Latest investment procedures under the form of BCC contract

Investment procedures under the form of BCC contracts is a legal process to implement investment projects without establishing an economic organization. This form helps domestic and foreign investors cooperate in business flexibly, through the contents agreed in the contract. The following article provides complete information about concepts, legal regulations, implementation procedures, and legal issues that need to be kept in mind during the investment process under BCC contracts.

General regulations on investment in the form of BCC contracts

According to the provisions of Clause 14, Article 3 of the Law on Investment 2020, a business cooperation contract (hereinafter referred to as a BCC contract) is a contract signed between investors to cooperate in business, divide profits, and divide products according to the provisions of law without establishing an economic organization. This characteristic creates the unique flexibility of BCC investment form compared to other forms of investment.

The BCC contract is unique in that it does not require the establishment of a separate legal entity. Participating parties only need to sign the contract, register investment according to regulations and establish a coordination board to implement the contract.

Subjects of BCC contracts include domestic and foreign investors. Pursuant to Article 27 of the Law on Investment 2020, BCC contracts can be signed between domestic investors, between domestic and foreign investors, or between foreign investors. Accordingly:

• Foreign investors are individuals with foreign nationality or organizations established under foreign law that conduct business investment activities in Vietnam.
• Domestic investors are individuals with Vietnamese nationality or economic organizations that do not have foreign investors as members or shareholders.

The basic feature of a BCC contract is that the parties involved agree to contribute capital, share risks, and divide profits and products. According to Article 27 of the Law on Investment 2020, investment in the form of BCC contracts is regulated as follows:

• BCC contracts signed between domestic investors will comply with the provisions of civil law. Registration procedures are simpler than contracts involving foreign investors.
• For BCC contracts signed between domestic investors and foreign investors or between foreign investors, the implementation of procedures for granting an Investment Registration Certificate must comply with the provisions of Article 38 of the Law on Investment 2020. The investment registration agency issues the Investment Registration Certificate within 05 working days from the date of receiving the written approval of the investment policy concurrently with the investor’s approval, or within 15 days from the date of receipt of the investment registration certificate. Date of receipt of request for issuance of Investment Registration Certificate for other cases.
• The parties participating in the BCC contract must establish a coordination committee to implement the contract. The functions, tasks and powers of the coordination board are agreed upon by the parties. The Coordination Board plays an important role in coordinating the activities of the parties, ensuring the effective implementation of the BCC contract and in accordance with the law.

The content of the BCC contract must comply with the provisions of Article 28 of the Law on Investment 2020, including the following information:

• Names, addresses, and authorized representatives of the parties to the contract; transaction address or location of investment project implementation;
• Objectives and scope of business investment activities;
• Contributions of the parties to the contract and division of business investment results between the parties;
• Progress and deadline for contract implementation;
• Rights and obligations of the parties to the contract;
• Modification, transfer, termination of contracts;
• Liability due to breach of contract, dispute resolution methods.

>>> Reference: What is a BCC contract? Instructions for drafting detailed BCC contracts.

During the implementation of the BCC contract, the parties to the contract may agree to use assets formed from business cooperation to establish an enterprise according to the provisions of 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.

When applying the BCC contract investment form, foreign investors are allowed to establish an operating office in Vietnam according to Article 49 of the Law on Investment 2020. This office has the right to use a seal, open an account, recruit workers and carry out business activities within the scope specified in the BCC contract.

Investment procedures under the form of BCC contracts

Investment procedures under the form of BCC contracts are carried out according to a clear process, starting from agreement and contract signing to investment registration and establishment of a coordination board. This process is specifically regulated in Articles 27, 28 and 38 of the Law on Investment 2020, creating a solid legal framework for investors. Specifically includes the following steps:

Step 1: Agreement and signing of business cooperation contract:

The parties agree and sign a BCC contract, the contract must fully meet the contents specified in Clause 1, Article 28 of the Law on Investment 2020.

>>> Reference: Things to note when negotiating business cooperation contracts (BCC).

Step 2: Register to invest:

• For BCC contracts with the participation of foreign investors, the parties must carry out procedures for issuance of an Investment Registration Certificate. If the project is subject to investment policy approval according to Articles 30, 31 and 32 of the Law on Investment 2020, the investment registration agency will issue an Investment Registration Certificate within 05 working days from the date of receiving the investment policy approval document, or within 15 days for other cases.
• For projects that are not subject to investment policy approval, investors need to meet the conditions specified in Clause 2, Article 38 of the Law on Investment 2020. These conditions include: the project does not belong to industries banned from business investment; have a location for project implementation; consistent with planning; meet investment and labor conditions; Meet market access conditions for foreign investors.

Step 3: After completing investment registration procedures, the parties participating in the BCC contract must establish a coordination board to implement the contract. The functions, tasks and powers of the coordination board are agreed upon by the parties in accordance with the needs of managing and operating the investment project.

For foreign investors in BCC contracts, they have the right to establish an executive office in Vietnam according to the provisions of Article 49 of the Law on Investment 2020.

Procedures for establishing an executive office of a foreign investor in a BCC contract

Pursuant to the provisions of Article 49 of the Law on Investment 2020, to establish an executive office, foreign investors in BCC contracts need to prepare establishment registration documents including:

• The registration document to establish an executive office includes: name and address of representative office in Vietnam (if any) of the foreign investor in the BCC contract; name and address of executive office; content, duration, and scope of operations of the executive office; Full name, place of residence, ID card number, Citizen Identification card or Passport number of the head of the executive office;
• Decision of the foreign investor in the BCC contract on the establishment of an executive office;
• Copy of the decision to appoint the head of the executive office;
• Copy of BCC contract.

Foreign investors submit an application to establish an executive office at the investment registration agency where the office is expected to be located (now the Department of Finance). The investment registration agency will issue the Executive Office Operation Registration Certificate within 15 days from the date of receipt of complete and valid documents.

The executive office of the foreign investor in the BCC contract has a seal; can open accounts, recruit workers, sign contracts and conduct business activities within the scope of rights and obligations specified in the BCC contract and Certificate of registration for establishment of executive office.

>>> See more: Terminate the operations of the foreign investor’s executive office in the BCC contract.

Investment method consulting services in the form of BCC contracts at Long Phan Consulting Company

Investment consulting services in the form of BCC contracts at Long Phan Consulting Company provide comprehensive solutions for domestic and foreign investors. Our team of experts will support customers throughout the entire investment process, from initial consultation to carrying out necessary legal procedures.

• Consulting on contract structure and content suitable for each investment field.
• Support in drafting detailed, complete and legal BCC contracts.
• Investor representatives work with licensing agencies to apply for an Investment Registration Certificate.
• Instructions on procedures for establishing an executive office and project implementation steps.

With extensive experience in the field of investment consulting, Long Phan Consulting Company is committed to providing customers with high quality consulting services, contributing to the success of investment projects in the form of BCC contracts in Vietnam.

Frequently asked questions about investing under BCC contracts

Below are some frequently asked questions, please refer to:

Investment industries often use BCC contract form?

Industries such as telecommunications, resource exploitation, energy, real estate, and infrastructure are fields that often see BCC applied due to high cooperation requirements and complex legal requirements.

Can a BCC contract be terminated before its expiration date?

Yes. The parties may agree to terminate it before its term if there is a reasonable reason and it is clearly stated in the contract.

What are the main risks of investing under BCC contracts?

Risks include lack of common control, differences in investment culture, conflicts in profit division, and difficulties in resolving disputes due to not having its own legal entity.

Is due diligence required before signing a BCC contract?

Necessary. Evaluating the partner’s legal and financial capacity helps minimize risks and ensure effective cooperation.

Does the BCC contract have to be publicly registered?

It is not mandatory to disclose the entire contract. However, the necessary contents must be registered in the application for an Investment Registration Certificate.

Can the content of the BCC contract be adjusted after signing?

Maybe. The parties have the right to amend the contract content by means of an appendix, if not contrary to the law.

Is the BCC contract limited in term?

No specific limits. The contract term is mutually agreed upon by the parties, depending on the objectives and scale of investment.

How are disputes in BCC contracts resolved?

Can be resolved by negotiation, mediation, commercial arbitration or court, depending on the agreement in the contract.

Can parties transfer rights in a BCC contract?

Yes, if clearly stated in the contract and meets current legal conditions.

Conclude

Investment procedures under the form of BCC contracts require in-depth understanding of investment law. Customers who need detailed advice on investment procedures under the form of BCC contracts, please contact Long Phan Consulting Company via the hotline 0906735386 to receive support from a team of experienced experts, helping you implement investment projects effectively and in compliance with the law.