Capital contributions and shares are assets — and like all assets, they enter the estate when an individual investor dies. But a capital contribution is not like a bank account: it carries membership status in an operating company, alongside remaining members and the enterprise’s registers. This article follows the capital’s legal journey from the investor’s death until the heir is formally registered as a member, together with the accompanying inheritance tax — including an important kinship-based exemption many families miss.
1. Does the heir automatically become a member?
Under the Civil Code 91/2015, capital contributions and shares form part of the deceased’s estate and pass to heirs by will or by law. The special feature lies in the Law on Enterprises 59/2020/QH14. For an LLC, Article 54 provides: where a member who is an individual dies, that member’s heir by will or by law becomes a member of the company — membership status travels with the inherited capital automatically, and the remaining members have no vote on “accepting the heir or not”, unless the company charter itself imposes a condition that the heir be accepted by the Members’ Council. If the charter has that condition and the heir is not accepted, the capital is not frozen forever: the heir may transfer the capital contribution, or invoke the corresponding repurchase mechanism as prescribed — the estate’s economic value always has an exit. For a joint stock company, shares are assets passing freely by inheritance without company approval; notably, inheritance is also one of only two exceptions breaking the transfer prohibition on voting preference shares in Article 119(3) — the heir receives even the share class that cannot be traded on the market. Where the deceased leaves several heirs, the capital first belongs to the common estate until the co-heirs agree on division (a notarised estate division agreement) or a court divides it — during that time, membership rights over the capital are exercised through the co-heirs’ representative under civil mechanisms.
2. The registration procedure: from estate documents to the register
The procedure chain has four links. One — establishing inheritance rights: a notarised estate acceptance document or estate division agreement in Vietnam; where the investor is a foreign individual who died abroad, the estate file comprises the death certificate, the will or documents confirming the line of heirs under the relevant country’s law, and the heirs’ identity documents — all foreign-issued documents must undergo consular legalisation (or corresponding apostille certification) and notarised translation into Vietnamese before use in Vietnam. Two — declaring inheritance tax (see section 3) and obtaining the tax vouchers, as these are usually documents the company and registration authority require in the file. Three — the company performs the member/shareholder change: based on the estate file, the company updates the member register/shareholder register, registers the member change with the business registration authority within the statutory period after the change, and for an FDI enterprise amends the investor information on the Investment Registration Certificate — the foreign heir inherits the foreign-investor status of that capital as well. Four — knock-on relationships: if the deceased was also the company’s legal representative/director, the enterprise must elect/appoint a replacement under the charter in parallel with the inheritance procedure (two independent matters: inheritance transfers property rights, not management offices); the deceased investor’s ICA is handled under banking rules as the heir closes/opens accounts.
3. Inheritance tax on capital: 10% above a threshold, and the exemptions
Income from receiving an inheritance is a separate PIT-taxable income source in the Law on Personal Income Tax 109/2025/QH15. For an inheritance consisting of capital contributions/shares (not real estate), tax is computed at 10% on the portion of estate value exceeding VND 20 million received by each heir — in other words, the first VND 20 million of each inheritance share is untaxed. The capital’s value for tax purposes is determined by its value at the time the declaration duty arises (for capital in an enterprise, based on book value/corresponding asset value per guiding rules and declaration practice). The most important rule families need to know is the inheritance tax exemption between close relatives: inheritance income between spouses; between birth/adoptive parents and children; between parents-in-law and daughters/sons-in-law; between paternal/maternal grandparents and grandchildren; and between siblings — falls within the PIT exemption. Most family capital inheritances fall exactly within these relationships, so the practical duty is usually only to declare to establish the exempt status, not to pay. An heir outside the exempt group (for example a testamentary heir with no kinship, or more distant relationships) pays the general 10% on the portion above VND 20 million. Once registered, the heir’s subsequent transactions with the capital (profit distributions, transfers) are taxed in the heir’s own category — and the value declared on receiving the inheritance becomes an important link in their cost basis file.
4. When co-heirs dispute: how the company should handle it
The company is not the arbiter of an inheritance dispute — and correct corporate handling during the dispute is to freeze changes and preserve the status quo: keep the member information in the register unchanged until there is a valid estate division document of the co-heirs or an effective court judgment/decision identifying who is entitled to the capital; send meeting notices and documents to the estate bloc’s valid representative per the existing file; record dividends/profits arising on the disputed capital and temporarily withhold payment until the lawful beneficiary is identified, avoiding mistaken payment that creates liability for the company. The enterprise must never register the capital to any individual heir based on unilateral documents not yet passed through valid estate acceptance/division — registering the wrong heir creates far greater legal risk than registering late. On the family’s side, the path to closing a dispute is a notarised estate division agreement (fastest while the parties can still negotiate), or asking the court to divide the estate by law; meanwhile, appointing a common representative of the co-heirs to exercise membership rights (attending meetings, receiving information) keeps the company from being paralysed by a “suspended” stake. Inheriting capital is therefore the intersection of three systems — civil, enterprise and tax — and the correct processing order is: establish inheritance rights first, tax and state registration after, and any dispute is separated out for its own handling without freezing the company’s operations.
A foreign individual investor has died — what must the heir do to receive the capital contribution?
Four steps: (1) establish inheritance rights with a notarised estate acceptance document or estate division agreement (under the Civil Code 91/2015); the heir to an LLC capital contribution automatically becomes a member under Article 54 of the Law on Enterprises 59/2020/QH14, unless the charter imposes a Members’ Council acceptance condition; (2) declare inheritance tax; (3) the company updates the member register, registers the member change and amends the investor information on the Investment Registration Certificate for an FDI enterprise; (4) handle management positions the deceased held (inheritance transfers property rights, not offices).
Must foreign estate documents be consularly legalised?
Yes. The death certificate, the will or heir-line confirmation, and the heir’s identity documents issued by foreign authorities must be consularly legalised (or apostille-certified where applicable) and notarised-translated into Vietnamese before being used in the estate acceptance file and the member change registration in Vietnam. The deceased investor’s foreign document set is usually the most time-consuming part of the entire procedure.
Must an heir pay income tax when receiving inherited capital?
Under the Law on Personal Income Tax 109/2025/QH15, income from inheriting capital bears 10% tax on the portion of value exceeding VND 20 million received by each heir. However, inheritance between close relatives is exempt: spouses; birth/adoptive parents — children; parents-in-law — daughters/sons-in-law; paternal/maternal grandparents — grandchildren; siblings with each other. Most family inheritances fall in this exempt scope — the remaining duty is mainly to declare to establish the exempt status.
If several heirs dispute with each other, how does the company handle it?
The company preserves the status quo: it keeps the member register unchanged until there is a valid estate division agreement of the co-heirs or an effective court judgment/decision; it never registers the capital to any individual heir on unilateral documents; profits arising on the disputed capital are recorded and payment temporarily withheld until the lawful beneficiary is identified. The co-heirs should appoint a common representative to exercise membership rights during the dispute so the company is not paralysed.
This article has been quality-reviewed by the FLAW AI Legal Council
