FOREIGN INVESTMENT IN VIETNAM IN THE FORM OF BCC CONTRACT
Foreign investment in Vietnam in the form of BCC contract is a form of investment based on a business cooperation contract (also known as BCC contract, where BCC stands for Business Cooperation Contract) as specified in Law on Investment and related guiding documents. From the perspective of investment law, BCC contract is a contract signed between investors to cooperate in business, share profits, distribute products in accordance with the law without establishing an economic organisation.
Foreign investment in Vietnam in the form of BCC contract
Foreign investors can choose to sign BCC contract with domestic investors or with other foreign investors to carry out business investment activities. However, please note that, in accordance with the investment law, the parties entering to the BCC contract must carry out the procedures for issuance of the Investment Registration Certificate as prescribed.
Since independent legal entities are not established, the parties to the BCC contract need to have a mechanism for coordinate operation and ensuring the sharing of rights and obligations among the parties. Therefore, the parties participating in the BCC contract can set up an operating office to execute the BCC contract. The functions, duties and powers of the operating office shall be agreed by the parties.
Contents of BCC contract
In principle, the parties to the BCC contract have the right to agree on contents that are not contrary to the provisions of law. However, before signing BCC contract, foreign investors should note the following main contents of BCC contract in accordance with the investment law:
- Name, address, authorised representative of the parties to the contract; transaction address or location of investment project;
- Objectives and scope of business investment activities;
- Contributions of the parties to the contract and division of business investment results between the parties;
- Schedule and duration of contract performance;
- Rights and obligations of the parties to the contract;
- Amendment, assignment and termination of the contract;
- Liability for breach of contract, method of dispute resolution.
During the performance of the BCC contract, the parties to the contract may reach agreement on the use of assets formed from business cooperation to establish an enterprise in accordance with the law on enterprises.
Procedures for applying for Investment Registration Certificates for foreign investment in Vietnam in the form of BCC contract
After signing the BCC contract, the parties will carry out the procedure for applying for an Investment Registration Certificate for an investment project under the BCC contract.
By law, the investment registration agency shall issue an Investment Registration Certificate for investment project subject to approval of investment policies as specified in Articles 30, 31 and 32 of the Law on Investment within the following time limit:
- 05 working days from the date of receipt of the written approval of the investment policy simultaneously with the investor’s approval for the investment project subject to the issuance of the Investment Registration Certificate;
- 15 days from the date of receipt of the investor’s request for the issuance of the Investment Registration Certificate for an investment project other than the above-mentioned case.
Establishment of operating office of foreign investor to the BCC contract
Foreign investors to the BCC contract are allowed to set up an operating office in Vietnam to perform the contract. The location of the operating office shall be decided by the foreign investor in the BCC contract according to the contract performance requirements. The operating office of the foreign investor to the BCC contract has a seal; may open accounts, recruit employees, sign contracts and conduct business activities within the scope of rights and obligations specified in the BCC contract and the Certificate of registration for establishment of the operating office.
The foreign investor in the BCC contract shall submit an application for registration for the establishment of the operating office at the investment registration agency of locality where the operating office is expected to be located. By law, the preliminary registration application for the establishment of the operating office shall include:
- The written registration for the establishment of the operating office includes name and address of the representative office in Vietnam (if any) of the foreign investor in the BCC contract; name and address of the operating office; contents, duration and scope of operation of the operating office; full name, residential address, number of the people’s identity card, citizen card or passport of the head of the operating office;
- The decision of the foreign investor in the BCC contract on the establishment of the operating office;
- Copy of the decision on the appointment of the head of the operating office;
- Copy of BCC contract
Within 15 days from the date of receipt of a complete and valid dossier, the investment registration agency shall issue the Certificate of operation registration for the operating office to the foreign investor to the BCC contract.
One of the advantages of foreign investment in Vietnam in the form of BCC contract is that the parties do not have to establish new legal entities, do not have to carry out procedures for establishing enterprises, thus saving time and costs for foreign investors. This also allows foreign investors to quickly conduct business and investment activities in Vietnam. In addition, the cooperation in the form of BCC contract helps investors exploit and take advantage of each party’s business, capital, and human resources to conduct business activities with the aim of seeking profits.
Before making decision of foreign investment in Vietnam in the form of BCC contract, foreign investors need to thoroughly consider, research, and study the market, economic conditions, policies and related legal provisions of Vietnamese law as well as the partners whom the investors intend to sign the BCC contract.
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