VietNamNet Bridge - There are a variety of means of investments in the form of contracts in Vietnam. One such form is investment under the Business Cooperation Contract, which offers many benefits, along with some disadvantages as well.

As regulated by the 2005 Law on Investment and guided by Circular No. 108/2006/ND-CP, the Business Cooperation Contract (hereinafter referred to as "BCC") is a form of cooperation agreement between investors, including at least one domestic (Vietnamese) partner.

A BCC assigns rights, profit sharing and joint responsibility for risks to each business cooperation party during the investment process, without establishing a legal entity. Agreement between investors under BCC is one of the forms of direct investment. The fact that a BCC does not require a legal entity is considered an outstanding advantage for all investors, both domestic and foreign. Investors and their partners may agree upon their rights and obligations under a contract as independent parties without being bound by a joint legal entity.

Investors are able to save on the time and cost of establishing and operating a new legal entity; they need not depend on their partners' decision to transfer or sell their part under certain circumstances. In addition, investors have no need to worry about dissolution when a project completes.

Investing under the BCC is one of the optimal choices that allows foreigners planning to invest in a new market to be able to quickly approach information of such a market through the understanding of domestic partners. At the same time, domestic investors also receive from their foreign partners support in terms of capital and modern technology for business production activities or development of investment projects. This form of investment is suitable for short-term investment projects with rapid implementation. On the other hand, not establishing a legal entity also has a downside. The implementation of sideline contracts and transactions serving the BCC may confuse a third party when there is not any representative - a joint venture between investors. Meanwhile, Vietnam's laws have not yet had any detailed regulation on specific obligations of business cooperation parties when entering into contracts with a third party. Moreover, investors also have to agree upon which company seal shall be used when entering into contracts with a third party. In cases where any problems arise, specifically when the parties disagree on which seal to use, such investment projects are stopped for settlement.

By english.vietnamnet.vn/

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