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BCC Contract/Business Cooperation Contract: Classification & Sample File
Investment in the form of a BCC contract (also known as a business cooperation contract) is a form of investment that has existed for a long time. When investing in this form, investors only need to sign a cooperation contract with each other to do business together, share benefits and products during the business process without having to establish an economic organization. Therefore, this is a quite flexible and convenient form of investment chosen by investors when they want to invest but do not want to be bound as when establishing a new business.
The following article by Siglaw will share basic issues related to the BCC contract template, please read along.
What is a BCC Contract/Business Cooperation Contract?
A BCC Contract/Business Cooperation Contract is a bilateral contract and must be made in writing. There must be 2 or more entities participating in the BCC contract, establishing a coordination board to implement it without having to establish an economic organization and must comply with the provisions of the Investment Law 2020 and the Civil Code 2015.
Why should you choose to invest in the form of a BCC contract?
First, investing in the form of a BCC contract helps investors save a lot of time and costs because they can carry out an investment project without having to establish a new economic organization as well as operating costs after establishing the enterprise, and dissolution costs when stopping the project. This is an advantage that can be considered the most outstanding of this form of investment.
Second, when investing in the form of a BCC, investors are less dependent on their partners when deciding on issues related to the investment project because the investors independently exercise their rights and obligations in the contract on their own behalf.
In the form of establishing an economic organization, investors rely on the capital they contribute to the company to choose the head of management, so the decisions of investors will sometimes depend on the party holding more authority. But for this form of investment, that problem has been solved, the parties are not bound to each other by a common legal entity, so this advantage has contributed to better meeting the requirements and choices of different investors.
Third, with the form of investment under BCC, the parties in the contract can overcome and support each other when there are shortcomings and limitations in the cooperation process. When foreign investors enter into BCC with domestic investors: foreign investors can access the market through domestic investors, and domestic investors can take advantage of human resources, capital and technology of foreign investors. Thus, the form of BCC can be considered a form of investment in which all parties benefit.
Some limitations when investing under a business cooperation contract
First, not establishing a legal entity in this form of investment can easily lead to certain limitations:
- There is no common seal to serve the project’s operations;
- A large investment project with many parties that only operates based on one document, which is a cooperation contract, may not be tight enough, and the connection is not sustainable enough to carry out related investment activities such as signing new contracts to serve the project, responsibilities and obligations to third parties related to the contract;
- Parties in the contract are also prone to having equal responsibilities, not corresponding to the capital contribution ratio;
Second, investment procedures in this form are only suitable for projects that need to be implemented quickly with a short term;
Third, there are currently no regulations on one party entering into a contract with a third party for the purpose of serving the project, and the responsibilities of the parties in the contract towards this third party;
Subjects of BCC contracts
According to the provisions of the Investment Law 2020, the subjects of BCC contracts are domestic investors and foreign investors. And in the BCC contract, there is no limit on the parties involved. The parties directly participating in signing the contract will directly exercise the rights and obligations in that contract.
Subjects of BCC contracts include:
- Foreign economic organizations; economic organizations with foreign investment capital; Vietnamese economic organizations;
- Individuals with Vietnamese nationality; individuals with foreign nationality;
The subjects in the BCC contract will exist independently and separately without the need to establish a common legal entity during the cooperation process, and will be responsible for their own business activities.
BCC Business Cooperation Contract Template
The basic contents of the BCC Business Cooperation Contract Template include:
- Name, address, representative of the parties participating in the contract; location of the investment project or transaction address;
- Scope and objectives of business investment activities;
- Contribution level of the parties participating in the BCC Contract and division of business investment results (can be made into attached appendices);
- Progress and duration of contract implementation;
- Rights and obligations of the parties participating in the contract;
- Provisions on contract amendment, termination, and transfer;
- Responsibilities for breach of contract and methods of settlement when disputes arise;
- Other contents that the parties can agree on that are not contrary to the provisions of law;
The parties in the BCC Contract can completely agree on the use of assets formed from business to establish an enterprise according to regulations.
Sample BBC File
SOCIALIST REPUBLIC OF VIETNAM
Independence – Freedom – Happiness
BUSINESS COOPERATION CONTRACT
No.: …/BCC
- Pursuant to the provisions of the Civil Code 2015;
- Pursuant to the provisions of the Commercial Law 2005;
- Based on the actual situation of both Parties;
- Based on the principles of honesty and goodwill in cooperation of both Parties;
We, the undersigned, are:
Here is the translation of your business cooperation contract into English, using formal and legal language:
SOCIALIST REPUBLIC OF VIETNAM
Independence – Freedom – Happiness
BUSINESS COOPERATION CONTRACT
No.: …/BCC
- Pursuant to the provisions of the Civil Code 2015;
- Pursuant to the provisions of the Commercial Law 2005;
- Based on the actual situation of both Parties;
- Based on the principles of honesty and goodwill in cooperation of both Parties;
We are:
…………………………………
(Party A)
Address: ………………………………………………….
Representative: Mr. ………. Position: ……………………..
Phone: ………………………………………………….
Account number: …….. at: ……………………………….
And
……………………………..
(Party B)
Address: ………………………………………………….
Representative: Mr. ………. Position: ……………………..
Phone: ………………………………………………….
Account number: …….. at: ……………………………….
Both parties agree to enter into this Business Cooperation Contract with the following terms and conditions:
Article 1. Objectives and Scope of Business Cooperation
- Objectives of Business Cooperation
Party A and Party B agree to cooperate in business operations, management, and share profits obtained from the business cooperation.
- Scope of Business Cooperation
Both parties agree to cooperate in business, operate, and manage business activities to generate profits.
- Scope of Cooperation of Party A:
Party A is responsible for overall management of the business premises and strategic business development. - Scope of Cooperation of Party B:
Party B is responsible for managing the entire business process of products and services, such as:- Seeking, negotiating, signing, and making payments on contracts with suppliers of materials;
- Recruiting, training, and managing personnel for business operations within the cooperation scope;
- Investing in and promoting the development of commercial activities within the cooperation scope.
Article 2. Duration of the Contract
The contract duration is … (… years) starting from …/…/… to …/…/….
Contract Extension:
Upon the expiration of this contract, both parties may agree to extend the contract or sign a new contract depending on their business conditions.
Article 3. Capital Contribution and Profit Sharing
3.1. Capital Contribution:
- Party A contributes capital in the form of: … equivalent to the amount of …….
- Party B contributes capital in the form of: … equivalent to the amount of …….
3.2. Profit Sharing:
3.2.1. Sharing Ratio: Profits from business operations are shared as follows: Party A receives ….%, and Party B receives ….% of the profit after fulfilling all obligations to the State.
3.2.2. Profit Distribution Time: The last day of the fiscal year. The fiscal year starts from January 1 to December 31 each year. For the year 2018, the fiscal year is understood to start from the date this contract comes into effect until …/…/20… .
3.2.3. In Case of Business Loss: Both parties must jointly agree on a resolution. If no agreement can be reached, the parties shall contribute as stipulated in Clause 3.1 of this Article to cover costs and continue business operations.
Article 4. Financial Principles
4.1. Both parties must comply with the financial and accounting principles as prescribed by the accounting laws of the Socialist Republic of Vietnam.
4.2. All income and expenditures for business operations must be clearly, fully, and accurately recorded.
Article 5. Business Operation Management Committee
5.1. Members of the Committee: Both parties will establish a Business Operation Management Committee consisting of … members. Party A will appoint …, and Party B will appoint … . Specifically, the committee members are as follows:
- Representative of Party A: Mr./Ms. …….
- Representative of Party B: Mr./Ms. …….
- Mr./Ms.: …………………….
5.2. Voting Form of the Committee:
When making decisions related to the cooperation content specified in this contract, decisions of the Committee will be passed when at least two members agree.
Voting must be documented and signed by all Committee members.
5.3. Committee Office Location: The office of the Business Operation Management Committee is located at: ……………
Article 6. Rights and Obligations of Party A
6.1. Rights of Party A:
- …………………………………………………..
- …………………………………………………..
- Entitled to ….% of the post-tax profit from business operations.
6.2. Obligations of Party A:
- …………………………………………………..
- …………………………………………………..
Article 7. Rights and Obligations of Party B
7.1. Rights of Party B:
- …………………………………………………..
- Entitled to ….% of the post-tax profit from business operations.
7.2. Obligations of Party B:
- …………………………………………………..
- …………………………………………………..
Article 8. General Provisions
8.1. This contract is governed by and constructed in accordance with the laws of the Socialist Republic of Vietnam.
8.2. Both parties commit to fully implementing the terms agreed in the contract. Any party that breaches the contract, causing damage to the other party (except in cases of force majeure), must compensate for the entire damage incurred and is subject to a penalty of 8% of the value of the breached contract.
8.3. During the contract implementation, if any party encounters difficulties, they must notify the other party within 1 (one) month from the date of difficulty.
8.4. Both parties are responsible for promptly informing each other of the progress of work performance and ensuring the confidentiality of all information related to business activities.
8.5. Any amendments or supplements to this contract must be made in writing and signed by both parties. Appendices are an integral part of the contract.
8.6. Any disputes arising during the performance of the contract shall first be resolved through negotiation and mediation. If mediation fails, the dispute shall be resolved at a competent court.
Article 9. Contract Effectiveness
9.1. The contract terminates upon the expiration of the contract term as stipulated in Article 2 of this contract or in other cases as prescribed by law. Upon termination of the contract, both parties will prepare a contract liquidation record.
9.2. This contract is made in 02 (two) copies in Vietnamese, each party holds 01 (one) copy with equal legal validity and becomes effective from the date of signing.
Representative of Party A Representative of Party B
Classification of BCC business cooperation contracts
BCC contracts are usually classified into the following main forms:
- Form of division based on pre-tax product revenue profits
- Form of division based on post-tax profits
- Form of jointly controlled assets of members participating in business cooperation.
- Form of jointly controlled business activities.
Investment procedures in the form of BCC contracts
BCC contracts between domestic investors: Implemented according to the provisions of civil law on contracts;
BCC contracts between domestic investors and foreign investors or between foreign investors with each other carry out procedures for granting Investment Certificates according to the provisions of investment law.
In case of investment policy approval: Investors submit dossiers to competent authorities (National Assembly/Prime Minister/Provincial People’s Committee) for consideration and issuance of investment policy approval decisions;
The business registration agency shall issue Investment Registration Certificates within 05 days from the date of the investment policy approval decision.
For cases not subject to investment policy approval: The investor submits 01 set of documents to the investment registration agency and is considered for issuance of an Investment Registration Certificate within 15 working days from the date of receipt of the complete documents and the investor meets the following conditions:
- Meeting market access conditions for foreign investors
- The investment project is not in the prohibited business investment sector;
- The investment project has a project implementation location;
- The investment project is in accordance with the planning;
- The investment project meets the conditions on investment rate per land area, number of employees;
The parties to the BCC Contract establish a Coordination Board to implement the contract; the tasks, functions and powers of the coordination board are agreed upon by the parties.
Establishing an executive office of the foreign investor to implement the BCC contract:
The foreign investor is the subject of the BCC Contract and is allowed to establish an executive office in Vietnam to implement the contract. The location of the office is chosen by the foreign investor in accordance with the requirements of the Contract;
The executive office of the foreign investor has a seal, is allowed to open an account, recruit employees, sign labor contracts, and conduct business activities within the scope of rights and obligations of the contract and the Certificate of registration for establishment of the executive office.;
The foreign investor in the BCC contract submits the application for registration for establishment of the executive office to the investment registration agency where the office is expected to be located.
The certificate of the executive office is issued within 15 days from the date of receipt of the complete application of the investor.
When the project in the BCC contract is completed or at any time of the project, the investor has the right to terminate the operation of the executive office. Within 07 days from the date of the decision to terminate, the investor must notify the investment registration agency that issued the Certificate of establishment of the executive office;
How to withdraw from the BCC Contract?
Cases where withdrawal from the BCC contract is allowed include:
- According to the terms and conditions agreed upon in the contract.
- With a legitimate reason and approved by the majority, more than 1/2 of the total cooperative members.
Members withdrawing from the BCC contract have the right to request to receive back the contributed assets and be divided according to the assets in the total common assets. After withdrawing from this contract, members must pay and fulfill the obligations as agreed.
Cases of termination of business cooperation contracts
Below are 05 cases of termination of BCC business cooperation contracts including:
- According to the agreement between the cooperating members.
- Termination when the agreed time period stated in the BCC contract has expired
- The parties have achieved the purpose of cooperation
- The competent state agency issues a termination decision
- And cases of termination of BCC contracts according to Vietnamese law
In the case of termination of BCC business cooperation, the parties are required to fulfill their obligations to fully pay all debts arising from the contract. If the common assets are not sufficient, the members will use their personal assets to pay.
Except for cases with other agreements, after paying the debt, if the common assets are still surplus, the members will be divided according to the corresponding capital contribution ratio of each member.
Business cooperation contract consulting service
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| Step 3 | Service quote |
| Step 4 | Drafting of consulting service contracts for business cooperation contracts (BCC) |
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