Contributing Land Use Rights as Capital Advisory

Contributing land use rights as capital is a common form in joint ventures and real estate investment cooperation: one party contributes land, the other contributes money or implementation capacity. This seemingly simple transaction carries many hidden risks — from valuing the contributed land, to the legal conditions of the land, to exit mechanisms when cooperation breaks down.

Conditions for Contributing Land Use Rights as Capital

Land use rights may only be used as capital contributions when they satisfy the conditions for rights transfer under Article 45 of the Land Law 2024: holding a Certificate, the land is dispute-free, not seized, and still within the use term. In addition, note that:

Land leased from the State with annual rental payment generally may not be contributed as land use rights (except as otherwise prescribed by law);
The capital contribution must be registered for change at the Land Registration Office;
If the land is mortgaged, the mortgagee’s consent is required.

Valuation of Contributed Assets

Under the Law on Enterprises 2020, contributed assets must be valued: either by unanimous agreement of the founding members/shareholders, or by a valuation organization (Article 36). The value of contributed land must reflect the market price at the time of contribution — overvaluation creates “phantom” capital, affecting the parties’ interests when distributing profits or dissolving. The valuation agreement and valuation method should be documented in writing signed by all contributing parties.

Points to Clarify in the Capital Contribution Agreement

What value the land use rights are counted at, and what corresponding capital contribution/ownership ratio (%) that represents;
Whose name appears on the Certificate after contribution; the title transfer procedures;
Distribution of profits, risks, and governance rights corresponding to the contribution ratio;
Exit mechanisms: when one party wants to withdraw, how the land is handled — the remaining party buys it out, transfer to a third party, or dissolution and division;
Handling when the land is recovered or planning changes during the cooperation period.

How Does ANT Legal Assist?

Legal review of the land parcel intended for contribution;
Drafting and reviewing capital contribution agreements and company charters;
Representing clients in land change registration procedures;
Advising on and resolving capital contribution disputes when cooperation breaks down.

Contributing Land Use Rights as Capital Advisory

Conditions for Contributing Land Use Rights as Capital

Valuation of Contributed Assets

Points to Clarify in the Capital Contribution Agreement

How Does ANT Legal Assist?

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