Investment in the form of a business cooperation contract (BCC Contract) is a form of investment through a contract signed between investors, in order to cooperate in business, divide profits and divide products in accordance with the provisions of law without establishing an economic organization[1]. Here are some notable substances for foreign investors when investing in Vietnam through a BCC Contract:

Firstly, if a BCC Contract is signed between domestic investors and foreign investors or between foreign investors, the investors are required to apply for an Investment Registration Certificate under Article 38 of the Law on Investment 2020 [2].

Secondly, similar to other forms of investment, foreign investors must satisfy market access conditions applicable to foreign investors corresponding to their potential business lines.

Thirdly, the BCC Contract must contain the following key provisions[3]:

• • Name, address, authorized representative 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 division of business investment results between the parties;
  • Progress and duration of contract performance;
  • Rights and obligations of the parties to the contract;
  • Modification, assignment, termination of the contract;
  • Liability for breach of contract, method of dispute resolution.

Fourthly, the parties to the BCC Contract may divide business results between the parties in the following ways [4]:

• • Division of business results by revenue from sales of goods and services;
  • Division of business results by products;
  • Divide business results by profit before tax;
  • Divide business results by after-tax profit;

Fifthly, the parties to the BCC Contract may establish a coordinating committee to perform the BCC Contract. The functions, tasks and powers of the coordinating board shall be agreed upon by the parties.

Sixthly, foreign investors in BCC Contract are allowed to establish an executive office in Vietnam to perform the contract. The foreign investor’s executive office in the BCC Contract is entitled to carry out business activities. This is different from representative offices of foreign traders in Vietnam which are not allowed to carry out business activities and earn profits under the Enterprise Law 2020 and the Commercial Law 2005. The foreign investor’s executive office in the BCC Contract has a seal; may open accounts, recruit labor, sign contracts and conduct business activities within the scope of rights and obligations specified in the BCC Contract and the Certificate of registration of establishment of executive offices.[5]

Seventhly, during the performance of the BCC Contract, the contracting parties are allowed to use assets formed from business cooperation to establish enterprises in accordance with the law on enterprises. In addition, the parties to the BCC Contract have the right to agree on other terms and conditions that are not contrary to the provisions of law[6].

Foreign investors often opt for BCC Contracts when considering initial forays into the Vietnamese market, whether as a preliminary exploration before committing to a local subsidiary or to leverage opportunities alongside domestic investors. But in any case, the most important issue to pay attention to is that the parties need to agree specifically and clearly on how to manage and operate joint business activities, and the mechanism for sharing business results. This proactive approach serves to preempt potential disputes and enhance the overall effectiveness of investment endeavors in Vietnam.