contrary to the provisions of law.”
“Article 28 of the Law on Investment in 2020 stipulates the content of BCC contract
A BCC contract includes the following main 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 business investment activities;
c) Contributions of the parties to the contract and distribution of business investment results between the parties;
d) Progress and time limit for contract performance;
dd) Rights and obligations of the parties to the contract;
e) Amending, transferring or terminating the contract;
g) Liability for breach of contract, method of dispute settlement.”
The subject of the business cooperation contract has been specified and detailed in the concept. Performing business cooperation contracts are investors, including domestic investors and foreign investors. At the same time, the representative to sign and perform the contract can be two or more signatories. , depending on the number of businesses and investors who have needs and aspirations to participate in cooperation and investment, and wishes to exercise the rights and obligations agreed upon in investment and business cooperation.
Investors who can be the subject of a business cooperation contract are clearly specified in Clauses 18, 19, 20, Article 3 of the Law on Investment 2020 as follows: “18. Investors are organizations and individuals conducting business investment activities, including domestic investors, foreign investors and foreign-invested economic organizations.19. Foreign investor means an individual with a foreign nationality or organization conducting business investment activities in Vietnam.20. Domestic investors are individuals with Vietnamese nationality, economic organizations that do not have foreign investors as members or shareholders.”
Conclusion: So the above is Drafting a business cooperation contract under Vietnam law. Hopefully with this article can help you in life, please always follow and read our good articles on the website: lsxlawfirm.com
