Donation of enterprises’ properties and notes under Vietnamese law

Donating property is a civil relationship based on a property donation contract, whereby the giver delivers the property and transfers its ownership rights to the recipient without a compensation, and at the same time, the recipient agrees to receive the property and the ownership rights. Donating to enterprise’s properties is subject to more complicated regulations than donating to an individual’s properties. 

In this article, BLawyers Vietnam would like to point out the notable points according to regulations of Vietnamese law regarding the donations to an enterprise’s properties.

1. What is the difference between donating movable properties and immovable properties?

By law, real estate includes properties such as land, houses, construction works, other assets attached to land or houses, etc. The property will be considered movable property if it is not an immovable property.

The donation of the movable property will take effect when the recipient accepts the property, however, where the law requires the ownership rights with respect to such moveable property to be registered, the contract shall take effect from the time of registration.

On the other hand, donation of the immovable property must be made in writing, notarized, authenticated, or registered if the law on the immovable property requires registration of ownership. If the immovable property is not subject to registration of ownership, the donation contract shall take effect from the time of property transfer.

2. Restrictions for enterprises in donating properties

Currently, Vietnamese law provides scattered provisions in cases where enterprises are restricted from donating properties. Specifically:

  1. According to the bankruptcy law, during the 06 months before the date the Court issues a decision to open the bankruptcy procedure, the insolvent enterprise may not donate the property to other individuals or organizations. If there is non-compliance with this provision, the donation transaction will be considered invalid. In addition, after the decision to open bankruptcy is issued, the enterprise is prohibited from donating properties.
  2. According to the provisions of the law on enterprises, after the dissolution decision is issued, the enterprise is prohibited from carrying out the donation of properties to other individuals/ organizations.
  3. If case an individual/organization donates contributed capital of a limited liability company with two or more members and the giver is not approved by the Members’ Council to be a member of the company, this contributed capital shall be repurchased or transferred by the company unless the recipient is an heir according to law.

3. What is a conditional property donation?

Conditional donation of property in accordance with Vietnamese law is a donation relationship, in which the giver requires the recipient to perform one or more obligations before or after the donation. Note that the donation conditions must not violate the prohibitions in the law, and must not be contrary to social ethics.

According to Vietnamese law, the conditional donation of property must comply with certain regulations, including:

  1. In the case of having to perform an obligation before donating, if the recipient has fulfilled the obligation but the giver does not deliver the property, the giver must pay the obligation that the recipient has performed.
  2. In the case of having to perform obligations after giving the donation but the recipient does not perform, the giver has the right to reclaim the property and claim compensation for damage.

In short, donating properties of an enterprise could have potential legal risks so that enterprises should consider this carefully.

The above is not official advice from BLawyers Vietnam. If you have any questions or suggestions about the above, please contact us at consult@blawyersvn.com. We would love to hear from you.

Date: 22 March 2023

Writer: Tuyen Pham

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