Valuation of contributed assets to the company according to Vietnamese Law on Enterprise 2020

Valuation of contributed assets to the enterprise is a necessary procedure to determine the amount of charter capital of the company. What is the rate of capital contribution among members? To rely on that and determine the titles of members in the company. Since this is an important issue, Viet An Law Firm would like to inform customers about this issue in the article below.

Legal basis

• Civil Code 2015;
• Law on Enterprise 2020;
• Law on Anti-Corruption 2018;
• Law on Public Employees 2010;
• Law on Cadres and Civil servants 2008.

What is capital contribution?

What is property?

According to Article 105 of the Civil Code 2015, property comprises objects, money, valuable papers and property rights. Property or asset can include  immovable property and movable property (which can be existing property and future-generated property or off-plan property).

Although this is an enumerated regulation, the scope of this concept is very broad, almost anything can be considered property.

Example: A seed is considered an asset (existing property), and future crops grown from that seed are also considered an asset (future-generated property).

What is capital contribution ?

Capital contribution is understood as the contribution of assets to form the charter capital of the company, including capital contribution to establish a company or additional contribution to the charter capital of an already established company. This is stipulated in Clause 18, Article 4 of the Law on Enterprise 2020.

However, not everyone has the right to contribute capital to the business. Specifically, in Clause 3, Article 17 of the Law on Enterprises of Vietnam 2020, organizations and individuals have the right to contribute capital, except for the following cases:

• State agencies and units of the people’s armed forces use state assets to contribute capital to enterprises for their own profit;
• Subjects are not allowed to contribute capital to enterprises under the provisions of the Law on Cadres and Civil servants, the Law on Public Officials, and the Law on Anti-Corruption. Specifically:
• Article 20 of the Law on Cadres and Civil Servants 2008, cadres and civil servants are not allowed to do production- and business-related jobs specified in the Anti-Corruption Law.
• Public employees may contribute capital but do not participate in the management and administration of limited liability companies, joint stock companies, partnerships, cooperatives, private hospitals, private schools and private scientific research organizations, unless otherwise provided for by specialized law (Clause 3, Article 14 of the Law on Public Employees 2010).
• According to Clause 4, Article 20 of the Law on Anti-corruption 2018, heads and deputy heads of heads of state agencies are not allowed to contribute capital to enterprises operating within the lines of business in which that person directly performs the management. management, or let relatives do business within that industry or profession.

Therefore, not all cadres and civil servants are not allowed to contribute capital to enterprises, but only heads and deputy heads of state agencies and their families are prohibited from contributing capital to enterprises. enterprises that are operating within the scope of the industry or profession that that person manages.

Capital contribution property

Assets contributed as capital as prescribed in Article 34 of the Vietnam Enterprise Law 2020 are Vietnam Dong, freely convertible foreign currency, gold, land use rights, intellectual property rights, technology, technical know-how, and other property that can be valued in Vietnam Dong.

Therefore, it can be understood that the capital contribution assets that individuals and organizations use to contribute capital when establishing an enterprise or contribute additional capital upon the establishment of the company are objects, money, valuable papers and valuable property rights. can be valued in Vietnam Dong.

However, it should be noted that not all assets specified in Article 105 of the Vietnam Civil Code 2015 can be used to contribute capital to an enterprise, only those assets can be valued. only in Vietnam Dong can contribute capital.

Vietnam’s regulations on valuation of assets contributed as capital

Article 36 of the Law on Enterprises of Vietnam stipulates the valuation of assets contributed as capital as follows:

Form of assets contributed capital

If the assets contributed as capital are not Vietnam Dong, freely convertible foreign currency, gold must be valued by members, founding shareholders or appraisal organizations and expressed in Vietnam Dong.

Valuation of assets contributed as capital when establishing a business

When setting up a business, founding members and shareholders may directly value the assets contributed as capital, but must comply with the consensus principle, or the assets are assessed indirectly by a valuation organization.

• In case assets contributed as capital are assessed by a valuation organization, the value of assets contributed as capital must be approved by more than 50% of the members and founding shareholders.
• If at the time of capital contribution, the assets contributed as capital are valued higher than the actual value of such assets, then at the time of valuation completion, the difference between the assessed asset value and The actual value of the assets contributed as capital will be jointly contributed by the founding members and shareholders. At the same time, the founding members and shareholders are also jointly liable for damages arising from the intentional pricing of assets contributed as capital higher than the actual value.

Valuation of assets contributed as capital in the course of business operations

During the operation, the owner, the Members’ Council, for limited liability companies and partnerships, the Board of Directors, for joint-stock companies, and capital contributors may agree on the valuation of assets. capital contribution property, or may assign the contributed property to a valuation organization for valuation.

• Where a valuation organization determines the value of assets contributed as capital, it must be approved by the capital contributor and the owner, the Members’ Council or the Board of Directors.
• In case at the time of capital contribution, the assets contributed as capital are valued higher than the actual value of such assets, at the time of closing the valuation, the difference between the value of assets contributed as capital is valued and the actual asset value will be jointly contributed by capital contributors, owners, members of the Members’ Council, for limited liability companies, partnerships, and members of the Board of Directors, for joint-stock companies jointly responsible for making additional contributions to make up for the difference. At the same time, the damage resulting from the act of intentionally pricing the assets contributed as capital higher than the actual value of such assets will also be jointly responsible by the above subjects.

Some keynotes on valuing contributed assets

• The valuation of the property is divided into two different times:
  • At the time of business establishment;
  • During business operations.
• At different times, the valuer of the property , the person responsible for the difference between the assessed value of the capital contribution property and the actual value of the property, as well as the person responsible for the damage. The damage resulting from the intentional higher valuation of contributed assets also has a certain difference. Therefore, when valuing contributed assets, customers need to be careful and pay attention to this issue.

Customers who want to learn more information about property valuation, please contact Viet An Law Firm by phone, Zalo or email to get our best support!