CAPITAL CONTRIBUTION USING ASSETS, TECHNOLOGY, AND INTELLECTUAL PROPERTY: IS IT RECOGNIZED BY LAW?

In the era of the digital economy and the boom of innovation, capital contributions to enterprises are no longer limited to cash or tangible real estate. An increasing number of founders and investors are choosing to leverage technology, software, trademarks, copyrights, or trade secrets as strategic capital. However, is this form of capital contribution using intangible assets fully recognized and protected by the Vietnamese legal system? This is a key legal issue that every enterprise must resolve before signing a cooperation agreement.

Current Legal Framework Paving the Way for Intangible Assets

The encouraging news for investors is that Vietnamese law fully recognizes and facilitates capital contributions using intangible assets, technology, and intellectual property. Pursuant to Clause 1, Article 34 of the Law on Enterprises 2020, contributed assets may include Vietnamese Dong, freely convertible foreign currencies, gold, land use rights, intellectual property rights, technology, technical know-how, and other assets that can be valued in Vietnamese Dong. Regarding intellectual property rights, this provision encompasses copyrights, related rights, industrial property rights (patents, industrial designs, trademarks, trade secrets, etc.), and plant variety rights as prescribed by the Law on Intellectual Property 2005 (amended and supplemented). A core requirement stipulated under Clause 2, Article 34 of the Law on Enterprises 2020 is that only individuals or organizations who are the lawful owners or hold lawful usage rights to these assets have the right to use them for capital contribution.

Mandatory Valuation Requirements and Asset Transfer Procedures

For a capital contribution to take actual legal effect and avoid future disputes, the process of contributing intangible assets must undergo transparent valuation and strict ownership transfer procedures. Pursuant to Article 36 of the Law on Enterprises 2020, assets contributed that are not Vietnamese Dong or freely convertible foreign currencies must be valued by the founding members or shareholders based on consensus, or evaluated by a professional valuation organization. The weight of this regulation lies in the fact that if an asset is valued higher than its actual value at the time of contribution, the founding members or shareholders shall jointly contribute an additional amount equal to the difference and remain liable for any damages caused by intentionally overvaluing the asset.

Concurrently, pursuant to Article 35 of the Law on Enterprises 2020, the contributor must complete the procedures to transfer ownership or usage rights to the company. For registered assets such as trademarks or patents, the contributor must carry out assignment procedures at the National Office of Intellectual Property. For non-registered technology or technical know-how, the contribution must be executed through hand-over minutes and technology transfer contracts adhering to the provisions of the Law on Technology Transfer 2017 and the Civil Code 2015.

Latent Legal Risks Enterprises Need to Identify

Although the legal corridor has widened, contributing capital through intangible assets still contains several legal pitfalls if parties lack due care. The most common risk stems from the legality of the asset, particularly when the technology or trademark being contributed is subject to dispute, has expired protection, or inadvertently infringes upon the intellectual property rights of a third party under Article 198 of the Law on Intellectual Property.

Additionally, the risk of inflated valuation is particularly sensitive. Due to the inherently complex nature of quantifying intellectual property assets, artificially inflating values to secure higher equity ratios can lead to severe legal consequences, compelling shareholders to bear joint financial liability under Clauses 2 and 3, Article 36 of the Law on Enterprises 2020. Finally, delays or failures in transfer procedures—such as failing to successfully register the assignment of IP rights or technology failing to perform as promised—will cause the capital contribution to be deemed incomplete, risking forced reductions in charter capital or internal shareholder disputes.

In-Depth Recommendations for Enterprises to Optimize and Protect Capital

To transform technology and intellectual property rights into safe capital sources, the primary solution for enterprises is to conduct legal due diligence prior to the transaction. Thoroughly reviewing protection certificates, the scope of usage rights, the confidentiality of trade secrets, and the dispute history of the asset helps eliminate potential risks arising from the contributing party.

Furthermore, enterprises should proactively engage an independent professional valuation organization under the Law on Prices rather than relying on subjective mutual agreements, thereby establishing a solid, objective legal basis to protect shareholders from joint financial liabilities. Most importantly, the parties must draft a detailed Capital Contribution Agreement, clearly setting out technology performance warranties, mechanisms for revaluation should asset values decline, confidentiality obligations, and a comprehensive roadmap for completing ownership transfers in full compliance with the law.