In a manufacturing joint venture between a Vietnamese partner and a Singapore investor, the Vietnamese side contributed the use rights to three hectares long used as its family workshop, and the charter recorded the contribution at sixty billion dong. Five years later, with industrial land prices surging, the Vietnamese side argued the land had been undervalued, demanded a revaluation and a larger ownership share; the Singapore side objected because the charter and the enterprise registration certificate had long recorded the capital ratios. The dispute erupted exactly when the joint venture sought a bank loan and was asked to clarify the contributed land dossier.
The legal framework: Articles 34, 35 and 36 of the 2020 Enterprise Law meet the 2024 Land Law
The Enterprise Law No. 59/2020/QH14 handles land use right contributions in three core articles. Article 34 confirms that contributed assets may include land use rights and other assets capable of valuation in Vietnamese dong, and that the contributor must be the lawful owner or lawful use right holder of the asset. Article 35 requires transfer of ownership of contributed assets: for assets subject to registration of ownership or land use rights, the contributor must complete the transfer procedure to the company at the competent State authority, and the contribution is complete only when the company becomes the lawful rights holder. Article 36 governs valuation: non-cash contributed assets must be valued by the founding members or shareholders by consensus, or by a professional valuation organisation; if the agreed value exceeds the actual value at the time of contribution, the founding members or shareholders are jointly liable to make up the shortfall and for resulting damage.
The Land Law No. 31/2024/QH15, effective from 1 August 2024, adds conditions specific to the land itself: land use rights may be contributed as capital only where the certificate exists, the land is free of dispute and seizure, the use term is still running, and the land category and user fall within the cases where contribution is permitted. For a foreign-invested joint venture, it must also be tested whether the land sits within a channel open to economic organisations with foreign investment. The two layers run in parallel: a valuation completed under the Enterprise Law means little if the land use rights cannot actually be transferred under the Land Law, because the capital contribution then remains incomplete in substance even though the charter already records it.
Applying the rules: three classic flashpoints of land-for-capital deals
The first flashpoint is valuation. Where the parties valued the contributed land by consensus under Article 36 without an independent valuation firm, that number tends to be reopened by one side whenever market prices move sharply or a new investor offers to buy in. The law does not permit a unilateral revaluation of a recorded capital portion merely because land prices have risen; registered ownership ratios change only through agreed charter capital increases or decreases, or transfers of capital portions in due form. Conversely, where the recorded value is shown to have exceeded actual value at contribution time, Article 36 imposes joint liability on the then founding members or shareholders to top up the difference. That is why the original valuation file, however old, remains the central evidence in every later dispute.
The second flashpoint is unfinished paperwork. In many cases the contributed land has no certificate yet, is mid-regularisation, or still stands in the personal name of the Vietnamese business owner rather than the contributing enterprise. Under Article 35 of the Enterprise Law, until the transfer procedure is completed the joint venture does not truly hold rights over the land; banks will refuse it as mortgage collateral and auditors routinely qualify their opinions. The third flashpoint is “taking the land back”: the land contributor in principle cannot unilaterally reclaim the plot while the joint venture operates, because the use rights have become company assets; withdrawal is possible only through capital reduction, division, dissolution or a buy-out of the capital portion, with full tax, land and ownership consequences for the remaining parties.
Checklist for handling a land contribution dispute
When a dispute erupts around the contributed land portion, the parties should clarify the following matters in sequence:
- Rebuild the original contribution file: the valuation minutes under Article 36 of the Enterprise Law, any valuation certificate, successive charters and the enterprise registration certificate recording the capital ratios.
- Check the transfer status under Article 35: whose name the certificate currently bears, whether the change has been registered to the joint venture, and which procedures remain outstanding at the land registration office.
- Engage an independent valuation organisation to value the land as at the contribution date, not at today prices, where the dispute turns on alleged over- or under-valuation at inception.
- Freeze transactions altering the land status during the dispute: no mortgage, transfer or sub-lease of the contested plot without written agreement of all parties.
- Identify the dispute mechanism in the charter and the joint venture agreement: member negotiation, mediation, arbitration or court, and review any buy-out clause signed earlier.
Frequently Asked Questions
How is land contributed as capital to a joint venture valued?
Under Article 36 of the Enterprise Law No. 59/2020/QH14, non-cash contributed assets such as land use rights must be valued by the founding members or shareholders on a consensus basis, or by a professional valuation organisation. Where a valuation firm is engaged, its value stands when approved by the statutory majority of the remaining founding members or shareholders. The agreed value is recorded in the valuation minutes and the charter, and determines the contributing party capital ratio in the joint venture company.
How are disputes over the value of contributed land handled?
Start from the original valuation file and the Article 36 mechanism of the 2020 Enterprise Law: if the recorded value exceeded actual value at the time of contribution, the founding members or shareholders must jointly contribute the shortfall and compensate resulting damage. A mere rise or fall in today market price is not a ground to revalue a registered capital portion. The parties negotiate a capital adjustment or a buy-out of the portion; failing agreement, the dispute goes to arbitration or court under the charter and the joint venture agreement.
What if the contributed land has no certificate yet?
This is a high-risk posture. The 2024 Land Law requires contributed land use rights to satisfy conditions including the existence of a certificate, and Article 35 of the Enterprise Law requires the transfer procedure to be completed for the contribution to be complete. Uncertified land may render the capital portion treated as not fully contributed, the company cannot mortgage it for loans, and the contributor may be required to top up with other assets or cash. In practice the parties set a documented timetable to perfect the paperwork with sanctions in the joint venture agreement, or substitute the contribution with a qualifying asset.
Can the land contributor withdraw the land?
Not unilaterally. Once the transfer under Article 35 of the Enterprise Law is completed, the land use rights are assets of the joint venture company, no longer the contributor separate property. Taking the land back can only be effected through legal mechanisms such as charter capital reduction, redemption of the capital portion, division or dissolution of the company, with the parties consent under the charter and corresponding valuation, tax and land procedures. Seizing the land back for personal use may be treated as an infringement of company assets.
This article has been quality-reviewed by the FLAW AI Legal Council