Currently, investment in the form of a business cooperation contract (hereinafter referred to as BCC contract) is being chosen by numerous investors. However, disputes arising from this type of contract are also increasingly common. Therefore, to limit disputes, the parties should pay attention to the drafting stage of the contract. In the following article, TNTP will analyze the business cooperation contract and the basic contents you need to know about this contract.
1. What is a business cooperation contract?
According to Clause 14, Article 3 of the Investment Law 2020, a business cooperation contract (hereinafter referred to as BCC contract) means a contract between investors for business cooperation and distribution of profits or products without establishing a business organization.
On the other hand, Article 504 of the Civil Code 2015 stipulates that the cooperation contract means an agreement between natural and/or juridical persons regarding the property contribution, effort to perform certain jobs, the same benefit, and mutual responsibility.
Thus, the business cooperation contract is an agreement between two or more parties (the parties may be both domestic investors or foreign investors, or one party is a domestic investor and the other is a foreign investor) regarding the property contribution, effort to perform business cooperation, profit sharing or product distribution without the establishment of a business organization.
For instance, Company A is an enterprise legally established and operating in Vietnam, specializing in the production of plant varieties, and willing to expand its business activities to rice production and export. Company B is a legally established company in Japan, specializing in producing and distributing rice products. Company B is wishing to transfer seeds to produce and trade Japanese rice in Vietnam. Hence, Company A and Company B mutually agree to make and enter into a BCC contract to perform business cooperation activities.
2. Form of a business cooperation contract
According to Clause 1, Article 27 of the Investment Law 2020, BCC contracts signed between domestic investors shall be executed in accordance with civil law. According to Article 504 of the Civil Code 2015, the cooperation contracts between individuals and legal entities must be written in writing.
In addition, Clause 2, Article 27 of the Investment Law 2020 stipulates that BCC contracts signed by and between a domestic investor and a foreign investor or by and between foreign investors shall implement procedures for the issuance of investment registration certificates in accordance with the provisions of Article 38 of the Law on Investment. That means the business cooperation contract by and between a domestic investor and a foreign investor or by and between foreign investors must be made in writing and procedures for the issuance of an investment registration certificate in accordance with the law.
Thus, the business cooperation contract must be made in writing. This will be the basis for determining the membership of the parties. Based upon the content of this contract, each party will know its rights, obligations and responsibilities to the other party. In addition, even though the law does not stipulate the contract must be notarized or authenticated if the parties to the contract are both individuals, the contract should be notarized and authenticated to facilitate the settlement dispute in the jurisdictions (if any).
3. Main contents of the contract
Pursuant to Article 28 of the Investment Law 2020, the business cooperation contract shall contain at least:
– Names, addresses and authorized representatives of parties to the contract; business address or project address;
– Objectives and scope of business;
– Contributions by the parties to the contract, and distribution of business investment results between the parties;
– Schedule and duration of the contract;
– Rights and obligations of parties to the contract;
– Adjustment, transfer and termination of the contract;
– Responsibilities for breaches of the contract; method of dispute settlement.
In addition to the main contents aforementioned, the parties to the contract are entitled to agree upon other items which are not contrary to the law.
Above is the content of the article: “Business cooperation contract – Basic contents you need to know” that TNTP sent to readers. Hope the above information is useful to those who are interested in this issue.