Is it possible to contribute capital to establish a Joint Stock Company with labor?

Is it possible to contribute capital to establish a Joint Stock Company with labor?

According to the provisions of Article 34 of the Law on Enterprises 2020 on assets used to contribute capital to establish a Joint Stock Company, such as following:

“Article 34. Assets contributed as capital

1. Capital contributed assets are Vietnamese Dong, freely convertible foreign currencies, gold, land use rights, intellectual property rights, technology, technical know-how, and other assets that can be valued in Vietnamese Dong.

2. Only individuals and organizations that are legal owners or have legal use rights to assets specified in Clause 1 of this Article have the right to use those assets to contribute capital according to the provisions of law.”

Pursuant to the above legal regulations, assets used to contribute capital to establish a Joint Stock Company include the following types of assets:

– Vietnam Dong;

– Freely convertible foreign currencies, gold;

– Property rights, including: land use rights, intellectual property rights, technology, technical know-how;

– Other assets that can be valued in Vietnam Dong.

Thus, in the case of wanting to contribute capital to establish a Joint Stock Company with labor, it can be said that labor is not intellectual property rights or any technology or technical know-how. However, with the open regulation that assets contributed as capital can be other assets that can be valued in Vietnam Dong, in fact you can still contribute labor to the capital to establish a Joint Stock Company when there is written consent of the founding members, shown in the company’s charter on capital contribution and the members will themselves value the assets by the amount in accordance with the prescribed legal procedures.

In what cases must assets contributed as capital to establish a joint stock company be valued?

For capital contributions other than Vietnamese Dong, freely convertible foreign currencies, and gold, they must be valued by members, founding shareholders, or valuation organizations according to the provisions of Article 36 of the Law on Enterprises 2020 as follows:

“Article 36. Valuation of assets contributed as capital

1. Capital contribution assets other than Vietnamese Dong, freely convertible foreign currencies, or gold must be valued by members, founding shareholders or valuation organizations and expressed in Vietnamese Dong.

2. Assets contributed as capital when establishing an enterprise must be valued by members and founding shareholders according to the principle of consensus or by a valuation organization. In case a valuation organization determines the value, the value of contributed assets must be approved by more than 50% of the members and founding shareholders.

In case the assets contributed as capital are valued higher than the actual value of that asset at the time of capital contribution, the members and founding shareholders jointly contribute equal to the difference between the appraised value and the actual value of the assets contributed as capital at the time of completion of valuation; At the same time, jointly responsible for damages caused by intentionally valuing contributed assets higher than the actual value.

3. Assets contributed as capital during the course of operations are determined by the owner, the Board of Members for limited liability companies and partnerships, the Board of Directors for joint stock companies, and capital contributors by agreement or by a valuation organization. In case a valuation organization determines the value, the value of contributed assets must be approved by the capital contributor and the owner, the Board of Members or the Board of Directors.

In case the assets contributed as capital are valued higher than the actual value of that asset at the time of capital contribution, the capital contributor, owner, member of the Board of Members for limited liability companies and partnerships, members of the Board of Directors for joint stock companies jointly contribute equal to the difference between the appraised value and the actual value of the contributed assets at the time of completion of valuation; At the same time, jointly responsible for damages caused by intentionally valuing contributed assets higher than the actual value.”

How is ownership of assets contributed as capital to establish a Joint Stock Company carried out?

The transfer of ownership of assets contributed as capital to establish a Joint Stock Company is stipulated in Article 35 of the Law on Enterprises 2020 as follows:

“Article 35. Transfer of ownership of assets contributed as capital

1. Members of limited liability companies, partnerships and shareholders of joint stock companies must transfer ownership of assets contributed as capital to the company according to the following regulations:

a) For assets with registered ownership or land use rights, the capital contributor must carry out procedures to transfer ownership of that asset or land use rights to the company according to the provisions of law. The transfer of ownership and land use rights for assets contributed as capital is not subject to registration fees;

b) For assets whose ownership rights are not registered, capital contribution must be made by handing over the contributed assets with confirmation by a record, except in cases where it is done through an account.

2. The minutes of delivery and receipt of contributed assets must include the following main contents:

a) Name and address of the company’s headquarters;

b) Full name, contact address, legal document number of the individual, legal document number of the organization of the capital contributor;

c) Type of asset and number of units of contributed assets; total value of assets contributed as capital and the proportion of that total asset value in the company’s charter capital;

d) Delivery date; signature of the capital contributor or authorized representative of the capital contributor and the company’s legal representative.

3. Capital contribution is only considered fully paid when the legal ownership of the contributed assets has transferred to the company.

4. Assets used in business activities of private business owners do not have to go through procedures to transfer ownership to the business.

5. Payment for all activities of buying, selling, transferring shares and capital contributions, receiving dividends and transferring profits abroad of foreign investors must be made through accounts in accordance with the law on foreign exchange management, except in cases of payment in assets and other non-cash forms.