Cases of termination of contribution of land use rights as capital in Vietnam

Cases of termination of contribution of land use rights as capital in Vietnam (Internet image)

Regarding this issue, LawNet would like to answer as follows:

1. Conditions for the exercise of the rights to contribute land use rights as capital in Vietnam

Pursuant to Article 188 of the Land Law 2013, conditions for the exercise of the rights to contribute land use rights as capital in Vietnam are as follows:

- 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:

+ 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 the Land Law 2013;

+ The land is dispute-free;

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

+ Within the land use term.

- Particularly in cases of receiving capital contributions for agricultural land use rights, the following conditions must be met:

+ Obtain written approval from a competent authority for economic organizations to receive capital contributions in the form of agricultural land use rights to implement investment projects.

+ The purpose of the land area contributed as capital by land use rights must ensure compliance with the local land use plan and planning.

+ For land specialized in wet rice cultivation, a prescribed amount of money must be paid so that the State can replenish the lost rice land area.

Note: Capital contributions using land use rights must be registered at the land registration agency and take effect from the time of registration in the cadastral book.

2. Cases of termination of contribution of land use rights as capital in Vietnam

According to Clause 3, Article 80 of Decree 43/2014/ND-CP, the contribution of land use rights as capital shall terminate in the following cases:

- Upon expiration of the duration of contribution of land use rights as capital;

- At the request of one or all of the parties as agreed upon in the capital contribution contract;

- Upon land recovery in accordance with the Land Law;

- The party contributing land use rights as capital to the business cooperation contract or joint venture enterprise is declared bankrupt or dissolved;

- The individual participating in the capital contribution contract dies; is declared dead; loses the civil act capacity or has it restricted; is banned from operation in the field of business cooperation while such contract must be performed by such individual;

- The legal entity participating in the capital contribution contract terminates operation while such contract must be performed by such legal entity.

Thus, if you fall into the above cases, contribution of land use rights as capital shall terminate.

3. How are land use rights handled upon termination of capital contribution in Vietnam?

Upon termination of the capital contribution, land use rights shall be handled as follows:

- When the duration of capital contribution expires or ends under an agreement of the parties involved, the contributor of the land use right can continue using the land for the remaining duration.

In the event that the investor applies for registration or land use conversion after the land user contributes the land use right, the rights and obligations between the contributor and the receiver upon the expiration of capital contribution shall adhere to their agreement as per the laws. If the contributor does not desire to continue using the land upon the expiration of land use, the government shall expropriate the land.

- If the capital contribution terminates under a decision of a competent state agency due to a violation of the land law, the State shall recover such land;

- If the recipient or the contributor of land use rights as capital is an organization which falls bankrupt, the contributed land use rights shall be handled under the bankruptcy declaration decision of the court.

The person who receives land use rights and land-attached assets under decisions of people’s courts may continue using the land for the determined purpose for the remaining land use term and shall be granted certificates of land use rights and ownership of houses and other land-attached assets.

If there is no person to receive land use rights and land-attached assets, the State shall recover such land and assets;

- If the individual entering into the capital contribution contract dies, his/her land use rights already contributed as capital may be bequeathed in accordance with the civil law;

- In case the individual entering into the capital contribution is declared dead or has his/her civil act capacity restricted, his/her contributed land use rights shall be handled in accordance with the civil law;

- If the joint-venture enterprise or the institutional party contributing land use rights as capital is dissolved, the contributed land use rights shall be handled as agreed upon between the parties in accordance with the Land Law and other relevant laws.

(Clause 4, Article 80, Decree 43/2014/ND-CP (amended in Decree 01/2017/ND-CP))

Nguyen Ngoc Que Anh

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