Some notes on receiving capital contributions in the form of land use rights for project implementation

Receiving capital contributions through land use rights for project implementation is a common and effective method of mobilizing land resources. However, this process requires strict compliance with relevant legal regulations to ensure legality, transparency, and avoid legal risks. This article will analyze key considerations for receiving capital contributions in the form of land use rights to assist economic organizations and investors in project implementation.

1. Conditions for Capital Contribution in the Form of Land Use Rights

According to Article 45 of the 2024 Land Law, the conditions for contributing capital with land use rights (excluding agricultural land) are as follows: 

• The land must have one of the following valid certificates: Land Use Right Certificate; Certificate of Ownership of Residential Housing and Land Use Rights; Certificate of Land Use Rights, Ownership of Housing, and Other Assets Attached to the Land; Certificate of Land Use Rights and Ownership of Attached Assets (excluding specific cases like inheritance, agricultural land consolidation, gifts to the state or community, or as specified under Clause 7, Article 124, and Point a, Clause 4, Article 127 of the 2024 Land Law). 

• The land must not be under dispute, or any disputes must have been resolved with legally binding decisions. 

• The land use rights must not be subject to seizure or other legal measures under civil execution laws. 

• The duration of land use must still be valid. 

• The land use rights must not be under emergency legal measures. 

Notes: 

• Contracts for capital contributions with land use rights must be notarized or certified. 

• Registration with the Land Registration Office is required, and the contribution becomes effective from the date it is recorded in the cadastral register. 

2. Procedures for Economic Organizations to Receive Capital Contributions with Land Use Rights for Projects

To receive capital contributions with land use rights, the following steps must be followed: 

Step 1: Obtain Approval from the Provincial People’s Committee 

Economic organizations must submit an application to the Provincial People’s Committee, including an extract of the land location and a written request for approval of capital contribution with land use rights for the project. 

Step 2: Appraisal of the Application 

The Department of Natural Resources and Environment will appraise the application and submit it to the Provincial People’s Committee for approval. 

Step 3: Administrative Procedures for Land Use Rights Establishment 

After receiving approval: 

• Adjust Capital in Enterprise Registration Certificate and Investment Registration Certificate.  

• Register Land Use Rights in the cadastral register and apply for a Land Use Right Certificate for the contributed land. 

3. Termination of Capital Contributions with Land Use Rights and Legal Considerations

Under previous regulations (The Land Law 2013 and Decree 43/2014/ND-CP), the termination of capital contributions with land use rights, including the cancellation of the contribution registration, was addressed under Clause 3, Article 80 of Decree 43/2014/ND-CP. However, this led to inconsistencies in practical implementation: 

Issue 1: Inconsistencies in Legal Guidance 

According to Clause 2, Article 50 of the Law on Enterprise 2020, it prohibits withdrawing contributed capital except in specific cases such as transfer, inheritance, donation, or repayment of debts. On the other hand, Clause 3, Article 80 of Decree 43/2014/ND-CP, allowed for cancellation of capital contribution registration. 

This conflict caused confusion, as parties could negotiate the end of the contribution period and request cancellation of the registration. However, this action often conflicted with enterprise law, potentially leading to reductions in a company’s charter capital. 

Issue 2: Overlapping Regulations in Land Management 

The cancellation of capital contribution registration also had consequences, such as Land Registration Offices would update the land use status on certificates and return the original certificates to contributors and in cases where a certificate was issued to the recipient of the contribution, it would be revoked, and a new certificate would be issued to the contributor. These overlaps resulted in difficulties in practical application. Recognizing this, lawmakers have removed the provision allowing for cancellation of contribution registration under current land laws.  

Therefore, the Investors must now ensure that contracts for capital contributions comply fully with the law in terms of both form and content to avoid future legal risks. 

Receiving capital contributions in the form of land use rights offers significant benefits but also poses legal challenges if parties fail to comply with regulations. To ensure legal compliance and project efficiency, economic organizations and investors should thoroughly understand the required conditions, procedures, and termination scenarios. By adhering to these principles, projects can achieve both economic goals and sustainable development in accordance with the current legal framework. 

See more:

1/ Contributing capital with machinery and equipment: Legal regulations and practice

2/ Solutions for cases where foreign investors contribute capital or pay for share transfers incorrectly

3/ Consequences of not contributing full charter capital

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