Donating property is a civil relationship established 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 respectively. Donating to the enterprise’s properties has more complicated regulations than donating to the individual’s properties. 

In this article, we cover notable points according to the regulations of Vietnamese law regarding the donation to the 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, constructions, other assets attached to land or houses, etc. Otherwise, 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, the 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 06 months before the date the Court issues the decision to open the bankruptcy procedure, the insolvent enterprise may not donate the property to other individuals or organizations. In case of 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 performing the donation of properties.
2. According to the provisions of the law on enterprises, since the dissolution decision is issued, the enterprise is prohibited from performing the donation of properties to other individuals/organizations.
3. In case an individual/organization donates the 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 prohibition of the law, and not 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 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 carefully.

Should you have any questions about the above contents, please revert to BLawyers Vietnam at consult@blawyersvn.com. We are more than happy to hear from you!

Date: 22 March 2023

Writer: Tuyen Pham