Capital contribution assets include Vietnamese Dong, freely convertible foreign currencies, gold, land use rights, intellectual property rights, technologies, technical know-how, and other assets that can be valued in Vietnamese Dong. So, what exactly are capital contribution assets? What kinds of assets can be used for capital contribution?
I. What are capital contribution assets?
According to Article 34 of the Law on Enterprise 2020:
- Capital contribution assets are defined as Vietnamese Dong, freely convertible foreign currencies, gold, land use rights, intellectual property rights, technologies, technical know-how, and other assets that can be valued in Vietnamese Dong.
- Only individuals or organizations who legally own or have the lawful right to use the aforementioned assets are allowed to use them as capital contribution in accordance with the law.
Therefore, individuals and organizations may contribute capital in cash (Vietnamese Dong or freely convertible foreign currencies).
II. Legal provisions on valuation of capital contribution assets
1. Valuation of assets when establishing a company:
Assets contributed during company formation must be valued based on consensus among the founding members or shareholders, or by a professional valuation organization. If valued by such an organization, more than 50% of the founding members/shareholders must approve the valuation.
If the asset is overvalued compared to its actual market value at the time of contribution, the founding members/shareholders must jointly contribute the difference and bear joint responsibility for the discrepancy.
2. Valuation of assets during company operation:
During business operations, contributed assets are valued based on agreement between the capital contributor and:
- The owner or Members’ Council (in a limited liability or partnership company);
- The Board of Directors (in a joint-stock company);
- Or by a professional valuation organization, with mutual approval from the contributor and the owner, Board of Members or Board of Directors approves.
If overvaluation occurs, the contributor and relevant company officials must jointly contribute the difference and are jointly liable.
III. Transfer of ownership of capital contribution assets
According to Article 35 of the Law on Enterprise 2020:
- For assets requiring registration of ownership or land use rights, the contributor must complete ownership or land use right transfer procedures at the competent state agency. These transfers for capital contribution purposes are exempt from registration fees.
- For assets not requiring ownership registration, the contribution is formalized through a handover report, which must be documented in writing.
Note: Capital contributions in the form of assets other than Vietnamese Dong, foreign currencies, or gold are considered fully paid only when ownership has been lawfully transferred to the company.
- Assets used for business operations in a private enterprise are not required to go through the ownership transfer procedure.
IV. Conditions for assets to be eligible for capital contribution
In principle, any item considered an “asset” under Article 105 of the Civil Code 2015 may be used for capital contribution. However, practically, such assets must be:
- Measurable in value; and
- Tradeable on the market.
Capital contribution when establishing a company is voluntary. Therefore, asset valuation is based on mutual agreement among members. The purpose of valuation is to determine the actual market value of the contributed asset at the time of the final valuation.
V. Questions regarding capital contribution assets
1. When is the capital contribution considered complete?
As per Clause 3, Article 35 of the Law on Enterprise 2020: for assets that require ownership or land use right registration, the capital contribution is considered complete only after the transfer procedures are finalized. These transfers are exempt from registration fees.
2. Which intellectual property rights can be used for capital contribution?
These include:
- Copyrights;
- Related rights;
- Industrial property rights;
- Plant variety rights; and
- Other intellectual property rights under current laws.
Only legal owners of these rights may contribute them as capital.
3. How is valuation done for assets other than Vietnamese Dong, foreign currencies, or gold?
Assets other than Vietnamese Dong, freely convertible foreign currency, or gold must be valued by members, founding shareholders, or professional valuation organizations and expressed in Vietnamese Dong.
4. What must a capital contribution handover report include?
The report must contain:
- Name and address of the company’s head office;
- Full name, contact address, and legal documents of the contributor (individual or organization);
- Type and quantity of the contributed asset;
- Total value of the contributed asset;
- The proportion of the asset’s value relative to total charter capital.
These are some important legal notes regarding capital contribution assets under current Vietnamese law. NPLaw, with our experienced team of lawyers and associates, is ready to support businesses in completing capital contribution procedures efficiently and resolving any arising issues effectively.
