Valuing the assets contributed as capital

50% OF THE FOUNDING SHAREHOLDERS AND OTHER SHAREHOLDERS ACCEPT THE VALUE OF CAPITAL CONTRIBUTION

Article 36 the Law on Enterprises 2020 regulated about valuation of contributed assets as follows:

1. Contributed assets that are not VND, convertible foreign currencies or gold shall be valued by members/partners/shareholders or a valuation organization and expressed as VND.

2. Assets contributed upon establishment of an enterprise shall be valued by members/partners/founding shareholders by consensus or by a valuation organization. In the latter case, the value of contributed assets must be accepted by more than 50% of the members/partners/founding shareholders.

In case a contributed asset is valued at a value higher than its actual value at contribution time (overvalued), the members/partners/founding shareholders shall jointly contribute an amount equal to the difference and are jointly responsible for the damage caused by the overvaluation.

3. Assets contributed during the operation shall be valued by the owner or the Board of Members/Partners (for limited liability companies and partnerships) or the Board of Directors (for joint stock companies) and the contributor or by a valuation organization. In the latter case, the value shall be accepted by the contributor and the owner, the Board of Members/Partners/Directors.

In case a contributed asset is overvalued, the contributor, the owner and members of the Board of Members/Partners/Director shall jointly contribute an amount equal to the difference and are jointly responsible for the damage caused by the overvaluation.

Ảnh minh hoạ

ASSETS CONTRIBUTED AS CAPITAL

Article 34 the Law on Enterprises 2020 regulated about contributed assets as follows:
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.

2. Only the individual or organization that has the lawful right to ownership or right to use the asset mentioned in Clause 1 of this Article may contribute it as capital as prescribed by law.

Accordingly, 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. Vietnam. The law clearly stipulates that only individuals and organizations that are lawful owners or have lawful use rights to the above-mentioned assets have the right to use such assets to contribute capital in accordance with regulations of the law.

  Thus, the Law on Enterprises 2020 has kept the provisions on the types of assets that can be contributed as capital to enterprises. This is the same with regulations of the Law of Enterprises, but it has removed the explanation of intellectual property rights used to contribute capital to enterprises by individual companies. This right has been detailed by the law on intellectual property.

 Transfer of ownership of contributed assets
Article 35 the Law on Enterprises 2020 regulated about Transferability of ownership of contributed assets as follows:

1. Transfer of contributed assets by members of a limited liability company, partners of a partnership, shareholders of a joint stock company shall comply with the following regulations:

a) For assets whose ownership have been registered and LURs, the capital contributor shall follow procedures for transfer the ownership of such assets or the LUR to the company as prescribed by law. This transfer is exempt from registration fee;

b) Contribution of assets whose ownership is not registered shall be recorded in writing unless the contribution is made by wire transfer.

2. The record on transfer of contributed assets shall contain the following information:

a) The company’s name and headquarters address;

b) Full name, mailing address, legal document number of the contributor that is an individual; legal document number of the contributor that is an organization;

c) Types and quantities of contributed assets; total value of contributed assets and the ratio of this value to the company’s charter capital;

d) Date of transfer; signatures of the contributor or the contributor’s authorized representative and the company’s legal representative.

3. The contribution is considered complete once the lawful ownership of the assets has been transferred to the company.

4. Procedures for ownership transfer are exempt for assets serving business operation of the sole proprietorship’s owner.

5. Payment for transfer of shares/stakes, receipt of dividends of remittance of profits by foreign investors shall be carried out through accounts in accordance with foreign exchange laws, except for payment in assets and cashless payment.

Accordingly, the Law on Enterprises 2020 stipulates members of a limited liability company, partners of a partnership, shareholders of a joint stock company (except for sole proprietorships) must transfer ownership of assets contributed as capital to the company in accordance with regulations as follows:

 For assets whose ownership have been registered and LURs, the capital contributor shall follow procedures for transfer the ownership of such assets or the LUR to the company as prescribed by law. This transfer is exempt from registration fee; The transfer of ownership and land use rights to the company in accordance with the law. The transfer of ownership rights, the transfer of land use rights for assets contributed as capital is not subject to registration fees. As for assets without registration of ownership, the capital contribution must be made by handing over the contributed assets with certification in writing, unless it is made by handing over the assets contributed as capital with confirmation. receive by minutes, except for the case it is done through the account. The capital contribution is only considered to complete payment when the legal ownership of the assets contributed as capital has transferred to the company.

 Payment for the purchase, sale, transfer of shares and capital contributions, receipt of dividends and remittance of profits abroad by foreign investors must be made through accounts in accordance with the law on foreign exchange management, except for the case of payment by assets and other non-cash forms.

  Thus, this amendment aims to be consistent with the foreign exchange law, because the Enterprise Law 2014 only requires that all payments to buy shares, contributed capital or remit profits abroad must be remitted abroad by transfering money to the account, what type of account is it, what form of investment is applied to, and the procedure and sequence of account opening will be regulated by the foreign exchange law to ensure compatibility between the law of enterprises and the law, foreign exchange law. The Law on Enterprises 2020 also adds provisions on cases which payments cannot be tranfer through accounts, such as payment in assets, to match the reality of capital transfer and contribution transactions of enterprises.

(Excerpt from the book 145 questions and answers of the Enterprise Law 2020 by the group of authors Dr. Tran Viet Long, Dr. Nguyen Vinh Huy, LS. Nguyen Van Tu)