Is it allowed to contribute capital by land use rights?
Clause 1, Articles 34 of the 2020 Enterprises Law Enterprise stipulates that:
“1. Contributed assets include VND, convertible foreign currencies, gold, land use right (LUR), intellectual property rights, technologies, technical secrets, other assets that can be converted into VND.”
Thus, law allows capital contribution in land to establish a company.
Assets contributed as capital can be Vietnamese Dong, freely convertible foreign currencies, gold, land use rights value, according to Clause 1, Article 35 of the 2014 Law on Enterprises and Clause 1, Article 34 of the Law on Enterprises 2020, effective from January 1, 2021.
For each type of enterprise, the law regulates the order and procedures for capital contribution differently. With registered assets or land use rights value, capital contributors must carry out procedures to transfer asset ownership or land use rights to the company at a competent state agency, according to Point a, Clause 1, Article 36 of the Law on Enterprises. 2014 and Point a, Clause 1, Article 35 of the Enterprise Law 2021.
Conditions for contributing capital by land use rights
To contribute capital to the company with the value of land use rights, you need to meet the conditions according to the provisions of the 2013 Land Law; That is, it is necessary to determine the legal status of the individual or organization that wants to contribute capital to that land as well as whether that land is eligible to participate in the transaction or not?
Subjects who want to contribute capital by the value of land use rights to the company must meet the conditions specified in Clause 1, Article 188 of the 2013 Land Law as follows:
“Article 188. Conditions for the exercise of the rights to exchange, transfer, lease, sublease, inherit, donate or mortgage land use rights; to contribute land use rights as capital
1. 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:
a/ 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 this Law;
b/ The land is dispute-free;
c/ The land use rights are not distrained to secure judgment enforcement;
d/ Within the land use term.“
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