A Business Cooperation Contract (BCC) lets foreign investors cooperate with Vietnamese partners without establishing a new legal entity. When should a BCC be used instead of a joint venture? This article analyses Article 22 of the Law on Investment 2025 (No. 143/2025/QH15, effective 1 March 2026), with practical pros and cons.
1. What is a BCC contract?
Under Article 3.14 of the Law on Investment 2025, a business cooperation contract (BCC) is a contract signed between investors for business cooperation and profit/product sharing without establishing an economic organisation. It is one of the five investment forms in Article 18.
The core difference from a joint-venture company: a BCC creates no new legal person — each party keeps its independent legal status, with all rights and obligations governed by the contract.
2. Legal framework for BCC under the Law on Investment 2025
Article 22 provides:
- BCC between domestic investors: governed by civil law, no investment procedures required (Clause 1).
- BCC involving foreign investors (domestic + foreign, or among foreign investors): must complete IRC issuance procedures under Article 26 (Clause 2).
- The parties establish a coordination board; its functions, duties and powers are as agreed (Clause 3).
- During performance, parties may agree to use assets formed from the cooperation to establish an enterprise under enterprise law (Clause 4) — an “upgrade path” from BCC to legal entity when cooperation succeeds.
- The Government prescribes BCC contract contents (Clause 5).
Additionally, Article 37 allows a foreign investor in a BCC to establish an operating office in Vietnam — with its own seal, and entitled to open accounts, recruit labour, sign contracts and conduct business within the scope of the BCC.
3. When to use a BCC: 5 typical scenarios
- Fixed-term projects: oil and gas exploration/exploitation; infrastructure and energy projects; BOT projects — the contract ends when the project ends, with no entity dissolution to unwind.
- Vietnamese partner contributes land-use rights or licences instead of cash: a BCC “monetises” licence/land-use value without complex in-kind capital valuation into an entity.
- Sectors with foreign-ownership caps: where control via a legal entity is impossible, a BCC is a flexible market-entry channel.
- Speed matters: skipping entity incorporation shortens the time to operations.
- Market testing: trial cooperation before committing to a long-term legal entity.
4. When NOT to use a BCC
- An independent legal person is needed to raise capital, sign long-term contracts and ring-fence liability.
- Large-scale, long-duration projects — pure contractual governance breeds operational disputes without corporate governance mechanisms.
- Parties lack deep trust: a BCC demands an extremely detailed agreement; a weak partnership plus a thin contract equals disputes.
5. “Survival” clauses in a BCC contract
- Contributions and sharing: what each party contributes (capital, land, licences, technology, management), profit/product sharing ratios and timing.
- Coordination board: composition, decision rights, voting and deadlock mechanisms.
- Representation and seals: who may sign with third parties, whose seal is used — avoiding representation disputes.
- Operating office: location and activity scope of the foreign investor’s operating office.
- Amendment, assignment, termination: conditions for assigning rights/obligations to third parties; early-termination events.
- Breach liability and dispute resolution: penalties, damages; negotiation, then arbitration/courts.
- Tax: allocation of tax obligations; foreign investors should note foreign contractor tax and complete tax registration.
6. BCC and the IRC obligation
Foreign investors in BCC contracts must not skip IRC issuance. IRC conditions (Article 26): the project is not in a prohibited sector; has a location; conforms to planning; meets investment-rate/labour norms (if any); and satisfies foreign-investor market-access conditions.
7. Conclusion
A BCC is a flexible instrument demanding high contractual discipline. Used correctly — for fixed-term projects, land/licence-contributing partners, or speed — it saves significant time and cost versus incorporating. Used incorrectly — where long-term governance and fundraising matter — it becomes a dispute source. Golden rule: the more detailed the contract, the more durable the cooperation.
For advice on drafting and negotiating BCC contracts with Vietnamese partners, investors may contact us. See more in our Foreign Investment section.
Prepared and reviewed by the FLAW AI Legal Council — now submitted to the owner for approval prior to publication. This content is for reference only and does not constitute legal advice for any specific case.
