Exiting a business cooperation contract (BCC) differs fundamentally from exiting a company: a BCC creates no legal person, no charter capital and shares to sell – the only thing existing is a CONTRACT and the assets and interests formed during that contract’s performance. BCC liquidation is therefore a contract and asset problem, not an enterprise procedure problem.
This article presents exiting a BCC: through what mechanism liquidation proceeds when one party exits or the contract terminates; how common assets formed from the cooperation are divided; whether each party must finalize tax on its own share; and where BCC liquidation disputes – having no ‘enterprise registration authority’ to adjudicate – are resolved.
Applicable Legal Framework
The business cooperation contract (BCC) is an investment form under the 2025 Investment Law (No. 143/2025/QH15): a contract signed between a domestic investor and a foreign investor, or among foreign investors, to cooperate in business and divide profits/products WITHOUT establishing a new economic organization. A BCC’s contents under law include terms on conditions, timing of termination, and contract liquidation upon termination – precisely the document governing the later capital exit/liquidation process. An investment project implemented under a BCC is issued an Investment Registration Certificate for the contract, and project termination follows Article 36 of the 2025 Investment Law.
The most important structural consequence of having no legal person: each BCC party remains an independent subject throughout – the parties self-declare and pay tax on their divided income shares under tax administration law (the mechanism for BCC parties’ tax duties, including cases where parties agree one party performs certain duties on behalf per regulation); assets each party contributes to the cooperation remain that party’s property unless the contract provides otherwise, and assets formed jointly during cooperation are divided entirely per the contract’s agreement. Where a BCC has a foreign investor, the parties establish a coordination board to implement the contract – this board is an operating focal point, not a legal person, and dissolving the coordination board is part of liquidation.
Detailed Answers to Practical Questions
What is the liquidation procedure when exiting a business cooperation contract (BCC)?
BCC liquidation runs in three layers: contract terms, state obligations, and financial reconciliation among parties. Layer one – activation and contract terms: one party’s exit or the whole contract’s termination is performed exactly per the termination/liquidation terms the BCC prescribed (the reason the law mandates this term in the contract from signing): exit notice per the contract’s notice period, determining the termination event (expiry, agreement, a party’s breach, a termination condition occurring), and convening the liquidation mechanism the contract sets (the coordination board performs liquidation, or a designated party acts as liquidator). Layer two – state obligations: the BCC investment project is terminated at the investment registration authority under Article 36 of the 2025 Investment Law like every project (termination notice, implementation status report, revoking the contract’s IRC); sector licenses attached to the cooperation’s operations are ended at the issuing authorities; the parties’ investment reporting duties are completed to the final period. Layer three – financial liquidation and handover: inventorying all assets and relations formed from the cooperation (common assets, inventory, receivables from third parties arising in the cooperation’s name, running contracts with the cooperation’s customers/suppliers), completing or transferring in-progress contracts by agreement, collecting receivables, paying the cooperation’s debts to third parties, dividing the remainder per the contract, and signing a final liquidation record signed by all parties confirming no unhandled rights and obligations remain among parties (except surviving contract terms such as confidentiality, indemnity, and dispute resolution). The core difference from company dissolution to remember: there is no Article 208 statutory payment order (because there is no legal person and no legal person’s creditors); all division follows the CONTRACT, and the cooperation’s debts to third parties are handled per the responsibility each party committed in the contract and under civil law on joint obligations where parties jointly stood in the transaction with that third party.
How are a BCC’s common assets divided when one party exits?
Division passes through three asset groups with different fates, and every BCC liquidation dispute erupts from parties not distinguishing these three groups from contract signing. Group one – assets each party CONTRIBUTED to the cooperation: machinery, equipment, land-use rights, technology a party brought into the cooperation’s operations under the contract. Under the BCC institution’s principle (no common legal person), contributed assets remain the contributing party’s property unless the contract transfers ownership otherwise; when the contract terminates, this asset group returns to its owner (that party receives back the asset or its residual value per the contract’s depreciation/use agreement). Group two – assets FORMED from the cooperation’s operations: assets purchased from the operation’s common fund, inventory products, rights and interests arising from the cooperation’s contracts. This group is ‘common assets’ in substance and is divided by the profit division ratio/mechanism prescribed in the contract – in kind if divisible and parties agree, or by valuation with one party taking the asset and paying the difference to the other. Group three – receivables and third-party obligations: the operation’s receivables are collected and divided at the same ratio; amounts payable to third parties are paid from the common asset pool BEFORE dividing the remainder – a logically mandatory order usually recorded in the contract, because no party may receive its share while common third-party debt still hangs on that pool. The scenario of one party exiting MID-TERM (the contract continues among remaining parties): the exiting party’s share is determined by the method of computing its interest value at exit time under the contract terms (the cooperation part’s net asset value x participation ratio, adjusted for amounts the exiting party still owes the operation), and is paid in cash or in kind per the exit agreement – simultaneously the exiting party escapes obligations ARISING AFTER the exit time, while obligations arisen before are handled by a partial liquidation record at exit. All these mechanisms work well only when the original contract wrote them clearly – which is why this article’s FAQ returns to the most important contract design point for investors CONSIDERING signing a BCC.
Must tax be finalized when exiting a BCC?
Yes – but under the BCC’s own tax structure, not a legal person’s finalization. Because a BCC is not an independent taxpayer like an economic organization, the cooperation’s tax obligations are performed by THE PARTIES THEMSELVES on their income shares: each BCC party self-declares, finalizes, and pays corporate income tax on the revenue/profit share divided to it under the contract, together with tax duties relating to transactions that party stands in. When one party exits or the contract terminates, finalization comprises three concrete tasks. Task one – closing the division to the termination time: parties reconcile and confirm in writing the cooperation’s total revenue, costs, and profit to the liquidation date and each party’s division ratio – this document is every party’s declaration basis, and inconsistency among parties in division figures is the first point the tax authority examines. Task two – finalizing each party’s share: each party brings its final BCC income share into its own tax finalization at its managing tax authority (a foreign party without a permanent establishment performs duties via the declaration mechanism applying to them under tax administration rules for business cooperation contracts); taxes relating to the operation’s transactions (contractor tax for payments abroad belonging to the operation, PIT of employees working for the coordination board) are closed at the party assigned to perform them under the contract and regulation. Task three – asset liquidation consequences: dividing/selling common assets and returning contributed assets may generate tax duties at each party depending on each transaction’s nature (asset transfer, residual profit division) – these transactions must be dossiered in the liquidation record with valuations so each party has a declaration basis. The absolutely-to-avoid point: parties sign a commercially ‘clean’ liquidation record but cannot close the tax reconciliation among themselves – when one party is inspected later, the BCC’s entire division chain reopens for all parties.
Where are BCC liquidation disputes resolved?
BCC disputes are resolved under the mechanism the contract and the 2025 Investment Law set for investment disputes, with the forum chosen by the parties’ agreement in the contract from the start. Feasible forums include: (1) negotiation and mediation – the first step in most professional BCCs’ multi-tier dispute clauses; (2) Arbitration in Vietnam or foreign/international arbitration per the parties’ agreement – especially common in BCCs with foreign investors for neutrality and award enforceability in many countries under the 1958 New York Convention; (3) Vietnamese Courts – the default forum where parties have no valid arbitration agreement, and the mandatory forum for disputes under Vietnamese courts’ exclusive jurisdiction per procedural law. Three BCC liquidation dispute specificities to note. One – the dispute’s object is usually VALUATION and DIVISION, not the termination event: everyone agrees the contract ended, but common asset values, liquidation cost division ratios, and third-party debt responsibilities are contested – so a good liquidation term must pre-provide an independent valuation mechanism (an appraiser appointed upon dispute) so most disputes resolve at the expert tier rather than the litigation tier. Two – no ‘registration authority’ adjudicates in their place: unlike a company with a business registration authority recording status, whether a BCC has finished liquidating is a matter among parties and the tax/investment authorities at their own stages – one party cannot unilaterally declare liquidation complete if the other has not signed the record. Three – a dispute between a foreign investor and the Vietnamese side in a BCC does not automatically become an international investment dispute (ISDS): the investor-state dispute mechanism arises only where an applicable investment treaty exists and its conditions are met; for purely private contract party disputes, the contract forum is where resolution happens. The design consequence: the dispute resolution term and the liquidation term are two terms that must be negotiated as a pair right at BCC signing – when liquidation arrives, nobody still has the standing to negotiate them on equal footing.
Action Checklist
- Liquidate the BCC exactly per the contract’s termination/liquidation terms – activating notice and the coordination board/liquidator mechanism per the contract
- Terminate the BCC project at the investment registration authority under Article 36 of the 2025 Investment Law and end the cooperation’s sector licenses
- Divide by 3 asset groups: contributed assets (back to owners), jointly formed assets (per contract ratio), third-party debts (paid before division)
- Close the revenue/cost/profit division reconciliation in writing – each party finalizes tax on its own share from the same figure set
- Never apply the Article 208 order to a BCC – no legal person exists; all division follows the contract and each party’s civil liability
- The final liquidation record is signed by all parties, listing surviving terms (confidentiality, indemnity, dispute resolution)
- An independent valuation mechanism in the liquidation term is the main protection layer against division disputes
Frequently Asked Questions
At BCC signing, what must the liquidation term prescribe so later exit does not deadlock?
Seven contents a professional BCC liquidation term must have from signing. One – termination events and notice periods for each event (expiry, agreement, breach, voluntary exit of one party if permitted). Two – the liquidation mechanism: who is the liquidating party/board, their powers, the liquidation completion deadline. Three – asset division principles by the three groups (contributed assets, formed assets, third-party debts) and the ratio applying to each group. Four – the valuation mechanism: how common asset value is determined at liquidation and how an independent appraiser is appointed when parties disagree. Five – how running contracts with third parties are handled (continued, transferred to one party, or terminated) and the parties’ joint liability for those obligations. Six – one party’s mid-term exit mechanism: whether permitted, how the exiting share’s value is computed, in what form and within how long it is paid. Seven – surviving terms and dispute resolution applying to the liquidation phase. A BCC lacking these contents is not a ‘simple’ contract – it is a liquidation dispute already scheduled.
How do remaining parties handle a BCC party’s bankruptcy or insolvency?
This situation must be handled on two layers. The contract layer: most professional BCCs prescribe a party’s bankruptcy/insolvency as a termination event or an event permitting remaining parties to terminate that party’s participation – remaining parties activate the corresponding term, freeze new divisions to the troubled party, and determine that party’s interest share at the event time under the contract’s valuation mechanism; that interest share belongs to the asset pool handled under that party’s bankruptcy procedure (managed by the Court/asset administrator under the 2025 Law on Rehabilitation and Bankruptcy – 142/2025/QH15, replacing the 2014 Bankruptcy Law from 1 March 2026), not automatically to the remaining parties. The third-party obligation layer: the cooperation’s debts to third parties do not vanish – remaining parties must still perform per their commitments to third parties, then divide internal responsibility afterwards, with the bankrupt party’s share entered into their bankruptcy dossier as a corresponding receivable/payable. The most important practice point is speed: as soon as a party’s insolvency is known, remaining parties should fix the common asset state and division dossiers by a record at that time – because after bankruptcy proceedings open, all transactions relating to the bankrupt party’s share are scrutinized under bankruptcy law, and a clean status record is the remaining parties’ best protective evidence.
Must changes be registered when one BCC party exits and a new party replaces it?
There are procedural layers to handle even though a BCC has no ‘enterprise registration’ like a legal person. On the investment side: the BCC project is issued an Investment Registration Certificate recording the contract’s parties – when party composition changes (one party exits, a new party joins), the parties must perform the Investment Registration Certificate adjustment procedure at the investment registration authority so the project dossier matches the amended/supplemented BCC; a new foreign investor party must also meet the investment conditions applying to them in the project’s sector. On the contract side: the party change is performed by a BCC amendment/supplement document or a replacement new contract signed by all related parties (including the exiting party confirming liquidation of its share and the new party accepting rights and obligations from the joining time). On the tax side: the exiting party’s share is finalization-closed to the change time as a partial liquidation round, and the new party starts its duties from the joining time – this time boundary must be recorded in the amendment document so no revenue period is declared by both parties or by neither.
This article has been quality-reviewed by the FLAW AI Legal Council
