How to handle a capital contribution in kind ?

Hi DMS Attorney in Vietnam! Our foreign company intends to set up a subsidiary in Vietnam. We need to plan for initial capital contribution. Can you advise me about how to handle a capital contribution in kind in Vietnam ? 

Hi!

If you form a company in Vietnam, you may either pay up the initial share capital in cash or by contributing non-cash assets (called contributions in kind).

Transfer of ownership of assets contributed as capital:

Members of a limited liability company or partnership and shareholders of a shareholding company must transfer ownership of assets contributed as capital to the company in accordance with the following provisions:

In respect of assets with registration of ownership or value of land use rights, the person contributing capital must carry out the procedures to transfer the ownership of such assets or the land use rights to the company at a competent State agency. Registration fees shall not be payable in respect of a transfer of ownership of assets contributed as capital.

In respect of assets without registration of ownership, capital contribution must be made by handing over assets contributed as capital, as evidenced by minutes. The minutes of such hand-over must specify the name and address of the head office of the company; full name, permanent residential address, number of people’s identity card, passport or other lawful personal identification, number of establishment decision or registration of the person contributing capital; type of asset and number of units of assets contributed as capital; total value of assets contributed as capital and percentage of the total value of such assets in the charter capital of the company; date of hand-over; signatures of the person contributing capital or of the authorized representative of the person contributing capital and of the legal representative of the company.

Shares or share of capital contribution by way of assets which is not denominated in Vietnamese Dong, freely convertible foreign currency or gold shall be deemed to have been paid only when the legal ownership of the assets contributed as capital has been transferred to the company.

Procedures for transfer of ownership to the enterprise are not required where the asset is used for the business operations of the owner of a private enterprise.

All payments for any purchase, sale or transfer of shares and share of capital contribution and the receipt of dividends by foreign investors must be made through capital accounts of such investors opened at banks in Vietnam, except for payment by assets (Article 36 Law on Enterprises No. 68/2014/QH13 dated 11/26/2014).

Related topics:

Contributing non-cash assets to set up a company in Da Nang, Vietnam

How to incorporate a single member LLC, owned by a foreign organization in Vietnam ?

Set up 100% FDI company in Vietnam in the form of a single member LLC

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Capital contributions in kind