Capital contribution, share division and benefits: What does the Enterprise Law say?

Starting a business is a journey full of enthusiasm and challenges. One of the fundamental issues that many entrepreneurs have a headache with is contributing capital to the company, how to “divide startup shares” fairly, determine the “company ownership ratio”, and protect the “rights of capital contributors”. This article will help you understand the nature, process and new points of the “share division law”, especially from the perspective of the latest Enterprise Law 2025.

Corporate Capital Contributions: Who is Allowed and the Basic Principles

a. Subjects entitled to contribute capital to enterprises

According to the Enterprise Law 2025, all organizations and individuals not prohibited by the Law on Cadres and Civil Servants, the Law on Public Employees, the Law on Anti-Corruption, etc. have the right to contribute capital and buy shares in joint stock companies, limited liability companies, and partnerships. However, the group of restricted subjects will be clearly defined by law to prevent conflicts of interest and make capital sources transparent.

b. Form and value of capital contribution

• Capital contribution can be in cash, assets, intellectual property rights...
• The value of contributed assets is agreed upon by members or appraised by an appraisal unit.
• Capital contribution must be recorded in writing, fully showing identity and ownership ratio.

Equity in startups: Principles and practices

a. How should shares be divided for startups?

• Based on actual contribution: The more a member contributes, the higher the percentage of shares owned. However, the idea factor should not take up too much of the stake. The implementation and operation of the business is the sustainable value.
• Vesting shares: To avoid conflicts, startups often apply the vesting mechanism (gradual granting of shares over time or long-term commitment conditions). Co-founders only receive full shares after meeting the commitment criteria.
• Consensus: Share division should be agreed upon by all members to avoid future disputes. The division formula can be based on capital contribution, experience, effort, time commitment, etc.

b. Startup share division process

• Initial company valuation.
• Agree on the list of official members and ownership percentages.
• Record in writing, develop charter/shareholder regulations on vesting period, preferential rights, transfer conditions.

Corporate Ownership Ratio: Legal and Economic Implications

• Ownership ratio determines power: Owners of a high percentage of shares have great decision-making power, influencing the election of members of the Board of Directors, General Meeting of Shareholders and strategic decisions.
• Profit sharing: Profit is shared according to the capital contribution ratio, except in cases where the parties agree to share more according to effort or other preferential rights.
• Liability: Shareholders are responsible for the company's assets to the extent of their contributed capital, limiting the risk of personalizing risks.

Rights of founding shareholders and capital contributors under the Enterprise Law 2025

a. Founding shareholders' rights

• Ownership of common shares: Must jointly own at least 20% of total shares when establishing a new enterprise.
• Transfer of restricted shares: Within 3 years from the date of issuance of the business registration certificate, the common shares of founding shareholders can only be transferred to other founding shareholders or, if transferred to outsiders, must be approved by the General Meeting of Shareholders.
• Voting preference: Founding shareholders may enjoy voting preference shares for the first 3 years, which are automatically converted into common shares thereafter.

b. Rights of capital contributors/common shareholders

• Profits are shared according to capital contribution ratio.
• Free transfer of shares: Ordinary shareholders (not founding shareholders in the first 3 years) have the right to freely transfer shares except in the case of a limited company (as provided in the company's charter or by specific law).
• Participate in strategic decisions: Based on ownership ratio, shareholders have the right to vote at General Meetings of Shareholders on important issues such as changing charters, profit sharing, issuing new shares, etc.

New points on capital return, preferential rights and share division under the Enterprise Law 2025

According to new regulations effective from July 1, 2025:

• The company shall return a portion of the capital contribution to shareholders, in proportion to their ownership, if it has been in operation for 2 years or more, excluding any suspension period, and shall ensure full payment of all debts and other financial obligations after returning the capital to shareholders.
• Shareholders owning redeemable preference shares have the right to request the company to refund their capital contribution according to the conditions stated in the shares and the company's charter.
• When distributing shares, voting preferences, dividend preferences, and refund preferences are clearly specified, meeting the diverse needs of investors' interests.

Important notes when contributing capital and dividing shares

• Objectivity and transparency: Valuation of companies and contributed assets must be objective to avoid causing damage to any member.
• Clear agreement: Capital contribution contract and company charter must clearly state the share ratio, vesting conditions, and preferential rights to prevent future disputes.
• Compliance with the law: Accurately apply the latest regulations, especially cases of capital redistribution and share transfer rights according to the Enterprise Law 2025, to avoid unnecessary legal risks.

=> Advice for businesses

• Clearly define the value of the business and the actual contribution of each member before dividing shares.
• Learn carefully the "shareholding law" to protect the maximum rights of startup contributors/shareholders.
• Build flexible and clear corporate charters, prioritize vesting solutions, and preferential rights for founders and strategic capital contributors.
• Work with specialized lawyers to ensure that all capital contributions and share division actions are accurate, optimizing benefits and minimizing legal risks for the company and each member.

Capital contribution and startup shares are not just numbers, but also strategic "rules of the game" to maintain the foundation, unanimously build and develop the business sustainably. GT Law hopes that this article will help you grasp the principles and new points of the Enterprise Law 2025 and be more confident on your startup journey.