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Business co-operation contract and Joint venture contract

Business co-operation contract and Joint venture contract

Business co-operation contract and Joint venture contract

In the broadcast business and law on the Voice of Vietnam (VOV), Lawyer Nguyen Thanh Ha, the law firm S & B (S & B Law) will talk about the business co-operation contract and Joint venture contract accordance with the law of Vietnam. We are pleased to send you the content of the interview:
Reporter: Sir, what is the concept and characteristics of the business co-operation contract and Joint venture contract? With these characteristics, what are advantage and disadvantage of both two contracts?

Lawyer Nguyen Thanh Ha: Accordance with the Investment law, there are two kinds of contract:

"The joint venture contract" means a document signed by two or more parties on the establishment of joint ventures, or a document signed between joint ventures and organizations, foreign individuals to set up new joint venture in Vietnam".
=> Thus, the purpose of the joint venture agreement was signed to establish the first legal entity to conduct activities for the two joint venture sides.

Advantages:
Operating independent and separated from operation of two separate joint venture partner => ensure transparency, clear and independent accounting => easy to control.

Disadvantages:

To conduct procedures of law on the establishment of a legal entity => takes more time.
Business co-operation contract (BCC) means the investment form signed between investors in order to co-operate in business and to share profits or products without creating a legal entity.

Advantages: Rapid, just signed BBC to start operating project.

Disadvantages: It’s hard to control operations actually, especially related to costs, because forced to choose sides using nominal (legal seal) of the parties to conduct transactions. In this case, the cost can only be accounted for in the selected nominal use.
The only mechanism to adjust the relationship between the two parties is the business cooperation contracts => many risks, especially in the case of relations between the two sides are no longer good.

Reporter: What does the case enterprises should choose a Business co-operation contract, and what does the case parties should choose a Joint venture contract to operate investment project?

Lawyer Nguyen Thanh Ha:
Depending on the willing and aspiration, those parties want to establish whether legal person or not?
Depending on the nature and length of the project and the complexity of the project.
In each case, the parties and attorneys will analyze the pros and cons of these two forms, associated with specific projects to determine appropriate forms.
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