PRECEDENT NO. 78/2025/AL: DETERMINING THE PURPOSE OF CAPITAL CONTRIBUTION

The failure to accurately determine the nature of the act of transferring assets within a Company often leads to prolonged and complex disputes; many transactions are “labeled” by the parties as charter capital contributions, but their actual nature is business cooperation or investment loans. The issuance of Precedent No. 78/2025/AL has established an important legal standard to clearly distinguish between a capital contribution relationship aimed at increasing the charter capital in a Company and a capital contribution into a company for other purposes

Core contents of Precedent No. 78/2025/AL on determining the intent of capital contribution

Precedent No. 78/2025/AL establishes an important legal principle in determining the nature of the act of transferring assets to a legal entity, especially in distinguishing between the act of capital contribution to establish membership/shareholder status and other forms of business cooperation or financial investment.

Accordingly, when resolving disputes, the Court must not only rely on the name or the expressed form in the written agreement (e.g., recorded as “capital contribution”), but must comprehensively examine the true intent of the parties at the time of establishing the transaction. In cases where the actual purpose of the asset transfer is not to become a member/shareholder of the Company to enjoy dividends, participate in management, and have a long-term commitment to the Company, there are insufficient grounds to recognize membership/shareholder status, even if the parties use the term “capital contribution”.

Normally, the sums of money referred to as “capital contributions” in these cases are only associated with executing one or several specific business activities, or to enjoy a determined property benefit upon the completion of such business activities. The legal nature of these transactions may be business cooperation, case-by-case investments, or property loan relationships with a profit-sharing agreement.

Precedent 78/2025/AL affirms: only acts of capital contribution with the intent to establish membership/shareholder status in a Company shall be recognized as capital contributions into the Company in accordance with the law on enterprises. This recognition must simultaneously satisfy the following conditions:

1. The act of capital contribution and the information of the capital contributor must be recorded in the legal documents of the Company, including but not limited to:

• Agreement on the joint establishment of the Company;
• List of founding members/shareholders;
• The Company’s Charter;
• Certificate of capital contribution or share certificate.

2. The Company must fully perform the procedures for registration and amendment of the Enterprise Registration Certificate in accordance with the law.

3. The capital-contributing individual or organization must actually exercise the rights and perform the obligations of a member/shareholder, including the right to manage, the voting right, the right to enjoy profits from the common business operations of the Company, and the corresponding obligations as prescribed by the Law on Enterprises.

In case of failure to satisfy the aforementioned conditions, the relationship between the parties shall not be determined as a capital contribution relationship giving rise to membership/shareholder status of the Company, but shall be considered and resolved according to the actual nature of the transaction, such as a business cooperation relationship or other financial investment relationships

Recommendations upon applying Precedent No. 78/2025/AL

The consequences of ambiguity in the nature of capital contribution into a company directly threaten the rights and interests of the capital-contributing individual, as well as the stable operation of the legal entity. Therefore, clearly separating charter capital contributions from business cooperation capital rights from the beginning will be the strongest legal shield in the spirit of Precedent No. 78/2025/AL. When the intent of the parties is materialized through actual management actions and standardized dossiers, the rights and interests of the subjects will be truly and comprehensively protected by the law.