Can land without a certificate of land use rights contribute capital to establish a business in Vietnam?

1. Can land without a certificate of land use rights contribute capital to establish a business in Vietnam?

Pursuant to Article 188 of the 2013 Land Law, there are regulations on conditions for the exercise of the rights to exchange, transfer, lease, sublease, inherit, donate or mortgage land use rights; to contribute land use rights as capital as follows:

1. Land users may exercise the rights to exchange, transfer, lease, sublease, inherit, donate or mortgage land use rights and contribute land use rights as capital when meeting the following conditions:

a/ Having the certificate, except the case prescribed in Clause 3, Article 186 and the case of receiving inheritance prescribed in Clause 1, Article 168 of this Law;

b/ The land is dispute-free;

c/ The land use rights are not distrained to secure judgment enforcement;

d/ Within the land use term.

2. In addition to the conditions specified in Clause 1 of this Article, when exercising the rights to exchange, transfer, lease, sublease, inherit, donate or mortgage land use rights and contribute land use rights as capital, land users must also be eligible under Articles 189, 190, 191, 192, 193 and 194 of this Law.

3. The exchange, transfer, lease, sublease, inheritance, donation or mortgage of land use rights or contribution of land use rights as capital must be registered with the land registration agency and will take effect from the time of registration in the cadastral book.

Thus, according to the above provisions, land without a certificate of land use rights or other certificate cannot be used to contribute capital to establish an enterprise, except in some cases related to inheritance.

2. Do I have to transfer my land use rights to the company when contributing land use rights as capital in Vietnam? 

According to Article 35 of the Enterprise Law 2020, there are the following provisions:

1. Transfer of contributed assets by members of a limited liability company, partners of a partnership, shareholders of a joint stock company shall comply with the following regulations:

a) For assets whose ownership have been registered and LURs, the capital contributor shall follow procedures for transfer the ownership of such assets or the LUR to the company as prescribed by law. This transfer is exempt from registration fee;

b) Contribution of assets whose ownership is not registered shall be recorded in writing unless the contribution is made by wire transfer.

2. The record on transfer of contributed assets shall contain the following information:

a) The company’s name and headquarters address;

b) Full name, mailing address, legal document number of the contributor that is an individual; legal document number of the contributor that is an organization;

c) Types and quantities of contributed assets; total value of contributed assets and the ratio of this value to the company’s charter capital;

d) Date of transfer; signatures of the contributor or the contributor’s authorized representative and the company’s legal representative.

3. The contribution is considered complete once the lawful ownership of the assets has been transferred to the company.

4. Procedures for ownership transfer are exempt for assets serving business operation of the sole proprietorship’s owner.

5. Payment for transfer of shares/stakes, receipt of dividends of remittance of profits by foreign investors shall be carried out through accounts in accordance with foreign exchange laws, except for payment in assets and cashless payment.

According to this Article, when contributing land use rights as capital in Vietnam, the capital contributor must carry out procedures for transferring land use rights to the company in accordance with law.

Best Regards!