Is it permissible to use foreign currencies for contributed assets in Vietnam? Is it compulsory to value assets when contributing them in enterprises in Vietnam?

Is it permissible to use foreign currencies for contributed assets in Vietnam?

Pursuant to Article 34 of the Law on Enterprises in 2020 stipulating contributed assets:

Contributed assets

1. Contributed assets include VND, convertible foreign currencies, gold, land use right (LUR), intellectual property rights, technologies, technical secrets, other assets that can be converted into VND.

2. Only the individual or organization that has the lawful right to ownership or right to use the asset mentioned in Clause 1 of this Article may contribute it as capital as prescribed by law.

As regulations above, contributed assets can be foreign currencies. According to the law in Vietnam, in addition to foreign currencies, other contributed assets include:

- VND: The most common contributed assets;

- Convertible foreign currencies: USD, EUR, JPY, etc;

- Gold: gold bar, gold ring, jewelry, etc;

- Land use right (LUR): valid LUR certificates;

- Intellectual property rights: patents, industrial designs, copyrights, etc;

- Technologies, technical secrets: have value and the potential for application in production and business;

- Other assets that can be converted into VND: machinery, equipment, factories, etc.

Is it permissible to use foreign currencies for contributed assets in Vietnam? Is it compulsory to value assets when contributing them in enterprises in Vietnam? - image from internet

Is it compulsory to value assets when contributing them in enterprises in Vietnam?

Pursuant to Clause 1 Article 34 of the Law on Enterprises in 2020 stipulating contributed assets:

Contributed assets

1. Contributed assets include VND, convertible foreign currencies, gold, land use right (LUR), intellectual property rights, technologies, technical secrets, other assets that can be converted into VND.

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Pursuant to Clause 1 Article 36 of the Law on Enterprises in 2020 stipulating valuation of contributed assets as follows:

Valuation of contributed assets

1. Contributed assets that are not VND, convertible foreign currencies or gold shall be valued by members/partners/shareholders or a valuation organization and expressed as VND.

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As regulations above, contributed assets include VND, convertible foreign currencies, gold, land use right (LUR), intellectual property rights, technologies, technical secrets, other assets that can be converted into VND.

In the case where contributed assets are not in VND,convertible foreign currencies, or gold, these assets must first be valued by members/partners/shareholders or a valuation organization. They must be converted into VND.

From the above regulations, it is not compulsory to value contributed assets. Only assets that are not in VND, convertible foreign currencies, or gold need to be valued and expressed as VND.

In which cases can multi-member limited liability companies in Vietnam decrease their charter capital?

Pursuant to Clause 3 Article 68 of the Law on Enterprises in 2020 stipulating regulations on increasing, decreasing charter capital:

Increasing, decreasing charter capital

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3. A company may decrease its charter capital in the following cases:

a) The company returns part of the contributed capital to the members in proportion to their holdings in the company after the company has operated for at least 02 consecutive years from the enterprise registration date and the company is able to fully pay its debts and other liabilities after the return of capital;

b) The company repurchases the members’ stakes as prescribed in Article 51 of this Law;

c) Charter capital is not fully and punctually contributed by the members as prescribed in Article 47 of this Law.

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As regulations above, multi-member limited liability companies in Vietnam can decrease their charter capital in following cases:

Case 1: The company returns part of the contributed capital to the members in proportion to their holdings in the company

In this case, the company shall satisfy following 02 criteria:

+ The company has operated for at least 02 consecutive years;

+ The company is able to fully pay its debts and other liabilities after the return of capital

Case 2: The company repurchases the members’ stakes

A member is entitled to request the company to repurchase that member’s stake if that member has voted against a resolution or decision of the Board of Members on the following issues: Amendments to regulations of the company's charter on rights and obligations of members and the Board of Members; Reorganization of the company; Other issues prescribed by the company's charter.

Case 3: Charter capital is not fully and punctually contributed by the members

The members shall contribute sufficient and correct assets as promised when applying for enterprise registration within 90 days from the issuance date of the Certificate of Enterprise Registration;

In case a member fails to contribute or fully contribute capital as promised by the expiration of the period, the company shall register the change in charter capital and the members’ holdings within 30 days from the deadline for contributing capital.

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