By making a capital contribution to a company, an individual or organization makes an agreed financial commitment in the form of money, assets, intellectual property or something of value, to establish or expand a business entity. For investors in Vietnamese entities, understanding the framework surrounding capital contribution is critical to protecting their investment and securing their rights within the company.
This piece provides a practical discussion of capital contribution, with particular reference to Precedent No. 78/2025/AL, adopted by the Judicial Council of the Supreme People’s Court, to protect the rights of investors.
Forms and Methods of Capital Contribution in Vietnam
The legal framework governing capital contribution has evolved considerably – most recently under the Law on Enterprises 2020. This law and the accompanying regulations define not only the forms and methods by which capital may be contributed, but also the rights and obligations that arise from an investor’s contribution.
Investors may contribute capital in the form of Vietnamese dong, freely convertible foreign currency, gold, land use rights, intellectual property rights, technologies, technical know-how, or other assets capable of being valued in Vietnamese dong. Where capital is contributed in a form other than Vietnamese dong, freely convertible foreign currency, or gold, the contributed assets must be valued by the members, shareholders, or by an independent price evaluation organization, and denominated in Vietnamese dong. If the company has a Direct Investment Capital Account (DICA), which is used to receive contributed capital, the investors may be required to pay into the DICA.
With respect to monetary contributions, the regulations distinguish among types of investor: institutional investors must make their capital contribution via bank transfer. Individual investors may contribute in cash.
Rights and Obligations of Capital Contributors
Investors must contribute capital of newly established companies within 90 days from the date the enterprise registration certificate (“ERC”) is issued. An investor is required to contribute its capital commitment in full and on time. An investor has liability for the debts and obligations of the company only to the extent of its contributed capital. For multi-member limited liability companies, investors may change the type of assets contributed, provided that the change is approved by members representing more than 50% of the charter capital and provided such change occurs within the same 90-day period.
Failure to contribute capital within 90 days carries legal consequences. An investor who fails to contribute capital within such period will fail to qualify as a member; an investor who has only partially contributed holds only rights that correspond to the amount actually contributed.
An investor who has fully contributed capital has full rights and obligations and may vote, participate in meetings, receive profit distributions, and transfer their capital to other parties.
Determining Ownership Status After Capital Contribution
For a single-member limited liability company, ownership is determined from the time full payment of capital has been made. With respect to multi-member limited liability companies and joint stock companies, there are two conditions for ownership recognition: (1) full payment of capital, and (2) the contributor’s required information is recorded in the corporate register.
Upon completing their capital contribution, contributors should request the company to provide a copy of the register of members/shareholders reflecting their ownership.
How to Protect Your Rights as a Capital Contributor
In practice, ownership recognition is not always clear. In a recent case[1], the court examined circumstances where the parties had entered into an agreement whereby one party would contribute capital to the company and share in the profits arising from such contribution. However, the agreement did not provide for any increase in the company’s charter capital as a result of the contribution, and the Enterprise Registration Certificate did not reflect any such increase. The court held that, in the absence of an agreement to increase the charter capital, the contribution was made for business purposes only and did not constitute a capital contribution for the purpose of becoming a member of the company. Accordingly, the court did not recognize the contributor’s membership status.
In view of this precedent, the following steps should be taken by investors when contributing capital with the intention of becoming a member or shareholder:
- First, the parties should enter into a clear written agreement on capital contribution, expressly stating the amount of charter capital to be contributed and confirming that such contribution will be reflected in the Enterprise Registration Certificate, thereby recognizing the investor as a member or shareholder of the company.
- Second, the investor should actively follow up on the enterprise registration process to ensure that their capital contribution is duly recorded in the Enterprise Registration Certificate or on the National Business Registration System (NBRS).
- Third, upon completion of the contribution, the investor should request the company to provide an original capital contribution certificate or share certificate, as well as a dated copy of the register of members or shareholders and the company’s amended charter reflecting the new ownership information including new increased registered capital.
Conclusion
Capital contribution is more than a financial transaction; it is a legal commitment and carries significant rights and obligations. As Precedent No. 78/2025/AL illustrates, intent and documentation are as important as the contribution itself. It is not sufficient for a contributor’s name to appear in the register of members or shareholders alone; the company’s charter capital must also be updated in both the Enterprise Registration Certificate and the company’s charter. A well-structured capital contribution, backed by a clear written agreement, timely registration, and proper documentation, is the most effective safeguard.
[1] Precedent No. 78/2025/AL dated 24 December 2025, issued by the Supreme People’s Court of Vietnam
