Legal considerations and risks when contributing assets as capital to an enterprise

25 June, 2025 | TNTP LAW | Legal newsletter

Contributing capital through assets is one of the most common methods used by individuals and organizations when establishing a business or increasing its charter capital. However, unlike capital contributions made in cash, contributing capital in the form of assets requires compliance with more complex legal regulations and carries various potential risks. The following article will outline key legal considerations and risks associated with contributing assets as capital to an enterprise.

1.Regulations on contributing assets as capital to an enterprise

According to Clause 18, Article 2 and Article 34 of the Law on Enterprises 2020, capital contribution refers to the act of contributing assets to establish or increase the charter capital of an enterprise. Contributed assets may include VND, convertible foreign currencies, gold, land use right (LUR), intellectual property rights, technologies, technical secrets and other assets that can be converted into VND.

Only organizations and individuals who are lawful owners or have the legal right to use the assets are entitled to use those assets as capital contributions to an enterprise.

Within the scope of this article, TNTP focuses on analyzing the legal issues related to capital contributions made in forms other than cash, gold, or foreign currency—specifically, other tangible and intangible assets such as real estate, intellectual property, technology, etc.

Capital contributions through assets are governed by the Law on Enterprises 2020, the Civil Code 2015, and other relevant legal regulations depending on the type of asset used (e.g., Land Law, Law on Housing, Intellectual Property Law, etc.). For each type of asset, capital contribution must meet specific conditions regarding ownership rights, transferability, and the procedures for transferring ownership or usage rights, among other requirements.

2.Key considerations when contributing assets as capital to an enterprise

a.Valuation and agreement on the value of contributed assets

According to Article 36 of the 2020 Law on Enterprises, non-cash and non-gold assets contributed as capital must be valued either by the founding members/shareholders or by a professional valuation organization, and their value must be expressed in VND.
For capital contributions made during the establishment of an enterprise, if the asset is valued by a valuation organization, the appraised value must be approved by more than 50% of the founding members or shareholders.
For capital contributions made to increase charter capital during the enterprise’s operation, the contributed assets shall be valued either by agreement between the contributor and the owner, the Members’ Council (in limited liability companies and partnerships), or the Board of Directors (in joint stock companies), or by a professional valuation organization.

b.Procedures for transferring ownership of contributed assets

According to Article 35 of the 2020 Law on Enterprises, a capital contribution is only considered fully paid when the legal ownership of the contributed asset has been transferred to the enterprise.

For assets that require registration of ownership or land use rights (such as land use rights, houses, automobiles, ships, intellectual property rights, etc.), the transfer of ownership or use rights to the enterprise must be carried out in accordance with the legal regulations applicable to each type of asset.

In cases where the contributed asset does not require ownership registration, the transfer must be documented in a written record clearly stating the company’s information; the contributor’s information; details of the asset (type and quantity of the asset; total value of the asset and its corresponding proportion in the company’s charter capital).

For assets used in the business operations of a sole proprietorship, there is no requirement to carry out procedures for transferring ownership to the enterprise. This is because a sole proprietorship does not have legal personality, and its owner bears unlimited liability with all of their personal assets during the course of the business’s operations.
In addition, enterprises should note that if the contributor fails to complete the transfer of asset ownership within the prescribed time limit (depending on the type of company), consequences may include liability for damages or forfeiture of the contributed capital portion.

c.Can the type of contributed asset be changed after commitment?

According to the 2020 Law on Enterprises, during the process of capital contribution to establish a company, a member of a multi-member limited liability company may change the type of asset initially committed as capital if more than 50% of the remaining members approve.
For other types of enterprises, the law does not provide specific regulations on changing the type of contributed asset. However, if such a change results in a modification of the contributed capital value, either an increase or decrease in the actual capital contributed by a member or shareholder – the enterprise must carry out the necessary procedures to adjust its charter capital in accordance with legal provisions.

3.Risks of contributing assets as capital to an enterprise

a.Risks arising from incorrect asset valuation

According to Clauses 2 and 3, Article 36 of the Law on Enterprises 2020, if a contributed asset is overvalued compared to its actual value at the time of contribution (due to lack of knowledge, subjective judgment, or intentional misrepresentation), the contributor and the owner (if applicable) must jointly contribute the shortfall and are also jointly liable for any damages caused by the intentional overvaluation of the contributed asset.
In addition, certain types of specialized assets—such as intellectual property rights, technology, and technical know-how—are inherently difficult to value accurately. Even when a valuation organization is engaged, it may be challenging to find one with both sufficient expertise in the relevant fields and the capability to perform in-depth market analysis. In such cases, the enterprise may face significant risks in determining the responsibilities of involved parties if disputes arise in the future.

b.Risks arising from ownership or usage rights disputes

Many enterprises overlook the importance of completing the legal procedures for transferring ownership or usage rights of contributed assets. As a result, such assets may remain registered under the contributor’s personal name and are not officially recognized as company assets. This can lead to disputes during dissolution, profit distribution, or the settlement of financial obligations.

If, after the capital contribution, a dispute arises over the ownership of the asset (for example, the asset is subject to ongoing legal disputes or has not been registered under the contributor’s name), the enterprise may lose ownership or usage rights over the asset, potentially resulting in significant losses.

4.Recommendations and risk mitigation measure

Conduct legal due diligence on the asset before accepting it as a capital contribution to ensure that it is not subject to seizure, not involved in any disputes, and legally owned by the contributor.
Carry out asset valuation in an honest and transparent manner. In cases involving high-value or hard-to-value assets, it is advisable to engage an independent valuation organization.
Complete all legal procedures for transferring ownership of the asset within the prescribed time frame in accordance with applicable regulations.

Contributing capital in the form of assets is a common investment method but carries significant legal risks if the parties involved do not fully comply with applicable laws. Therefore, investors and business owners should exercise particular caution in the valuation process, establishing ownership rights, and completing legal procedures in order to protect their interests and avoid unnecessary disputes.

The above is the article titled “Legal considerations and risks when contributing assets as capital to an enterprise” presented by TNTP to our valued readers. We hope this article proves helpful and informative.

Best regards,

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