Correct understanding of Capital Mobilization – Avoid wrongly labeling it as “illegal”

In market economy, Capital mobilization is the lifeblood of businesses and the entire economy..

However, in Vietnam, this phrase is often associated with negative concepts such as "financial pyramid schemes", "fraud" or "illegal fundraising".
This misunderstanding not only distorts the image of genuine businesses but also hinders the flow of innovative capital.

1. Capital mobilization is a legal right

According to Enterprise Law 2020All economic organizations have the right to contribute capital, mobilize capital, issue shares or bonds to serve production and business.
Businesses can call for investment through:

• Capital contribution contract, investment cooperation, investment trust (according to Civil Code 2015).
  
• Issuance of stocks and bonds (according to Securities Law 2019).
  
• Raise capital from venture capital funds, individual investors, or crowdfunding If transparent, no fixed interest commitment.
  

 That is, businesses are allowed to raise capital as long as they are transparent, disclose risks and use capital for the right purposes.

2. When does crowdfunding become illegal?

Fundraising is considered only as illegal or criminal when there are the following signs:

• Receive deposits from individuals and organizations without a banking license.
  
• Offering securities and bonds without registration or disclosure of information.
  
• Commitment to virtual profits, paying interest with later people's money - Ponzi scheme.
  
• Financial pyramid scheme, recruiting people to receive commissions instead of real business.
  

The above acts may be handled according to Decree 88/2019/ND-CP, Law on Credit Institutions, or Articles 174 and 217a of the 2015 Penal Code (amended 2017).

3. Distinguish between Deposit Mobilization and Capital Mobilization

The most common misconception today is that all investment solicitation activities are considered as “illegal money collection”. In fact, these two concepts completely different:

• Deposit mobilization

Only allowed to be performed by banks and credit institutions, licensed by State Bank.
This is the form receive money and commit to pay principal + fixed interest, of a nature credit – borrowing.

• Capital mobilization

Is the activity of business, investment fund or project to expand production, develop business, or share profits with investors.
Capital contributor not the depositor, which is investment partners, share risks and profits according to business results.

Deposit mobilization is within the scope of banks, while capital mobilization is within the scope of enterprises.
Understanding this boundary correctly helps to distinguish between financial innovation and lawbreaking.

4. Summary of legal basis

1. Law on Enterprises 2020 – Article 7: Enterprises have the right to raise capital, issue shares and bonds.
   
2. Law on Credit Institutions 2010 (amended 2017) – Article 8: Only credit institutions are allowed to accept deposits.
   
3. Securities Law 2019 – Articles 13, 15: Must register and publish information when issuing securities.
   
4. Decree 88/2019/ND-CP: Fine of 50-500 million VND for illegal mobilization.
   
5. Penal Code 2015 (amended 2017):
   
   • Article 174: Fraudulent appropriation of property.
     
   • Article 217a: Violation of regulations on multi-level marketing.
     
   • Article 290: Using computer networks to appropriate property.

Raising capital is not a crime.,But abuse of trust, promises of false profits, misuse is the violation.

Businesses need to understand the law to do the right thing, investors need to understand the law to choose the right thing, and society needs to understand the law so as not to kill creativity with blind fear.