Capital contribution in the form of land use rights

Question:

Dear DTD Law Firm,

Can I contribute capital to an enterprise in the form of land-use rights (500m2) with the purpose of investing to build houses for sale?

Answer:

          Pursuant to Clause 3, Article 18 of Law on Enterprise 2014.

“3. Every organization and individual is entitled to contribute capital, buy shares/stakes in joint-stock company, limited liability company, and partnership in accordance with this Law, except in the following cases:

a) Government agency, armed force unit using state-owned property to establish enterprise for its own benefit;

b) The entity prohibited from contributing capital to enterprise as prescribed by regulations of the Law on official and public employee.”

          According to the above regulations, except for circumstances fall under Point a and b of Clause 3, Article 18 of Law on Enterprise 2014, every organization and individual has the right to contribute capital to enterprise.

          Pursuant to Clause 1, Article 35 of Law on Enterprises 2014.

“1. Contributing asset may be Vietnam Dong (VND), freely convertible foreign currencies, gold, value of land-use rights, value of intellectual property rights, technology, technical secret, and other assets that can be assessed in VND.”

          According to this regulation, you can contribute capital to enterprise in the form of land-use rights. However, you should be aware of the followings:

-Condition for land-use rights to be contributable:

+  Documents regarding land-use rights: (i) certificate of land-use rights, ownership of house and other land-attached asset; (ii) certificate of land use right; (iii) certificate of ownership of house and habitable-land-use rights; or (iv) one of the documents stipulated under Article 100 of the Law on Land 2013.

+ Such land is free of dispute.

+ The land-use rights is not distrained or subjected to security for enforcement.

+ Within the land-use term.

-Regarding the dossier, pursuant to Clause 1, Article 79 of Decree No. 43/2014/ND-CP:

“1. The land user shall submit 01 dossier on implementing the rights of the land user and the owner of the land-attached asset.

In case of  implementing the rights of land user on one part of the land lot, the land user shall request the Land Registration Office to measure for separation of such part before submitting the dossier on implementing the rights of the land user .”

          A dossier consists of:

+ Notarized Contract of capital contribution in the form of land-use rights.

+ Certificate of land-use rights (original);

+ The land-use rights must be in alignment with the planning of the province or city; must have a reasonable land-use plan and the right holder had fulfilled all financial obligations in accordance with the law.

+ Application for land-use certificate (if any).

-Regarding charges and fees

Pursuant to Point a, Clause 1, Article 36 of Law on Enterprise 2014:

“1. Member of limited liability company, partnership, and shareholder of joint-stock company must transfer the right to ownership of asset contributed as capital as follows:
a) For asset which its ownership must be registered or asset that is the value of land-use rights, the capital contributor must follow procedures for transferring the ownership of such asset or land-use rights to the company at a competent authority.
The transfer of ownership of asset contributed as capital shall not incur registration fee”

In this case, you do not have to incur registration fee.