Contributing capital using land use rights is a notable legal provision under Vietnamese laws, particularly for foreign-invested enterprises. This article explores whether foreign-invested enterprises are allowed to contribute capital using land use rights, the conditions required, and the legal procedures involved.
- Is it possible to contribute capital using land use rights?
Land use rights are one of the types of assets permitted for capital contribution under the provisions of the 2020 Enterprise Law, provided that they meet the requirements for feasibility in valuation and legal ownership by the contributing entity. “Capital contribution” in this context includes contributing capital to establish a new entity or adding capital to the charter capital of an already established economic organization.
Based on Clause 3, Article 41 of the 2024 Land Law, foreign-invested economic organizations are allowed to contribute capital using land use rights and assets attached to the land they own if they are either leasing the land from the state with a one-time rental payment for the entire lease term or have been allocated land by the state with a land use fee for project implementation purposes.
“3. Overseas Vietnamese and foreign-invested economic organizations that are leased land by the state with a one-time rental payment for the entire lease term or are allocated land by the state with a land use fee for project implementation purposes shall have the following rights and obligations:
a) General rights and obligations as prescribed in Articles 26 and 31 of this Law;
b) Transfer land use rights and assets attached to the land within the duration of the land use rights;
c) Lease or sublease land use rights and assets attached to the land within the duration of land use rights;
d) Mortgage land use rights and assets attached to the land at credit institutions permitted to operate in Vietnam;
đ) Contribute capital using land use rights and assets attached to the land.”
- What conditions must foreign-invested economic organizations meet to contribute capital using land use rights?
Entities contributing land use rights as capital must fulfill all prescribed conditions to ensure the legitimate rights and interests of all parties involved in the transaction. These conditions include:
- Land Use Rights Documentation: The contributor must possess a certificate of land use rights, a certificate of house ownership and land use rights, or a certificate of land use rights, house ownership, and other assets attached to the land. Exceptions apply in cases of inheritance, agricultural land exchange, gifting land use rights to the government or community, or other specified cases
- Land Dispute Status: The land must not be under dispute, or any disputes must be resolved through competent state authorities, court rulings, or arbitration decisions that have taken legal effect.
- Enforcement Measures: The land use rights must not be subject to seizure or other enforcement measures to ensure compliance with civil judgment enforcement laws.
- Land Use Duration: The land must still be within the legal usage term as prescribed.
- Temporary Emergency Measures: The land use rights must not be under temporary emergency measures as stipulated by law.
Additionally, land users must meet specific conditions applicable to particular cases.
- What legal procedures must be followed to ensure lawful capital contribution using land use rights?
- Valuation of Land Use Rights
- Land use rights as contributed assets must be valued in Vietnamese Dong, conducted through valuation organizations, company members, or shareholders, depending on the specific case.
- The legal responsibility of owners, members, shareholders, or contributors arises if there is any increase in valuation discrepancy compared to the actual value at the time of contribution.
- Transfer of Land Use Rights
- Contributors must complete the process of transferring land use rights to the company in accordance with legal procedures. The capital contribution is only considered completed when the legal ownership of the contributed asset is transferred to the company.
- Notarization and Authentication of Contracts
- Contracts for contributing land use rights, and assets attached to the land, must be notarized or authenticated, except in cases where at least one party is a real estate business organization. In such cases, notarization or authentication is optional, depending on the parties’ agreement.
- Financial Obligations: All related financial obligations must be fulfilled fully and promptly as required by law.
In conclusion, capital contribution using land use rights is a viable method for foreign-invested businesses, provided that all legal, procedural, and financial requirements are met. Understanding these rules is essential to ensure compliance, protect the parties’ interests, and maximize investment efficiency.
📞 CONTACT LEGAL CONSULTANT:
TLA Law is a leading law firm with a team of highly experienced lawyers specializing in criminal, civil, corporate, marriage and family law, and more. We are committed to providing comprehensive legal support and answering all your legal questions. If you have any further questions, please do not hesitate to contact us.
1. Lawyer Vu Thi Phuong Thanh, Manager of TLA Law LLC, Ha Noi Bar Association
Email: vtpthanh@tlalaw.vn
2. Lawyer Tran My Le, Chairman of the Members’ Council, Ha Noi Bar Association
Email: tmle@tlalaw.vn.
Dinh Phuong Thao