Is it possible to contribute capital to establish a business with working capacity in Vietnam?

Is it possible to contribute capital to establish a business with working capacity in Vietnam?

Pursuant to the provisions of Clause 18, Article 4 of the Enterprise Law 2020, the capital contribution is as follows:

18. “capital contribution” means the contribution of capital as charter capital to establish a new company or contribution of additional capital to an existing company.

According to the provisions of Article 34 of the Enterprise Law 2020, the contributed assetsas capital include the following contents:

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.

Pursuant to Article 105 of the 2015 Civil Code, property is defined as follows:

1. Property comprises objects, money, valuable papers and property rights.

2. Property includes immovable property and movable property. Immovable property and movable property may be existing property or off-plan property.

According to this Article, capital contribution is made by contributing assets, which are defined as objects, money, valuable papers and property rights. Thus, it is not possible to contribute capital with working capacity, but only when that person owns a certain technology or technical know-how can it be used to contribute capital in Vietnam.

Do contributed assets as capital to establish a business need to be valued in Vietnam? 

According to Article 36 of the Enterprise Law 2020, valuation of contributed assets is as follows:

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.

2. Assets contributed upon establishment of an enterprise shall be valued by members/partners/founding shareholders by consensus or by a valuation organization. In the latter case, the value of contributed assets must be accepted by more than 50% of the members/partners/founding shareholders.

In case a contributed asset is valued at a value higher than its actual value at contribution time (overvalued), the members/partners/founding shareholders shall jointly contribute an amount equal to the difference and are jointly responsible for the damage caused by the overvaluation.

3. Assets contributed during the operation shall be valued by the owner or the Board of Members/Partners (for limited liability companies and partnerships) or the Board of Directors (for joint stock companies) and the contributor or by a valuation organization. In the latter case, the value shall be accepted by the contributor and the owner, the Board of Members/Partners/Directors.

In case a contributed asset is overvalued, the contributor, the owner and members of the Board of Members/Partners/Director shall jointly contribute an amount equal to the difference and are jointly responsible for the damage caused by the overvaluation.

Thus, for ontributed assets as capital other than Vietnam Dong, convertible foreign currencies or gold, the valuation must be carried out in accordance with the provisions of law.

Best Regards!