Contributing Land Use Rights to a Multi-Member LLC: Valuation and Asset Change Rules

Question: How is a commitment to contribute capital with land use rights into a multi-member limited liability company implemented? Short answer: Land use rights are lawful assets that may be used for capital contributions. The member must transfer the land use rights to the company within 90 days from the date of issuance of the Enterprise Registration Certificate; the value of the land use rights is determined by the members themselves or by a professional valuation organization.

1. May land use rights be used for capital contributions?

Yes. Under the Law on Enterprises 2020, contributed assets may be Vietnamese dong, freely convertible foreign currency, gold, land use rights, intellectual property rights, technologies, technical know-how and other assets valuably determinable in Vietnamese dong.

Conditions: the land use rights used for capital contribution must be lawfully held by the contributing member, free of disputes, not distrained to secure judgment enforcement, and within the land use term under land law.

2. Valuing the contributed land use rights

Under Article 36 of the Law on Enterprises 2020, contributed assets other than Vietnamese dong, freely convertible foreign currency or gold must be valued by the members, founding shareholders or a professional organization and expressed in Vietnamese dong. For land use rights, the company members may:

• Agree on the valuation of the contributed land use rights themselves; or
• Hire a valuation organization to value them.

The value of the land use rights agreed by the members (or according to the valuation result) is the basis for determining the member’s capital contribution ratio in the company’s charter capital.

3. Time limit and procedures for transferring land use rights to the company

Under Article 47 of the Law on Enterprises 2020, a member of a multi-member limited liability company must contribute to the company fully and in the correct type of committed assets within 90 days from the date of issuance of the Enterprise Registration Certificate, excluding the time for transporting and importing the contributed assets and carrying out administrative procedures to transfer asset ownership.

For contributions with land use rights, the member must carry out land change registration procedures (transferring the land use rights to the company) at the competent land registration authority. The capital contribution is only considered complete when the company has been recorded as the land user on the land use right certificate.

4. Changing the committed type of contributed assets

A member who has not contributed or has not fully contributed the committed capital must fully contribute within the 90-day period above. Where a member wishes to change the type of contributed assets (for example: having committed to contribute land use rights but wishing to switch to cash), the change must be approved by more than 50% of the remaining members of the company.

Notes on application

Before committing to contribute capital with land use rights, the member should carefully check the legal status of the land parcel: land use term, master planning, financial obligations on land, mortgage or dispute status. As land use right values fluctuate with the market, the valuation needs a clear basis, recorded in writing signed by the members to avoid disputes over contribution ratios later. When there is a change in contributed assets or a member has not fully contributed, the company must carry out charter capital change registration procedures as prescribed.

How can ANT Legal help?

ANT Legal advises and reviews the legality of the land parcel intended for capital contribution; drafts capital contribution commitment documents and asset valuation minutes; carries out land change registration and charter capital change registration procedures; and advises on handling capital contribution disputes among members. You may contact an ANT Legal lawyer for advice on your specific case.

Related topics

• Procedures for increasing or decreasing the charter capital of a multi-member LLC
• Valuing contributed assets when establishing an enterprise
• Handling cases where members fail to fully contribute capital on time