TRANSPARENCY OF OWNERSHIP AND BENEFICIAL OWNERS UNDER THE 2025 AMENDED LAW ON ENTERPRISES

1. Background and Rationale for the Amendment

In recent years, Vietnam has increasingly integrated into the global economy and attracted substantial foreign investment. However, this has also brought greater challenges regarding the transparency of corporate ownership information, especially in the context of cross-ownership, multi-layered ownership structures, or the use of nominee ownership to conceal actual economic interests.

Before 2025, the 2020 Law on Enterprises did not provide clear regulations on “beneficial owners”—the individuals who ultimately exercise control over a company. This created difficulties for regulatory authorities in tracing capital flows, combating money laundering and tax evasion, and fulfilling international commitments within the OECD’s BEPS framework, the United Nations Convention against Corruption (UNCAC), and the recommendations of the Financial Action Task Force (FATF).

In response, the 2025 Amended Law on Enterprises, approved by the National Assembly on June 17, 2025 and effective from July 1, 2025, introduces significant new provisions on ownership transparency and beneficial ownership.

2. New Provisions on Beneficial Owners in the 2025 Amended Law on Enterprises

2.1. New Definition – “Beneficial Owner”

A Beneficial Owner (Ultimate Beneficial Owner – UBO) is an individual who ultimately owns or controls a company, even if they are not officially named in the business registration documents. They are the persons who exercise actual control and derive benefits from the company’s operations, either through owning a certain percentage of charter capital (typically 25% or more) or having the power to make key decisions of the company—except for authorized representatives of the State at wholly state-owned enterprises and representatives of State capital in joint-stock or multi-member limited liability companies, as provided by the laws on management and investment of State capital in enterprises. (Pursuant to Point d, Clause 1, Article 1 of Law No. 76/2025/QH15).

Simply put, a beneficial owner is the individual who truly owns or controls a company, regardless of whether their name appears on official business registration documents.

This provision creates a legal basis for identifying individuals who actually control companies, not merely their legal owners on paper. It aligns with international standards widely adopted by OECD and EU member states.

2.2. Obligations to Declare and Update Information

Enterprises are required to:

· Collect, maintain, and update information on beneficial owners;

· Provide such information to the business registration authority, tax authorities, and other regulators upon request;

· Notify authorities of any changes in beneficial ownership (e.g., share transfers or alterations in ownership structure).

Applications for new business registration or amendments must include a list of beneficial owners and detailed information such as: full name, date of birth, nationality, ownership/control percentage, and actual rights and interests in the company.

2.3. State Management of Beneficial Ownership Information

The Government will provide detailed regulations on managing, sharing, and protecting beneficial ownership information. It is expected that this data will be integrated into the National Business Registration Database and the Anti-Money Laundering Database.

3. Significance and Impact of the New Provisions

3.1. Enhancing Transparency and Corporate Governance

Identifying and disclosing beneficial ownership helps regulators, investors, and business partners understand who truly controls a company, thereby limiting the risks associated with shell companies or complex cross-ownership arrangements.

This also contributes to improving Vietnam’s corporate transparency rankings and enhancing the country’s reputation in global business environment assessments.

3.2. Combating Money Laundering, Tax Evasion, and Base Erosion

The new regulations support Vietnam in fulfilling its obligations under the BEPS Action Plan and FATF recommendations, especially Recommendation 24 on the transparency of legal persons.

Accurate identification of beneficial owners helps prevent the misuse of corporate structures to shift profits offshore, evade taxes, or circumvent the global minimum tax regime.

3.3. Supporting Tax and Inspection Authorities

Regulatory bodies can rely on beneficial ownership information to:

· Examine related-party transactions and transfer pricing in multinational groups;

· Detect concealed profits or abuse of double taxation agreements;

· Monitor indirect foreign investment flows made through intermediary entities.

4. Challenges in Implementation

4.1. Identifying Beneficial Owners in Complex Structures

Many companies have multi-layered ownership chains or intermediary entities located overseas. Determining the “ultimate beneficial owner” requires investigative capacity, international cooperation, and a coherent legal framework.

4.2. Compliance Burdens for Small and Medium Enterprises (SMEs)

Small businesses may face difficulties establishing systems to collect, store, update, and report information. This may increase administrative costs and the risk of non-compliance.

4.3. Protection of Personal Data

Collecting detailed information on beneficial owners raises concerns about personal data protection, requiring compliance with Decree No. 13/2023/ND-CP on Personal Data Protection. The State must issue clear guidelines on information sharing while ensuring data security.

5. Conclusion

The introduction of beneficial ownership regulations in the 2025 Amended Law on Enterprises marks an important step in strengthening Vietnam’s corporate legal framework and governance standards. These provisions not only enhance transparency and accountability but also support Vietnam in fulfilling international commitments on anti-money laundering, tax compliance, and the global minimum tax regime.

The key challenge ahead will be ensuring effective implementation while balancing transparency with the protection of personal data.