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How does the law regulate the transfer of ownership of assets contributed to the company?

02-06-23 MTParners

The nature of capital contribution is the transfer of capital assets from members of limited liability companies, partnerships and shareholders of joint stock companies to the company to form the common assets of the company. Therefore, the transfer of ownership of capital assets is the core issue of capital contribution activities to establish a company. So how does the law regulate the way to transfer ownership of capital assets? What should be noted when performing this work? Let’s find out with us in the article below.

1. METHODS OF TRANSFERRING OWNERSHIP OF CAPITAL ASSETS

The method of transferring ownership of capital assets depends on the type of capital assets. Each type of capital asset is recognized by law as having ownership in different ways, therefore, to transfer ownership of capital assets, investors must comply with the legal provisions on procedures for transferring ownership of that type of capital asset. The method of transfer is stipulated in Clause 1, Article 35 of the Law on Enterprises 2020:

Article 35. Transfer of ownership of capital assets

1. Members of limited liability companies, partnerships and shareholders of joint stock companies must transfer ownership of capital assets to the company according to the following provisions:

a) For assets that have registered ownership or land use rights, the capital contributor must carry out procedures to transfer ownership of that asset or land use right to the company in accordance with the law. The transfer of ownership, transfer of land use rights for capital assets is not subject to registration fee;

b) For assets that do not register ownership, capital contribution must be made by delivering and receiving capital assets confirmed by minutes, except for cases that are carried out through accounts.”

Thus, the method of transferring ownership of capital assets to the company is as follows:

  • For assets that must register ownership or land use rights, the capital contributor has the obligation to carry out the procedures for transferring ownership at the competent authority. The company can only become a legal owner when it is granted a certificate of ownership or a certificate of land use right.
  • For assets that are not required to register ownership, the capital contributor has the obligation to transfer assets by delivering them to the company in accordance with the condition and quantity agreed upon in the capital contribution commitment and recorded by minutes. After the company receives the assets from the investor, those assets belong to the company and are managed by the company.

2. MINUTES OF DELIVERY AND RECEIPT OF CAPITAL ASSETS FOR THE COMPANY

Article 35. Transfer of ownership of capital assets

2. The minutes of delivery and receipt of capital assets must include the following main contents:

a) Name, address of the head office of the company;

b) Full name, contact address, number of legal documents of the individual, number of legal documents of the organization of the capital contributor;

c) Type and number of units of capital assets; total value of capital assets and the proportion of the total value of those assets in the charter capital of the company;

d) Date of delivery and receipt; signature of the capital contributor or the authorized representative of the capital contributor and the legal representative of the company.”

3. NOTES WHEN TRANSFERRING OWNERSHIP OF CAPITAL ASSETS TO THE COMPANY

In addition to the provisions on the method of transfer and the minutes of transfer of ownership of capital assets to the company, the law also stipulates other notes in the transfer of ownership of capital assets to the company as follows:

“Article 35. Transfer of ownership of capital assets

3. Capital contribution is only considered to be fully paid when the legal ownership of the capital assets has been transferred to the company.

4. Assets used for business activities of private enterprise owners are not required to carry out procedures for transferring ownership to the enterprise.

5. Payment for all activities of buying, selling, transferring shares and contributed capital, receiving dividends and transferring profits abroad of foreign investors must be carried out through accounts in accordance with the law on foreign exchange management, except for cases of payment by assets and other forms not in cash.”

MT & Partners hope that the article will bring useful knowledge to our readers.

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