The form of foreign investment in Vietnam known as BCC contract involves a business cooperation agreement between investors, as outlined in the Law on Investment and related regulations. In investment law terms, the BCC contract enables investors to collaborate in business, share profits, and distribute products in accordance with legal provisions, without formally establishing an economic entity.
Investment from overseas in Vietnam, specifically through the BCC contract format
Foreign investors are able to select whether to enter into a BCC contract with domestic or other foreign investors to conduct investment activities. However, it is important to note that under the investment law, those signing the BCC contract must complete the necessary procedures for obtaining the Investment Registration Certificate. These procedures are required since no legal entity is being established through the BCC contract. Consequently, to ensure effective coordination and sharing of responsibilities and entitlements among the parties involved, an operating office may be established. The parties have the freedom to determine the functions, responsibilities and authority of said office in accordance with their agreement.
Contents of BCC Contract
Essentially, the parties involved in the BCC contract have the freedom to agree on terms that are not in conflict with the law. On the other hand, foreign investors should be mindful of the following key considerations before signing off on a BCC contract that adheres to investment law provisions:
+ Identification of all parties involved along with contact and representative information
+ Clear definition of the scope and intended business investment targets
+ Contributions of all parties involved and how returns will be distributed
+ Timelines and duration of the contract in place
+ Account of the rights and obligations for every participant
+ Guidelines around changes, transfer of contract ownership or termination procedures
+ Protocols for handling legal troubles and means of mediation
At any point in the execution of the BCC contract, the parties involved may mutually agree to use assets acquired through business cooperation as a foundation for creating an enterprise that follows legally-defined enterprise laws.
Procedures for applying for IRC in Vietnam in the form of BCC contract
Once the BCC contract is signed, the involved parties must follow the appropriate procedure to apply for an Investment Registration Certificate for the investment project covered by the BCC contract. As per legal requirements outlined in Articles 30, 31, and 32 of the Investment Law, the investment registration agency will issue an Investment Registration Certificate for investment policies that have received approval, within set time limits. These time limits are as follows:
-Within 05 working days of receiving written approval for the investment policy and the investor’s approval for the related investment project that falls under the issuance of the Investment Registration Certificate.
-Within 15 days of receiving the investor’s request for the issuance of the Investment Registration Certificate for any investment project that does not fall under the aforementioned case.
Establishment of operating office of foreign investor to the BCC Contract
Foreign investors entering a BCC contract are authorized to establish an operating office in Vietnam for the purpose of executing the contract. The foreign investor can choose the location of the operating office in line with the contract’s performance requirements. Additionally, the foreign investor’s operating office has its own seal, which enables it to open accounts, hire staff, enter contracts, and undertake business activities in accordance with the provisions of the BCC contract and the Operating Office Registration Certificate.
To register the establishment of their operating office, the foreign investor engaged in the BCC contract must apply to the investment registration agency. In order to do this, they need to fill out the necessary paperwork and provide any required documentation. Once the foreign investor submits the application, the investment registration agency will review it and make a decision regarding the registration. The preliminary registration paperwork for the operating office’s establishment must include:
+ An application for registration that outlines the name and address of the foreign investor’s representative office based in Vietnam (if applicable), the operating office name and location, the scope and duration of the operating office’s activities, and the head of the operating office’s complete details such as full name, residential address, and passport or identity card number;
+ A decision confirming the establishment of the operating office from the foreign investor involved in the BCC contract;
+ A copy of the BCC contract; and
+ A copy of the decision appointing the head of the operating office.
+ The investment registration agency will issue the foreign investor an Operation Registration Certificate for their operating office within 15 days of receiving a complete and accurate application.
Conclusion
In conclusion, foreign investment in Vietnam in the form of BCC contracts can provide valuable opportunities for foreign investors to enter and explore the Vietnamese market. Through the implementation of BCC contracts, foreign investors can benefit from leveraging each other’s business and resources, while saving on time and expenses. However, foreign investors need to be cautious and diligent in researching and understanding the market, economic conditions, Vietnam’s legal provisions, policies, and their BCC contract partners before committing to foreign investment in Vietnam via a BCC contract.
One of the benefits of conducting foreign investment in Vietnam through BCC contracts is that investors will not need to establish new legal entities or comply with the procedures required for setting up a new enterprise. This will save foreign investors both time and expenses. Additionally, the BCC contract type of cooperation allows foreign investors to quickly carry out business and investment activities in Vietnam, whilst leveraging the best of each party’s business, capital, and human resources, with the ultimate goal of yielding profits.
HMLF is always available to offer assistance in understanding the procedures with authorities.
Harley Miller Law Firm “HMLF”
Head office: 14th floor, HM Town building, 412 Nguyen Thi Minh Khai, Ward 05, District 3, Ho Chi Minh City.
Phone number: +84 937215585
Website: hmlf.vn Email: miller@hmlf.vn