Hi Lawyer. In the near future, me and some friends plan to contribute capital to establish a joint stock company. Besides capital contribution in cash, some people say that they will contribute 50% cash and 50% labor. So is it possible to contribute capital with labor?
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According to the provisions of the Enterprise Law 2020, capital contribution is the contribution of assets to form the charter capital for the establishment of a company or additional contribution to the charter capital of an established company.
Pursuant to the provisions of Article 34 of the Enterprise Law 2020, the assets contributed as capital are prescribed as follows:
“ Article 34. Assets contributed as capital
- Assets contributed as capital are Vietnam Dong, freely convertible foreign currencies, gold, land use rights, intellectual property rights, technology, technical know-how, other assets that can be valued in Vietnam Dong.
- Only individuals or organizations that are lawful owners or have lawful use rights to such assets to contribute capital as prescribed by law.”
Therefore, individuals and organizations can contribute to the enterprise in the following forms:
- Cash, gold;
- Land use rights and other land-attached assets, intellectual property rights;
- Technology and technical know-how.
Thus, it can be seen that the law does not stipulate the form of capital contribution by labor, but only when that person owns a certain technology or technical know-how can it be used to contribute capital. And that property must be valued by founding members, shareholders or professional valuation organizations and expressed in Vietnamese Dong in accordance with Clause 1, Article 36 of the Enterprise Law 2020.
Therefore, when applied in practice, businesses can still allow members to contribute capital by labor or a specific job. This is not prohibited by law and only requires the consent of the founding members, reflected in the company’s charter on capital contribution, and the members will self-assess that effort in money.
Note: In the case of capital contribution by labor, a record should be made and the acceptance or valuation must comply with the decision process of the type of business to avoid future disputes.
