The material which mainly refers to rights. However, in order to avoid an incomplete list, these regulations also open up a wide scope for the parties to the company's establishment contract to freely agree to determine other types of assets contributed as capital.
Explaining the form of capital contribution, the Canadian Civil Code provides: A partnership contract is a contract by which the parties, in a spirit of co-operation, agree to carry on an activity, including the exploitation of an enterprise, to contribute capital to it by a combination of property, knowledge or operations and to share any pecuniary profits resulting therefrom (Article 2186).
Capital contribution in the form of assets is the most important form of capital contribution because without assets, a company cannot operate. In principle, any asset can be contributed as capital to a company, however, it depends on each specific agreement in the company establishment contract. Capital contribution can be in any form: material or intangible rights, provided that these assets must be assets that can be legally transferred in civil transactions, because capital contribution itself is an act of transferring assets, so it must comply with the general rules related to the transfer of assets. Based on the transfer, forms of capital contribution in the form of assets can be divided into several types such as capital contribution in money, capital contribution in material and capital contribution in rights.
One , contributing capital in cash is similar to spending money to buy rights in a company. However, the initial capital contributors are the ones who create those rights. When a commitment to contribute capital in cash is made but the person who makes the commitment does not contribute or does not contribute on time, the person who commits is considered to owe the company the committed amount according to the general rules of capital contribution. This capital contribution or repayment of debt can be made by means of payment.
Second , capital contribution in kind is essentially capital contribution by ownership of objects or items that can be real estate by nature or purpose.
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or movable property by nature. This capital contribution is similar to the sale or exchange of objects for rights in the company: the contributor receives the rights, and the company gains ownership of the object. If ownership is viewed as a physical right to dominate the object, then capital contribution in the form of material can be synonymous with capital contribution in the form of ownership of that object. The fact that the company becomes the owner of the capital contribution requires the company to have legal personality, which means that the company must be able to enjoy rights and assume obligations. This shows that capital contribution in the form of material cannot be made with companies that do not have legal personality. This observation further reinforces the view that a simple joint venture company also has legal personality.
Third , capital contribution by rights is somewhat more complicated than capital contribution by money and capital contribution in kind, and not only because of its value calculation, but also because of its classification. Capital contribution by rights is divided into capital contribution by usufruct rights, capital contribution by intellectual property rights and capital contribution by commercial industry.
- Contribute capital by usufruct rights
If we distinguish the ownership of an object into three rights: the right to use, the right to profit, and the right to dispose, then the right to usufruct here only includes two elements: the right to use and the right to profit. Therefore, people often separate capital contribution by usufruct right over an object from capital contribution by object, because the person contributing capital to a company only allows the company to use the object and profit from it. The company does not have the right to decide the fate of the object.
In exchange for giving the company the right to use the property, the capital contributor receives corresponding rights in the company. From this, it can be seen that contributing capital by using the right to use the property has similar characteristics to leasing the property.
Therefore, the 1931 Tonkin Civil Code stipulates that the person contributing capital with the right of usufruct must perform the obligations of the lessor of the property (Article 1207, paragraph 2). With this spirit, the Hoang Viet Trung Ky Civil Code at
Article 1439, paragraph 2 also has a similar provision. Article 127, Civil Code 1972 of the Saigon government also stipulates the same. That means that the person contributing capital by usufruct right must ensure that the company enjoys it peacefully. Unless otherwise agreed, the person contributing capital must maintain and repair the property so that the property is always in a usable condition as stated when committing to contribute capital. It must be determined that the person contributing capital still retains ownership of the property and bears the risks. Unlike capital contribution in kind, capital contribution by usufruct right has the consequence that when the company dissolves, the person contributing capital will receive the property back before dividing the company's assets, because this person does not transfer the right to dispose of the property to the company.
- Contribute capital with intellectual property rights
Absolute intangible assets include: industrial property rights, literary, artistic and scientific property rights, capital contributions in companies with legal status; and "some elements of commercial property cannot be perceived by the senses but must be perceived through the concepts of legal relationships between the person who has the right to exploit the benefits of the property and a third party" [7]. Through the exploitation of these assets, people can gain material benefits. However, in order to contribute capital, some elements of commercial property that can be separated are classified as capital contributions by intellectual property rights. These elements may include trade names, trademarks, networks of goods consumption and service provision.
Contributing capital with these assets requires the contributor to ensure that the company exploits the assets to bring about the benefits arising from them. In return, the contributor has corresponding rights in the company, in principle. However, it should be emphasized that, because intellectual property is a very dynamic factor, capital contribution depends largely on the agreement of the members and is regulated by intellectual property laws.
- Contribute capital with commercial assets
People use many different terms to refer to commercial property such as "commercial store", "business establishment". First of all, commercial property is not the business itself but only one of the factors of the business and is considered as intangible property owned by the trader and can be the subject of legal actions such as: transfer, mortgage, lease. Although considered intangible property, commercial property includes tangible elements (such as goods, machinery, vehicles, other items). And of course, there are many intangible elements (such as customer network, service supply network, property lease rights, trade name, brand name, signboard, patent, industrial design, model). The 1972 Commercial Code of the Saigon government defines:
A commercial store includes all assets and properties combined into a block and used for a commercial activity.
A commercial store consists of the customer as the main element and, unless otherwise provided, all other assets necessary for the operation of the store, such as signs, trademarks, leases, tools, equipment, goods, licenses, patents, trademarks, designs and models, literary and artistic property rights [25, Article 42].
Therefore, people often separate capital contribution by commercial property into a separate item, different from capital contribution by intellectual property rights. Capital contribution by commercial property is similar to the sale of commercial property and must be agreed upon by the parties in writing, clearly listing each item. The 1972 Commercial Code stipulates that the purchase or promise to purchase a commercial store, as well as the contribution of a commercial store to a company, must be made in writing (Article 46), which must clearly state:
The elements for sale, but if the elements for sale lack the customer element, it is not considered the sale of a commercial store (Article 47). That means the sale of a commercial enterprise is the transfer of all the elements of a commercial enterprise to another person, in which the customer element is necessarily included, because the customer is the main element of a commercial enterprise. However, because there are many different elements, both intangible and tangible, that can be separated independently, if no element is listed in the contract, that element is considered not to be sold. Capital contribution in the form of commercial enterprises is entirely subject to the rules for the sale of commercial enterprises stipulated in the Commercial Law.
- Contribute capital with knowledge
Contributing capital with knowledge will bring difficulties in many aspects such as: calculating the value of capital contribution to share benefits in the company; proving the violation of obligations of capital contributing members.
These difficulties probably depend entirely on the assessment and agreement of the members of the company. Here it is necessary to emphasize that, when knowledge is contributed, it does not disappear from the members who contribute it, meaning that it only exists with the members and the more it is used, the more it is consolidated and developed. Therefore, ensuring the exclusive use of that knowledge by the company is a big problem that requires the honesty of the contributors. Mutual trust and cooperation with each other are probably essential requirements in the current post-industrial and knowledge-based economy.
- Contribute capital by activity or work
Similar to capital contribution in the form of knowledge, capital contribution in the form of labor makes the contributor bound by the obligation of diligence and honesty. Therefore, there are also similar consequences to capital contribution in the form of knowledge. If the contributor fails to fully perform the committed obligations, he may be subject to sanctions requiring compensation for damages. However, capital contribution in the form of labor
is considered the smallest capital contribution. For example, the 1972 Civil Code of the Saigon government provides:
If the contract does not specify the profit and loss share for each member, that share will be calculated according to the proportion of each person's contribution to the association.
For those who have contributed by merit, this part will be considered as the smallest contribution by property [6, Article 1277].
These regulations show that the value of the contribution to the company is difficult to accurately value in money, so members agree on its value to compensate with benefits in the company. In a simple joint venture, capital contributors do not contribute capital in labor, but only members receive capital.
The basic obligation of company members as stipulated in the company establishment contract is the obligation to contribute capital. That means that when entering into a company establishment contract and committing to contribute capital, members have bound themselves to become the beneficiaries or debtors of the company. It should be emphasized that the capital contributions of members all become the property of the company created by themselves. Therefore, the company - a separate legal entity - is the creditor of its owners. If a member does not contribute capital or contributes capital late, the company has the right to demand. "With late capital contribution, members must pay interest without the condition that they have been forced to pay debt, and may have to compensate for damages without having to prove fraud" [25].
Reflecting these scientific views, the 1931 Tonkin Civil Code stipulated: "If the contract does not have a term or any conditions, then on that very day, the members must pay the portion they promised to contribute, otherwise, of course, they must pay the profits and interest and at the same time must compensate for the damage caused by the delay, even if it is money" [10, Article 1205].
The Royal Vietnamese Central Vietnam Law (Civil Code of Central Vietnam 1936) stipulates:
Each member is indebted to the association for his contribution, and must contribute immediately on the day of the association's establishment; if he does not do so in time, he must naturally pay the benefits or interest of his contribution to the association, according to the amount of interest prescribed by law, if the contribution is a sum of money, and sometimes he must also compensate for large losses due to late contribution [2, Article 1437].
The model of the above two Codes is the French Civil Code. Following this trend, Clause 3, Article 131, Enterprise Law 2005 of Vietnam has provisions for partnerships:
In case a capital contributing member fails to contribute the committed capital in full and on time, the uncontributed capital shall be considered as that member's debt to the company; in this case, the relevant capital contributing member may be expelled from the company according to the decision of the Board of Members [22].
Capital contribution or capital clause is an essential provision of the company incorporation contract. For example, the company laws of Malaysia and Singapore provide that:
Unless it is a company with unlimited liability, the company's charter must necessarily contain a capital provision which states the authorized capital and divides that capital into shares in a fixed number which becomes the limit to which the company may be authorized to raise [34].
A company is often considered from two aspects: economic and legal. In the economic aspect, a company is considered a business or a business entity. And in the legal aspect, a company is considered a contract. Therefore, capital contribution is also understood in the economic and legal sense, which means that the concept of capital contribution needs to be considered from the economic and legal aspects. If capital contribution, considered from the economic aspect, is the act of
Creating assets for the company to ensure the company's operating expenses and ensure the rights of creditors, capital contribution, from a legal perspective, is the act of transferring assets or putting assets into use in exchange for rights to the company. This act of exchanging rights is different from the act of buying and selling or leasing assets in that: in the act of buying and selling or leasing, when transferring the ownership of assets or the right to use assets, the transferor has the right to receive a sum of money from the selling price or the rental price; but in the act of capital contribution, when transferring the ownership or the right to use assets to the company, the contributor does not receive any money from that transfer.
When a member contributes assets to a company, that asset becomes the property of the company because the company's founding contract has created a separate entity or a legal entity with its own property. Each member of the company receives from this act of capital contribution a right to the company corresponding to his capital contribution in the normal sense. However, "the rights and obligations of a member also depend on the type of shares stipulated in the founding contract or the charter of the company whose capital is divided into shares" [34].
Contributing capital to a company will bring members benefits in the company, the benefits of members in a joint venture company are simply a mixture of the rights of members in the company in terms of personal and capital: The main benefits of members in the company are the benefits expressed by profit sharing according to the provisions of the company's charter and the benefits expressed by profit sharing and voting corresponding to the capital contribution. The transfer of these benefits must comply with special regulations prescribed by law.
The transfer of capital contributions of capital recipients to others is very difficult and in some cases leads to the dissolution of the joint venture company. If this principle is applied thoroughly, it is difficult to ensure