Contributed assets of enterprises

Before deciding to establish an enterprise or invest by contributing capital to an enterprise, individuals and organizations need to understand the assets contributed as capital to ensure compliance with legal regulations, and to ensure the legitimate rights and interests of both the contributor and the recipient of the capital.

According to the Law on Enterprises 2020, assets contributed as capital have some important characteristics, specifically as follows:

1. Contributed assets include

Vietnamese Dong, freely convertible foreign currencies, gold, land use rights, intellectual property rights, technology, trade secrets, and other assets that can be valued in Vietnamese Dong. Only individuals and organizations who are legal owners or have legal rights to use the contributed assets have the right to use those assets to contribute capital in accordance with the law.

2. Transfer of title of contributed assets

(i) Members of limited liability companies, partners of partnerships, and shareholders of joint-stock companies shall transfer the title of contributed assets to the company in accordance with the following regulations:

• For assets with registered title or land use rights, the contributor shall carry out procedures to transfer the title of such assets or land use rights to the company in accordance with the law. The transfer of title or land use rights for contributed assets is exempt from registration fees;
• For assets without registered title, the contribution of capital shall be carried out by transferring the contributed assets with a minutes of handover and receipt, except in cases where it is carried out via an account. The minutes of handover and receipt of contributed assets shall include the following main contents:

a) Name and registered address of the company;

b) Full name, contact address, legal documentation number of the individual, and legal documentation number of the organization of the contributor;

c) Type of assets, number of units of assets contributed, total value of contributed assets, and the proportion of total asset value in the charter capital of the company;

d) Delivery and receipt date; signature of the contributor or authorized representative of the contributor and the legal representative of the company.

(ii) The capital contribution is considered completed only when the lawful title of the contributed assets has been transferred to the company.

(iii) Assets used for the business activities of a private enterprise owner do not need to go through the process of transferring title to the enterprise.

(iv) All payments related to purchasing, selling, transferring shares and the contributed capital, receiving dividends, and transferring profits abroad by foreign investors shall be made through accounts as prescribed by the law on foreign exchange management, except for payment in non-cash assets or other non-cash forms.

3. Appraisal of contributed assets

• Contributed assets that are not in Vietnamese Dong, are freely convertible foreign currencies, and gold shall be appraised and expressed in Vietnamese Dong by the members, founding shareholders, or appraisal organizations.
• The contributed assets for enterprise establishment shall be appraised by the members or founding shareholders based on the principle of unanimity or by an appraisal organization. In case such contributed assets are appraised by an appraisal organization, the value of the contributed assets shall be approved by over 50% of the members or founding shareholders.
• If the contributed assets are appraised higher than their actual value at the time of contribution, the members or founding shareholders shall jointly contribute an amount equivalent to the difference between the appraised value and the actual value of the contributed assets at the end of the appraisal, and also be jointly liable for any damages resulting from intentionally overvaluing the contributed assets.
• Contributed assets during the operation of the company shall be appraised by the owner, the Board of Members for limited liability companies or partnerships, or the Board of Directors for joint stock companies and capital contributors, or by an appraisal organization. In case such contributed assets are appraised by an appraisal organization, the value of the contributed assets shall be approved by the contributor and the owner, the Board of Members or the Board of Directors.
• If the contributed assets are appraised higher than their actual value at the time of contribution, the contributor, owner, Board of Members for limited liability companies or partnerships, or Board of Directors for joint stock companies must jointly contribute an amount equivalent to the difference between the appraised value and the actual value of the contributed assets at the end of the valuation, and also be jointly liable for any damages resulting from intentionally overvaluing the contributed assets.

Referring to related article: Investment capital of sole proprietors.

This article is only for informational purposes. The contents of this article shall not constitute legal advice and should not be considered as detailed legal advice for specific cases. For more information on these issues, please contact us for specific support and advice.