In business activities, cooperation and collaboration between individuals or organizations through capital contribution have become a common solution to optimize resources and enhance business efficiency. However, in order to ensure the rights and obligations of the parties, the minutes of a business capital contribution agreement are an indispensable document, playing a foundational role throughout the cooperation process. So, what role does this document play and what should be noted when executing it?

I. Role of the minutes of business capital contribution agreement

The minutes of a business capital contribution agreement constitute an important legal document in the course of business cooperation. They not only record the parties’ commitments regarding capital contribution but also ensure transparency and clarity in the allocation of benefits and the handling of risks.

Such a document serves as the legal basis for the parties to exercise their rights and perform their obligations throughout the cooperation period. In addition, it is an instrument for determining the value of contributed assets, the profit or loss sharing ratio, and the responsibilities of each party when risks arise. Therefore, the preparation of such minutes must be implemented carefully, in compliance with legal regulations, and on the basis of consensus among the parties.

II. Legal regulations on the minutes of business capital contribution agreement

1. What is a business capital contribution agreement?

Clause 18, Article 4 of the Law on Enterprise 2020 provides: Capital contribution means the contribution of assets to form the charter capital of a company, including capital contribution for the establishment of a company or additional contribution to the charter capital of an already established company.

Accordingly, the minutes of a business capital contribution agreement may be understood as a document recording the commitments among the parties regarding capital contribution, profit distribution, and the handling of issues arising in the course of joint business operations. The minutes not only serve as a legal basis for dispute resolution but also ensure transparency and clarity in the cooperative relationship, thereby fostering mutual trust and protecting the lawful rights and interests of the parties in business activities.

2. What should be noted when preparing the minutes of a business capital contribution agreement?

The preparation of the minutes of a business capital contribution agreement requires prudence and strict compliance with legal regulations in order to avoid potential risks or disputes. Several main points to note include:

  • Ownership of contributed assets: The capital contributor must be the lawful owner or have lawful rights to use the contributed assets.
  • Valuation of contributed assets: The parties need to clearly determine the value of contributed assets to ensure fairness. Valuation may be agreed upon by the parties themselves or conducted by a professional valuation organization to avoid future disputes.
  • Capital contribution ratio and profit distribution: It is the core content, directly affecting the economic interests of the parties throughout the cooperation.
  • Rights and obligations of the parties: The minutes must clearly specify the rights and obligations of each party, including rights of management, administration, or participation in major business decisions.

In addition, in certain cases as required by law or upon the parties’ agreement, the minutes may be notarized or authenticated.

3. What contents are typically included in detailed minutes of a business capital contribution agreement? Which content is the most important, and why?

Currently, there is no mandatory statutory regulation prescribing the contents of the minutes of a business capital contribution agreement. In practice, such minutes usually include the following terms and provisions:

  • Information of the participating parties;
  • Purpose of the capital contribution;
  • Form and value of the contributed assets;
  • Capital contribution ratio and corresponding rights and benefits;
  • Method of profit distribution and risk allocation;
  • Dispute resolution clauses;
  • Duration and effectiveness of the minutes.

Among these, the provisions on capital contribution ratios and profit distribution methods are considered the most important. These are the core elements determining the economic interests of the parties and are also the most common causes of disputes if not clearly stipulated.

III. Questions regarding the minutes of business capital contribution agreement

1. Is asset valuation required in the minutes of a business capital contribution agreement?

Pursuant to Clauses 1 and 2, Article 36 of the Law on Enterprise 2020:

  • Assets contributed as capital other than Vietnam Dong, freely convertible foreign currencies, and gold must be valued by the members, founding shareholders, or a valuation organization and expressed in Vietnam Dong.
  • Assets contributed as capital upon the establishment of an enterprise must be valued by the members or founding shareholders based on the principle of consensus, or by a valuation organization. In cases where a valuation organization conducts the valuation, the value of the contributed assets must be approved by more than 50% of the members or founding shareholders.

Accordingly, asset valuation is mandatory for contributed assets other than Vietnam Dong, freely convertible foreign currencies, and gold. When preparing the minutes of a business capital contribution agreement, the parties must determine the value of the assets based on the valuation results and record such value in the minutes to ensure transparency and fairness among the parties.

2. What types of assets may be used for capital contribution when executing a business capital contribution agreement?

Clause 1, Article 34 of the Law on Enterprise 2020 stipulates contributed assets as follows:

  • Assets contributed as capital include Vietnam Dong, freely convertible foreign currencies, gold, land use rights, intellectual property rights, technology, technical know-how, and other assets that can be valued in Vietnam Dong.

Accordingly, when making a business capital contribution, the parties may contribute capital in the form of the assets specified above and prepare the corresponding minutes of the business capital contribution agreement.

3. On what basis is the profit distribution ratio determined in the minutes of a business capital contribution agreement?

Point l, Clause 2, Article 24 of the Law on Enterprise 2020 provides that the principle of post-tax profit distribution is one of the contents of a company’s Charter. Accordingly, the profit distribution ratio in a business capital contribution arrangement is implemented in accordance with the company’s Charter and relevant legal regulations applicable to each specific type of enterprise.

However, the parties should note that a company may distribute profits to its members only after it has fulfilled its tax obligations and other financial obligations in accordance with the law, and ensured full payment of due debts and other property obligations after profit distribution (Article 69 of the Law on Enterprise 2020).

In summary, when preparing the minutes of a business capital contribution agreement, the profit distribution ratio is agreed upon based on the company’s Charter and the applicable legal regulations for each type of enterprise.

IV. Legal consultancy services on the minutes of business capital contribution agreement

The above is NPLaw’s article on the current regulations regarding the minutes of business capital contribution agreements. With a team of experienced lawyers and legal professionals, NPLaw provides reputable and professional legal services, ensuring the best protection of clients’ lawful rights and interests. Should you require legal assistance, please contact NPLaw for consultation and support.