A business cooperation contract (BCC contract) is a cooperation agreement of investors to cooperate in business cooperation in a certain field. The nature of the BCC contract is that there is no establishment of an economic organization (legal entities) so the parties need to learn to understand the regulations when entering into this type of contract. Below, Hong Bang Law Firm would like to send to Clients advice on the notes when signing business cooperation contracts.

The nature of the business cooperation contract

According to the definition in the Investment Law 2014: “Business cooperation contract (BCC contract) is a contract signed between investors for business cooperation to divide profits and divide products without establishing an economic organization.”

A BCC contract is a form of investment regulated under the investment law. Business cooperation contracts are signed between investors on the basis of contracts. Accordingly, the parties contribute capital, jointly manage business, take risks, and divide the business results obtained but do not establish any new legal people.

Contents of business cooperation contracts

According to the Provisions of the Investment Law 2014, the business cooperation contract includes the following main contents:

“a) Names, addresses and competent representatives of the contracting parties; transaction address or address where the project is carried out;

b) Objectives and scope of business investment activities;

c) Contributions of contracting parties and division of business investment results between the parties;

d) Progress and duration of contract performance;

dd) Rights and obligations of the contracting parties; e) Amending, transferring or terminating contracts; g) Liability for breach of contract and dispute settlement method.” (according to Article 29)”

Accordingly, in the process of executing business cooperation contracts, the parties have the right to agree on the use of assets formed from business cooperation.

In addition, the parties to the BCC contract are also entitled to agree on other contents, without consuding the provisions of law.

Regulations on business cooperation contracts in the form of investment

The parties to the business cooperation contract shall establish a coordinating board to implement the terms of the business cooperation contract. Functions, tasks and powers of persons on the coordinating board shall be agreed upon and prescribed by the parties.

In case business cooperation contracts are signed between domestic investors, they shall comply with the provisions of civil law.

In case the BCC contract is signed between domestic investors and foreign investors or between foreign investors, the procedures for applying for investment registration certificates must be carried out according to law.

Benefits that business cooperation contracts bring

• This form of cooperation is easy to conduct, the project is implemented quickly, the investment term is not extended, investors can soon receive profits from business activities due to the time not to take time to carry out procedures for establishing enterprises and investing in building facilities, New production machinery. Therefore, the form of investment under business cooperation contracts benefits investors, saving a lot of time, effort and money.
• The parties can take advantage of each other’s strengths to optimize and improve efficiency in the production and business process. Often, domestic investors with knowledge of the local market will help to enter the market of foreign investors quickly, minimizing risks due to a lack of understanding of the competitive environment. Meanwhile, foreign investors with the advantage of technological level, modern technology and advanced management organization model and science will promote development cooperation activities, bringing efficiency and benefits that the parties desire.
• In the course of the performance of the contract, the parties will still retain their legal status, on their own behalf to perform the contract. This creates flexibility and initiative in carrying out business activities under the agreement on an equal and non-binding basis.

Limitations of business cooperation contracts

• As you know, a business partnership contract does not have to establish a new economic organization. Therefore, when implementing investment projects, it will be more difficult for the parties to sign other related contracts to serve the performance of BCC contracts. Since it is not an economic organization (not a legal entities), the parties will not have a common seal. At that time, the parties must make an agreement to use a party’s seal to serve business cooperation investment activities.
• The form of investment under the BCC contract will not be suitable for long-term projects and requires complex management and business.
• The form of investment under the business cooperation contract has been stipulated in the Investment Law 2014. However, the provisions of this law only stop at the general provisions. Currently, there is no decree or other legal document guiding specific and detailed forms of investment under business cooperation contracts. Therefore, investors need to have careful research and research before choosing this form of investment to avoid the risk of falling.

Above is advice on the notices when signing business cooperation contract.

If you need more detailed advice and answers as well as how to access this service, please contact directly our Lawyer Nhat Nam via hotline: 0912.35.65.75, 0912.35.53.53 or call the toll free legal consultation hotline 1900.6575 or send a service request via email: lienheluathongbang@gmail.com

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