Contributing capital through software is no longer unfamiliar in Vietnam. However, not every investor is well-versed in the regulations regarding the eligible contributors, capital contribution procedures, required documents as well as tasks to be performed when contributing capital through software to a company.
According to legal provisions, software is considered a computer program, a type of work protected by copyright, and can be used as a capital contribution to an enterprise.
1. Valuation of capital contribution assets
Contributed capital assets are valued using one of the following 02 methods:
1.1 Mutual agreement valuation
Members and founding shareholders agree on the valuation based on consensus. If the software is valued higher than its actual value at the time of capital contribution, the members and founding shareholders are jointly responsible for the difference between the agreed value and the actual value of the software at the end of the valuation.
Additionally, tax authorities have the right to request a reassessment of the fixed asset value through an appraisal council or an organization with appraisal functions if the software’s value does not align with the market reality.
1.2 Valuation by professional appraisal organizations
In cases where professional appraisal organizations perform the valuation, the value of the software must be agreed upon by the contributor(s) and the enterprise.
If the software is valued higher than its actual value at the time of capital contribution, the contributor(s), the appraisal organization, and the legal representative of the enterprise are jointly responsible for the difference between the agreed value and the actual value of the software at the end of the valuation.
2. Capital contribution procedures
Step 1: Software valuation and document preparation
Investors and the company (if any) need to establish an asset valuation council to agree on the software’s value, or use an organization with appraisal functions to assess the software. The parties agree on the value, complete the asset valuation minutes, and prepare the necessary documents.
Depending on the specific case, investors need to prepare the following documents when contributing capital through software:
- Minutes or contract of capital contribution to the company, or joint venture, association contract.
- Asset valuation minutes.
- Documents identifying the software owner:
- Copyright registration certificate (for registered copyrights); or
- Documentation on the origin of the software, documents identifying the software owner.
Step 2: Register establishment or adjust the license at the Investment registration authority
When contributing capital through software, investors declare the contributed asset in the “Other Assets” category, specifying the asset’s name as software and its corresponding value according to the prepared asset valuation minutes. Investors also submit additional required documents related to the capital contribution through software.
Due to the different nature of each type of asset and its formation, the Investment registration authority will review the application and depending on the specific case, request the investor(s) and the company to provide further explanations and evidence of ownership of the software asset (such as content description, storage form, protection method, and ownership of the software).
Step 3: Transfer Ownership of the Software to the Company
Investors contributing capital through software must transfer ownership of the software to the company.
For copyrighted software, the contributor must complete the copyright ownership transfer procedures at the competent state agency.
For software without registered copyright, the capital contribution must be carried out through the transfer of contribution assets, confirmed by a written agreement.
The handover minutes must contain details such as information about:
- the parties;
- the type and quantity of the contributed software;
- the total value of the contributed software in the company’s charter capital;
- the handover date, and
- the signatures of the parties involved.
Contributors must contribute capital in full and on time with the committed type of asset. At the time of full contribution or payment for the registered shares, the enterprise must issue a certificate of capital contribution, shares, or register the contributor’s name in the shareholder book.
3. Considerations when contributing capital through software
- Only individuals or organizations owning copyright to the software have the right to use those assets as capital contributions.
- The copyright owner for software can be the direct author, co-authors, organizations assigning tasks to authors, or those entering contracts with authors or inheriting rights.
- Determining ownership of copyright does not necessarily require a Copyright Registration Certificate. In cases where investors have not registered the copyright, they need to prepare relevant documents to demonstrate the origin and ownership of the software.
- After completing the software capital contribution process, the company only owns intellectual property rights (such as copying, distributing, renting, publishing, or allowing others to publish the software) but does not have personal rights such as naming or appearing as the author of the software.
- Determining the cost of fixed assets and depreciating fixed assets for capital contributions through software must follow the Accounting – Tax regulations.
- When contributing capital to a business, deliberately mispricing the software compared to its actual value may result in fines ranging from VND 30 million to VND 50 million.
Above are some notes about contributing capital by software to an economic organization in Vietnam. Investors and business owners need to pay attention and grasp the information to apply it appropriately to their investment and transaction structures to avoid legal risks that may occur in the future.
