Capital Contribution Contract in Vietnam

Capital Contribution is a common activity in daily life among individuals, between individual and business or among businesses. The purposes of the capital contribution are also various: capital contribution to purchase and sale, to establish the company or investment capital contribution … Especially in business, capital contribution is an important activity affecting the formation and development of many enterprises. To make it easier for those who wish to draft a capital contribution contract, the following article would summarize some of the contents required in this contract as follows:

Form of capital contribution contract: At present, there are no legal documents guiding in detail the form of capital contribution contract. However, in practice, the capital contribution should be documented to prevent the parties from breaching the agreement.

Contents of the capital contribution contract:

• Information of the parties: capital contributors and capital contributors (including information of legal representatives of both parties if the parties are enterprises);
• Asset to contribute capital:
  • Asset may be Viet Nam Dong, freely convertible foreign currency, gold, value of land use right, value of intellectual property rights, technology, know-how and other assets can convert into Viet Nam Dong. So the capital contributor can choose to many different forms of asset. However, the parties should focus on other regulations when contributing capital by land use rights in accordance with the provisions of the Land Law; contributing capital with the value of intellectual property rights, technology, technical secrets must comply with the provisions of the Intellectual Property Law;
  • Determine who the capital assets belong to;
• Value of assets contributed as capital:
  • Under the provisions of the Law on Enterprise 2014, when contributing to the charter capital of an enterprise, founding shareholders or professional appraisers need to verify the valuation of the asset (if it is not Viet Nam Dong, freely convertible foreign currency or gold) and express that valuation in Vietnam Dong. The pricing principle is stated in Article 37 of this Law;
  • In other cases of capital contribution, the determination of the value of assets must be based on the agreement between parties entering into the contract;
• Duration of capital contribution;
• The purpose of the capital contribution;
• Rights and obligations of parties to the contract;
• Argument setllement;
• Division of profits and risks (if any);

Notes:

• Under the Vietnamese Law on Enterprise 2014, Capital contribution means the contribution of assets to form the company’s charter capital. Capital contribution is either contribution of capital to establish a new enterprise or contribution of additional capital to an existing enterprise. This activity creates the enterprise’s ownership for the capital contributor, which is diffirent from the form of capital contribution in Business cooperation contract (BCC) for a certain benefit (profit sharing, special rights…). After contributing assets to the company’s charter capital, the legal representative of this company will carry out procedures to supplement the company’s members, shareholders (for multi-member limited liability companies or joint stock company) or convert the type of company (for single-member limited liability companies)…
• The capital contribution contract may be notarized, authenticated or not depends on the needs of parties (unless otherwise prescribed by regulations, such as the contract of capital contribution with land use rights must be notarized or authentication).
• In order to prevent any shortage in the capital contribution contract, the parties should consult the contract at the lawyer’s office or the law firm, especially when the contributed asset is extremely valuable.