Tiếng ViệtIn the context of business expansion, capital raising, or ownership restructuring, contributing capital in the form of assets has become an increasingly common method alongside cash contributions. This approach is particularly suitable for companies that already own fixed assets (such as factories, machinery, or transport vehicles), intangible assets (such as software, technology, or trademarks), or valuable land use rights.
However, in practice, many businesses still contribute capital in the form of assets based on subjective judgments, without following proper legal procedures or adequately assessing the associated risks. This can result in serious consequences such as: failure to be recognized as a member or shareholder, administrative penalties for misreporting charter capital, or even internal disputes, audits, and tax issues.
The 2025 Amended Law on Enterprises (effective from July 1, 2025) has supplemented, clarified, and tightened several regulations regarding asset valuation, ownership transfer, and capital contribution recording. Therefore, proper legal compliance from the outset is essential to ensure legitimacy, financial safety, and credibility with investors.
In this article, Lexconsult & Partners will provide in-depth legal insights for businesses, including:
– Common types of assets that can be used for capital contribution;
– Legal procedures for valuation and ownership transfer of contributed assets;
– Potential legal risks associated with improper capital contribution;
– Documentation, accounting, and joint liability notes for the contributing business.
1. What is capital contribution by assets?
According to clause 1, Article 34 of the 2020 Law on Enterprises:
Article 34 – Contributed Assets
Contributed assets include Vietnamese Dong, freely convertible foreign currencies, gold, land use rights, intellectual property rights, technologies, technical know-how, and other assets that can be valued in Vietnamese Dong.
Only individuals or organizations who are lawful owners or have legal rights to use such assets may contribute them as capital under the provisions of law.
Accordingly, capital contribution is the act of individuals or organizations using assets to establish or increase the charter capital of an enterprise. Contributed assets include:
– Vietnamese Dong or freely convertible foreign currencies;
– Gold, land use rights;
– Intellectual property rights (trademarks, patents, etc.);
– Technologies and technical know-how;
– And other assets that can be valued in Vietnamese dong.
In essence, contributing capital by assets refers to using these non-cash assets to contribute to the enterprise. Such contributions must be confirmed by a valuation record and ownership transfer documents.
2. Common types of assets used for capital contribution
In practice, the most common types of assets contributed by individuals or businesses include:
2.1. Machinery, equipment, and tangible fixed assets
These are commonly used in manufacturing, construction, logistics, and mechanical industries. Contributed assets may include: presses, CNC machines, conveyors, packaging systems, and industrial electrical systems.
Legal requirements:
– Valid documents proving ownership (invoices, purchase contracts);
– Asset valuation minutes signed by members or conducted by a licensed independent valuation entity (in case of disputes);
– Ownership transfer must be conducted in accordance with legal procedures: actual handover, minutes of delivery, and accounting book updates.
2.2. Land use rights and industrial premises
This category includes high-value assets typically used by businesses in real estate, manufacturing, logistics, or construction.
According to Article 167 of the 2013 Land Law, contribution of land use rights must be formalized by a notarized contract and registered at the Land Registration Office to complete the transfer to the enterprise.
Note: Only land with valid land use rights certificates and not subject to transfer restrictions may be contributed.
2.3. Intellectual property rights (IP)
This includes trademarks, patents, industrial designs, software copyrights, trade secrets, etc. This type of contribution is common in tech, media, startup, and education companies.
Clause 2, Article 34 of the Law on Enterprises 2020 allows IP contributions if supported by certificates of ownership or valid legal documentation.
The transfer of IP rights must comply with the Law on Intellectual Property 2005 (as amended in 2022), and be registered with the Intellectual Property Office of Vietnam to be legally effective.
Note: IP valuation is complex and may lead to disputes if not verified by a third-party valuation service.
2.4. Technologies and technical know-how
These are specialized intangible assets that are difficult to value without detailed technical documentation. For such assets, valuation and ownership should be documented by contract and, where applicable, registered copyright.
These assets are commonly seen in pharmaceuticals, food processing, biotechnology, and specialized manufacturing.
Requirements:
– Detailed descriptions of the technology process, software, or technical systems, along with handover minutes;
– Technology transfer contracts may need to be registered with the Ministry of Science and Technology under the 2017 Law on Technology Transfer (if applicable).
These assets provide high competitive value and are difficult to replicate. However, their valuation requires expertise and may be inflated without proper verification.
2.5. Transportation means and other fixed assets
Vehicles such as cars, trucks, ships, etc., owned by the contributor can be used as capital. This form is common among logistics, transportation, and construction companies.
Requirements:
– Vehicles must be registered under the name of the contributor;
– Ownership must be transferred to the enterprise via the registration authority, such as the Vietnam Register or the Department of Transport.
Note: Original documentation, usage history, and vehicle inspection expiry should be reviewed to avoid future disputes.
Each type of contributed asset offers distinct advantages but also carries legal risks and valuation challenges. Enterprises must prepare comprehensive legal documents, conduct accurate asset valuation, and ensure lawful ownership transfer procedures to avoid violations under the 2025 Amended Law on Enterprises.
3. Procedures for capital contribution by assets
According to articles 35 and 36 of the 2020 Law on Enterprises, capital contribution by assets involves the following key steps:
3.1. Valuation of contributed assets
Legal basis: Clause 2, Article 36 of the Law on Enterprises 2020.
Valuation is mandatory for all non-cash contributions (e.g., land use rights, machinery, intellectual property rights, etc.).
For capital contribution at the time of incorporation:
– Founding members/shareholders must agree on the asset valuation unanimously; or
– Engage a licensed valuation organization. In this case, over 50% of founding members/shareholders must approve the result.
For capital contribution during operations:
– The valuation is agreed upon between the contributor and the company; or
– Performed by a professional valuation organization and accepted by both parties.
Note: If an asset is overvalued, the contributor and those approving the valuation are jointly liable for the discrepancy and must compensate for any damages.
3.2. Transfer of ownership to the company
Legal basis: Article 35 of the Law on Enterprises 2020.
Depending on the asset type, ownership transfer procedures are as follows:
– Registered assets or land use rights (e.g., vehicles, apartments, land): The contributor must register the ownership transfer with the competent authority (e.g., Land Registration Office, Department of Transport).
– Unregistered assets (e.g., machinery, raw materials): Contribution is confirmed via physical handover and an asset delivery record containing: company and contributor names, legal information of contributor, asset description, quantity, value, ownership ratio, date of delivery, and signatures of both parties (Clause 2, Article 35).
– Intellectual property (IP): Must follow IP transfer procedures at the Intellectual Property Office or a competent agency, depending on the IP type.
Important: Capital contribution is considered valid only when ownership is legally transferred to the company (Clause 3, Article 35). If this step is not completed, the contribution will not be recognized, affecting the contributor’s shareholder/member status and rights.
3.3. Capital recognition and enterprise records
– Once ownership is transferred, the asset will be recorded in the company’s charter capital.
– The enterprise must update this information in its business registration or capital change records (if applicable).
3.4. Special notes
– For sole proprietorships: The owner’s assets used in business do not require legal transfer of ownership but are still considered business assets (Clause 4, Article 35).
– For foreign investors: All transactions related to capital contributions, dividend receipts, or profit repatriation must be made via a bank account under Vietnam’s foreign exchange control regulations, unless the payment is in-kind or non-monetary (Clause 5, Article 35).
4. Legal risks in capital contribution by assets
While the law allows contributions by various non-cash assets, improper execution may lead to legal and financial risks. Below are common pitfalls businesses must be cautious of:
4.1. Asset overvaluation – Major legal liability
If the contributed asset is overvalued, the contributor and founding shareholders are jointly liable to compensate the discrepancy and any damages caused (Article 36).
This issue often occurs when inflating asset value to increase charter capital or create a false image of financial strength.
For example: A business valued a technology device at VND 2 billion to boost capital, though its actual worth was only VND 800 million. After audit, shareholders had to contribute the remaining VND 1.2 billion.
Contributions of intangible assets like IP, software, or usage rights are particularly prone to overvaluation and false declarations of charter capital.
4.2. Failure to transfer ownership – Invalid capital contribution
Clause 3, Article 35 stipulates: Capital contribution is only complete upon legal transfer of ownership. Failure to complete this step results in:
– The contributor not being recognized as a shareholder/member;
– Loss of voting rights, profit sharing, or management participation;
– Internal disputes, especially with multiple investors.
4.3. Missing asset handover records – No legal evidence
For assets without registration (e.g., machinery, goods), a handover record is mandatory under Clause 2, Article 35.
Without this record:
– The contribution may be considered legally unsubstantiated in case of disputes;
– Cannot be entered in accounting records or business registration;
– The contributor may lose rights if the business is dissolved or sued.
4.4. Contribution of disputed or encumbered assets
Some businesses attempt to contribute assets under dispute, mortgage, or unclear ownership. This may result in:
– Assets being seized;
– The capital contribution contract being declared invalid;
– The company being jointly liable, increasing legal risk for all shareholders.
Conclusion: Always verify the legal status of contributed assets beforehand.
4.5. Failure to declare asset ownership – Legal exposure
Failure to accurately declare or register assets such as IP, technology, or land use rights may:
– Prevent the company from legally protecting its rights;
– Lead to administrative penalties under specialized laws (e.g., Land Law, IP Law).
Requirements:
– Proper registration of legal ownership;
– Complete legal documentation proving the ownership.
Without valid documents, the business risks:
– Inability to prove ownership during inspection or litigation;
– Administrative penalties under the amended 2025 laws.
4.6. Impact on ownership structure and voting rights
Overvaluation of contributed assets can distort the equity ratio, disrupt voting rights, and alter corporate control—especially during capital calls with multiple strategic shareholders.
Improperly declared capital (e.g., “paper-only” contributions without actual asset transfer) may result in:
– Penalties for false capital declaration under the 2025 Amended Law on Enterprises, effective July 1, 2025;
– Personal liability for legal representatives if damage occurs.
5. What should enterprises prepare when contributing capital by assets?
5.1. Verify the legal status of contributed assets
Enterprises must ensure that the assets intended for capital contribution meet legal requirements. According to Clause 2, Article 34 of the 2020 Law on Enterprises, only assets with lawful ownership or legal usage rights may be used for capital contribution.
Assets under mortgage, legal dispute, unclear ownership, or incomplete legal documentation should not be used. Doing so risks rendering the capital contribution invalid, affecting shareholder status and financial interests.
5.2. Prepare complete documentation proving ownership
The enterprise should require contributors to provide full legal documents proving ownership or usage rights. Depending on the asset type, required documents may include:
– Land use right certificates, intellectual property registration, or vehicle registration certificates (for cars, ships, etc.);
– Sales invoices, purchase contracts, or registration fee declarations;
– Transfer contracts or assignment documents if assets are acquired from third parties.
This documentation forms the basis for recording charter capital, supporting audits, and minimizing internal disputes.
5.3. Ensure transparent and lawful asset valuation
Assets must be valued accurately as per Article 36 of the Law on Enterprises 2020. For non-cash contributions, valuation must be conducted through:
– Mutual agreement among founding shareholders; or
– Independent professional appraisal to ensure objectivity.
The latter is recommended to reduce dispute risks. If the asset is overvalued, both the contributor and approving parties are jointly liable for the difference and any resulting damages.
5.4. Complete legal ownership transfer
Under Article 35, capital contribution is only complete once legal ownership is transferred to the company. This must be executed through:
– Registration of ownership change at the competent state authority for registered assets (e.g., land, vehicles, buildings);
– Preparation of an asset handover record for unregistered assets (e.g., machinery, materials).
The handover record must include: company name, contributor’s name, asset type, quantity, value, and transfer date. Failure to complete this step may result in the contribution being legally unrecognized.
5.5. Record assets in enterprise files and accounting system
After legal transfer, the enterprise must update records accordingly:
– Member/shareholder registry;
– Charter capital change documents (if applicable);
– Internal accounting books, financial reports, and systems.
This ensures financial transparency, supports compliance, and helps prevent legal and tax issues.
5.6. Keep complete files for audits or disputes
Enterprises must retain the following:
– Asset handover records;
– Valuation contracts (if applicable);
– Ownership transfer documents;
– Internal resolutions or capital contribution acceptance decisions.
Complete documentation facilitates legal compliance and protects the enterprise during audits, dissolution, mergers, or shareholder disputes.
6. Frequently asked questions about asset-based capital contribution
If ownership transfer hasn’t been completed, am I considered a shareholder?
→ No. Capital contribution is only valid after legal transfer of ownership to the company. Without it, you may lose shareholder status, voting rights, and dividend entitlements.
Can I contribute assets currently mortgaged to a bank?
→ Not advisable. Mortgaged assets are ineligible unless released or with bank approval. Contributing such assets may invalidate the contract and create serious legal risks.
What documents should enterprises prepare when receiving capital contributions by assets?
→ Depending on the asset type, documents should include: valuation reports, ownership proof, handover record, capital contribution contract, and ownership transfer records (if applicable). Proper documentation is essential for audits and accounting.
Are asset-based contributions subject to inspection or penalties?
→ Yes, especially if there are signs of false capital declarations, asset overvaluation, or failure to transfer ownership. Violations may result in administrative penalties, charter capital adjustments, or tax audits.
Contributing capital by assets offers businesses a flexible way to leverage existing resources and expand charter capital without relying on cash. However, it comes with stringent legal requirements related to ownership verification, asset valuation, lawful transfer, and accounting transparency.
From July 1, 2025, the amended Law on Enterprises will further tighten regulations on capital contribution, asset ownership transfers, and penalties for false capital declarations. Enterprises should proactively review their capital contribution documentation, especially for intangible or high-value assets. Proper documentation, lawful procedures, verified valuation, and clear asset transfers not only ensure compliance but also build trust with investors, shareholders, and strategic partners.
Lexconsult & Partners Law Firm is ready to assist your business in:
– Valuing and verifying contributed assets;
– Drafting capital contribution contracts and handover records;
– Representing clients in legal procedures for ownership transfer;
– Providing strategic legal advice on capital structure, internal control, and shareholder rights.
Contact us today for tailored legal advice from our corporate law specialists!
