Discussion on the form of capital contribution by management experience in enterprises

In the context of the knowledge economy and modern governance increasingly recognizing “intellectual capital” as a core competitive resource, the concept of “capital contribution by management experience” has begun to attract interest from enterprises and experts as a form of non-physical asset valuation within the ownership structure. Many enterprises – especially multi-industry corporations, technology startups, or companies with foreign investment – have raised the question: Can the experience, knowledge and operational capacity of founders and senior managers be considered a legitimate capital contribution, equivalent to cash, tangible assets or other property rights?
However, current Vietnamese corporate law still maintains a cautious approach when defining the value of capital contribution, mainly revolving around types of assets that can be “quantified, valued, and transferred ownership”. This leads to several legal gaps in recognizing, recording, and protecting the interests of contributors by “management capacity” a non-physical asset with real value but difficult to prove. The following article will share some perspectives on this issue.

1. Contributed capital under Vietnamese corporate law

According to current Vietnamese corporate law, “Contributed assets include VND, convertible foreign currencies, gold, land use right (LUR), intellectual property rights, technologies, technical secrets, other assets that can be converted into VND”. And it will be necessary to demonstrate that the individual or organization intending to use the assets to contribute capital to the enterprise is the lawful owner or user as stipulated by the corresponding law for each type of asset.
Contributed assets serve as the basis for determining the value of the capital contribution at the time of the contribution and they are intrinsically linked to the scope of liability of the contributor. Therefore, for contributed assets that are not cash, or for contributions involving the transfer of lawful ownership or use rights over an asset, the parties must carry out a valuation to determine the asset’s value corresponding to the capital portion that the individual or organization commits to contribute or acquire by transfer.
Accordingly, for assets with registered ownership or land use rights, the contributor must complete procedures for transferring the ownership of that asset or the land use right to the company in accordance with the law. The transfer of ownership or land use rights for contributed assets is exempt from registration fees. For assets without registered ownership, the capital contribution must be carried out through the handover and receipt of the contributed assets, confirmed by a minute, unless executed via an account. The capital contribution is only considered fully paid when the lawful ownership of the contributed assets has been transferred to the company.

2. Are operational experience and intellectual capital contributed assets?

In reality, many enterprises at their initial stage and at certain points in time recognize the need for highly experienced operational managers to help them achieve set preliminary objectives, or simply to establish order, streamline resources, and elevate the enterprise. This need is particularly evident in enterprises requiring corporate restructuring to discard the obsolete and embrace the new to overcome current difficulties. Typically, an enterprise would incur a substantial cost to recruit the specific management positions it needs, or to hire service providers for operations or corporate restructuring, but such costs often being quite high. Hence, some enterprises raise the proposition: “You help me operate the enterprise, and I will convert that into capital contributions or shares”. This also motivates the individual or enterprise providing the management and operational services…
The question posed is that while there is a practical demand, does Vietnamese corporate law recognize this form of asset presence for capital contribution? As previously mentioned, the Law on Enterprise currently defines contributed assets to include: “Vietnam dong, freely convertible foreign currency, gold, land use rights, intellectual property rights, technology, technical know-how and other assets that can be valued in Vietnam dong”. The Civil Code recognizes assets to be understood as: “Property comprises objects, money, valuable papers and property rights. Property includes immovable property and movable property. Immovable property and movable property may be existing property or off-plan property.”.
Examining the subjects of “experience and intellectual capital” under the above regulations, we see no clear legal basis to record this as a property right, no basis to determine the enterprise’s lawful right to use such assets, or, in other words, it cannot be transferred because experience and intellectual capital are intrinsically linked to the individual. Currently, many countries worldwide also do not recognize the conversion of experience and intellectual capital into a specific proportion of capital contribution or shares. Although the parties can agree on a valuation by an asset valuation minute without requiring a professional valuation organization, this internal valuation is conducted on the principle of self-commitment and self-responsibility.
To clarify, contributed assets other than Vietnamese Dong, freely convertible foreign currencies, or gold must be valued by the founding members, shareholders, or a valuation organization and expressed in Vietnamese Dong. Contributed assets upon the establishment of an enterprise must be valued by the founding members or shareholders based on the principle of consensus or by a valuation organization. If a valuation organization performs the valuation, the value of the contributed assets must be approved by more than 50% of the founding members or shareholders. If the contributed assets are valued higher than their actual value at the time of contribution, the founding members or shareholders are jointly liable to contribute the difference between the valued amount and the actual value of the contributed assets at the end of the valuation, and are also jointly liable for damages caused by intentionally valuing the contributed assets higher than their actual value.
Contributed assets during the operation process are valued by agreement between the owner, the Member’s Council for limited liability and partnership companies, the Board of Directors for joint-stock companies, and the contributor, or by a valuation organization. If a valuation organization performs the valuation, the value of the contributed assets must be approved by the contributor and the owner, the Member’s Council, or the Board of Directors. In case the contributed assets are valued higher than their actual value at the time of contribution, the contributor, owner, the members of Member’s Council for limited liability and partnership companies, or the members of Board of Directors for joint-stock companies are jointly liable to contribute the difference between the valued amount and the actual value of the contributed assets at the end of the valuation, and are also jointly liable for damages caused by intentionally valuing the contributed assets higher than their actual value.

3. Is it appropriate to recognize operational experience and intellectual capital as contributed assets?

Through practical experience working with many enterprises and investors, we recognize that it is time for regulatory authorities to consider allowing parties to convert “operational experience, intellectual capital” into contributed assets. This would also enhance the motivation of the contributing party. We understand that from legal, economic, and practical governance perspectives, this issue demands prudence because while it opens opportunities to properly recognize the value of humans, it also inherently carries the risk of distorting the capital structure if clear quantification standards are lacking. Additionally, there is a potential for parties to arbitrarily value “intellectual capital”, leading to a situation where the company does not possess a measurable amount of capital. When the need arises to assess the true financial capacity of the enterprise to meet certain financial obligations with a third party, the enterprise may fail to meet this requirement.
However, this is a trend that currently interests many enterprises, individual investors, and parties possessing operational and management capabilities. In the absence of a formal mechanism, parties often resort to tacit agreements regarding this matter, simultaneously recording the capital contribution status in the financial records, particularly when the contributor is an individual.
The declaration of capital contribution is mutually agreed upon by the parties and recorded on the principle of self-declaration and self-responsibility. In cases where the contributor is an enterprise, or one of the parties is a foreign-invested enterprise, the capital contribution is more strictly controlled. Therefore, stemming from the practical needs of enterprises, we propose that regulatory authorities should gradually establish a legal framework to govern the issue of capital contribution by experience and intellectual capital, so that all parties have a clear legal basis for execution.

Time of writing: 24/10/2025

The article contains general information which is of reference value, in case you want to receive legal opinions on issues you need clarification on, please get in touch with our Lawyer  at  info@cdlaf.vn

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