Does contributing capital with land use rights require asset valuation?

Does contributing capital with land use rights require asset valuation? Is this what must be done when contributing capital to a business using land use rights? This article will analyze the legal regulations on the valuation of assets contributed as capital using land use rights. Please refer to it!

Types of assets contributed as capital

Vietnamese law allows the use of many types of assets to contribute capital to businesses. These assets must be able to be valued in Vietnam Dong and legally owned by the capital contributor. According to Article 34 of the Law on Enterprise 2020, types of assets allowed for capital contribution include:

• Vietnamese Dong;
• Freely convertible foreign currencies;
• Yellow;
• Land use rights;
• Intellectual property rights;
• Technology and technical know-how;
• Other assets can be valued in Vietnam Dong.

Thus, land use rights are identified as one of the highly valuable assets and are often used to contribute capital to businesses. However, capital contribution using land use rights needs to strictly comply with the provisions of law on land and businesses.

Conditions for capital contribution using land use rights

To contribute capital using land use rights, the capital contributor and the capital contributor must comply with the following conditions:

For capital contributors

Pursuant to Article 45 of the Land Law 2024, land users can exercise the right to contribute capital with land use rights when the following conditions are met:

• Have a Certificate of land use rights or a Certificate of house ownership rights and land use rights or a Certificate of land use rights, house ownership rights and other assets attached to land or a Certificate of land use rights, ownership rights of assets attached to land, except for cases of inheritance of land use rights, conversion of agricultural land when consolidating land, exchanging plots, donating land use rights to the State, residential communities and cases specified in Clause 7, Article 124 and Point a, Clause 4, Article 127 of the 2024 Land Law;
• The land is not in dispute or the dispute has been resolved by a competent state agency, the judgment or decision of the Court, or the decision or award of the Arbitration has taken legal effect;
• Land use rights are not distrained, other measures are applied to ensure judgment enforcement according to the provisions of the law on civil judgment enforcement;
• Currently in the land use term;
• Land use rights are not subject to temporary emergency measures according to the provisions of law.

In addition, according to the provisions of Clause 5, Article 45 of the Land Law 2024, the land user must complete their financial obligations before contributing capital in case this person is allowed to delay the performance of financial obligations or have their financial obligations debited.

Thus, the capital contributor must strictly comply with the above regulations to be allowed to contribute capital with their land use rights. The lack of one of the above conditions will not give rise to the land user’s right to contribute capital.

For parties receiving capital contributions

Pursuant to Article 28 of the Land Law 2024, which regulates subjects receiving land use rights through capital contribution, not all types of businesses are allowed to receive capital contributions in the form of land use rights. Specifically, according to Point đ, Clause 1, Article 28 of the Land Law 2024, subjects eligible to receive capital contributions using land use rights include:

• Domestic economic organizations;
• Economic organizations with foreign investment capital.

Therefore, according to the provisions of Point b, Clause 1, Article 4 of the Land Law 2024, other domestic organizations are not allowed to receive capital contributions in the form of land use rights.

In addition, economic organizations with foreign investment capital that receive capital contributions to implement investment projects in areas with limited access to land must consult the Ministry of National Defense and the Ministry of Public Security according to the provisions of Clause 3, Article 10 of Decree 102/2024/ND-CP.

In addition, economic organizations receiving capital contributions with land use rights to implement investment projects must have an excerpt of the location of the land where the investor proposes to implement the project and a written request according to Form No. 07 in the Appendix issued with this Decree to send to the Provincial People’s Committee where the land is located as prescribed in Clause 1, Article 60 of Decree 102/2024/ND-CP.

Thus, the party receiving capital contribution still must meet the specific conditions above to receive capital contribution in the form of land use rights.

Does contributing capital with land use rights require asset valuation?

According to the provisions of Article 36 of the Law on Enterprise 2020, capital contribution assets other than Vietnamese Dong, freely convertible foreign currencies, or gold must be valued and expressed in Vietnamese Dong. Considering that land use rights are not among the types of assets exempt from valuation mentioned above, so must be valued when contributing capital.

Valuation of land use rights when contributing capital can be done by one of the following two methods:

1. Pricing according to consensus principle:

• In case of capital contribution when establishing an enterprise: valuation by members and founding shareholders according to the principle of consensus;
• In case of capital contribution during operation: the price will be agreed upon by the owner, the Board of Members, the Board of Directors and the capital contributor.

2. Valuation by valuation organization:

• In case of capital contribution when establishing an enterprise: the value of contributed assets must be approved by more than 50% of the members and founding shareholders;
• In case of capital contribution during operation: the value of contributed assets must be approved by the capital contributor and the owner, the Board of Members or the Board of Directors.

Thus, contributing capital with land use rights requires asset valuation. This valuation is to accurately determine the value of land use rights when contributing to the enterprise’s charter capital, ensuring the rights of related parties and complying with the law.

Is there a penalty for valuing assets contributed as capital using land use rights that do not match the actual value?

Pursuant to Clause 3, Article 46 of Decree 122/2021/ND-CP stipulating penalties for administrative violations in the field of planning and investment, intentionally valuing contributed assets at an incorrect value will be severely punished.

Specifically, according to the provisions of Point b, Clause 3, Article 46 of Decree 122/2021/ND-CP, companies that intentionally value contributed assets at an incorrect value will be fined from 30 million VND to 50 million VND.

For individuals who commit this violation, the fine applied is equal to 1/2 the fine for organizations, from 15 million VND to 25 million VND (based on Clause 2, Article 4 of Decree 122/2021/ND-CP).

Therefore, the valuation of assets contributed as capital with land use rights needs to be done honestly, objectively and in accordance with the actual value of the asset to avoid possible serious legal consequences.

Consulting service on valuation of capital contribution by land use rights at Long Phan Consulting Company

Long Phan Consulting Company provides professional consulting services on valuation of capital contributions using land use rights. Consulting services on valuation of capital contribution using land use rights at Long Phan Consulting Company include:

• Check the legality of land use rights before contributing capital;
• Consulting on conditions for capital contribution using land use rights according to current legal regulations;
• Consulting on methods of valuing land use rights according to the market, ensuring compliance with actual value;
• Guidance on procedures for transferring land use rights to businesses;
• Support for registration of changes in land use rights after capital contribution;
• Consulting on tax obligations related to capital contribution using land use rights.

Long Phan Consulting Company is committed to providing high quality consulting services, complying with legal regulations, and protecting the legitimate rights and interests of customers.

Some frequently asked questions about valuing assets contributed as capital using land use rights

We would like to provide some common questions about valuing assets contributed as capital using land use rights. Please refer!

What types of businesses are eligible to receive capital contributions using land use rights?

According to the provisions of the Land Law 2024, only domestic economic organizations and foreign-invested economic organizations are allowed to receive capital contributions using land use rights.

When is the valuation of land use rights for capital contribution performed?

The valuation of land use rights is carried out at the time of capital contribution to the enterprise, which can be when establishing the enterprise or during its operation.

What if the value of land use rights is assessed incorrectly?

If the value of land use rights is assessed incorrectly, related parties may be held legally responsible and subject to administrative sanctions according to regulations.

Does a capital contribution contract using land use rights need to be notarized?

According to current regulations, capital contribution contracts using land use rights must be notarized or authenticated, except for some special cases prescribed by law.

How long does it take to carry out the procedure for registering a change in land user?

According to the provisions of Decree 101/2024/ND-CP, the time to carry out procedures for registering changes in land users due to receiving capital contributions with land use rights is 10 days from the date the competent land registration office receives complete documents according to regulations.

Above are some common questions about property valuation using land use rights. We hope that the above answers have partly answered your questions.

Conclude

Thus, land users can make investments in the form of capital contribution using land use rights. However, capital contribution must meet legal conditions and procedures. If you need detailed advice on this issue, please contact Long Phan Consulting Company via the hotline 0906735386 to receive advice and support from our team of experts in the process of contributing capital with land use rights.