Procedures for capital contribution with land use rights

Thu, 30 Sep 2021 16:11:00  |  Print  |  Email   Share:

Ms. Nguyen Phuong Dung (Hanoi) has a piece of land and signed a contract to contribute capital to a joint stock company in 2018. Currently, the company is carrying out procedures to change the name of the land user to the company, but she has not seen the company follow the procedures to offer shares and increase capital.

According to Ms. Dung, a joint stock company raising capital from outside must follow the procedures for notifying the private placement of shares to the Department of Planning and Investment, after getting acceptance of shares offering, the company shall offer shares and register buyers. When someone registers to buy and make payment, the procedures for capital increase will be completed before the property is recorded and transferred the user’s name to the company.

Through the receipt and reply system to business recommendations, Ms. Dung asked if the company transfers the name of the land user before processing the capital increase procedures, does it comply with the law? What is the order of legal procedures specified for increasing capital with contributed capital of land use rights?

Regarding this issue, the Ministry of Planning and Investment has the following comments:

Clause 1, Article 122 of the Law on Enterprises stipulates that a share offering is a company's increase in the number of authorized shares and selling such shares during the company’s operation to increase its charter capital.

In case the company makes a private placement of shares, it is requested to comply with Article 123 of the Law on Enterprises and register the change of charter capital to the business registration authority within 10 days from completion of the share offering.

Point a, Point c, Clause 1, Article 36 of the Law on Enterprises provides:

“a) For assets with mandatory ownership registration or land use right, the capital contributor must follow procedures for transferring the ownership of such asset or land use right to the company at a competent State authority.

The transfer of ownership of contributed assets shall not incur registration fee;

… c) Shares or stakes in the form of assets other than Vietnam Dong, freely convertible foreign currencies, and gold shall only be considered transferred after the legal ownership of such assets is transferred to the company".

Based on the above provisions, enterprises need to conduct a share offering and register for a change in charter capital with the business registration agency before completing the procedures for transferring property ownership to the enterprise.

Regarding the order and procedures for capital increase when contributing capital with land use rights, conditions, order, and procedures for transferring land use rights to enterprises shall comply with the provisions of the land law. Therefore, it is suggested that Ms. Dung should contact the Ministry of Natural Resources and Environment for detailed instructions.

Dossiers, order, and procedures for registration of change of charter capital of a joint-stock company are specified in Clause 14, Article 1 of Decree No. 108/2018/ND-CP dated August 23, 2018, of the Government amending, supplementing some articles of the Government's Decree No. 78/2015/ND-CP on business registration.

By: Online Newspaper of the Government/ Translator: Viet Nguyen-Bizic


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