Disclosure of Beneficial Ownership: A Mandatory Obligation from July 1, 2025

Starting from July 1, 2025, one of the most significant legal changes for enterprises will take effect: the disclosure of beneficial ownership becomes a mandatory obligation under the amended Enterprise Law 2025 and Decree No. 168/2025/NĐ-CP. More than just a new administrative requirement, this regulation is a strategic measure aimed at enhancing corporate transparency, preventing money laundering, and aligning with international standards on beneficial ownership.

As Vietnam continues to attract foreign direct investment (FDI) and prepare for IPO and M&A transactions, understanding who qualifies as a beneficial owner, how to identify and declare them, and the accompanying legal obligations has become critically important.

This article by LexConsult & Partners provides businesses with a comprehensive, practical, and up-to-date overview of the new regulation—helping them avoid legal risks and ensure timely compliance.

1. Who Is a Beneficial Owner? New Legal Definition

1.1. Definition under the Amended Enterprise Law 2025

For the first time, the Enterprise Law introduces the concept of a “beneficial owner” into Vietnam’s corporate legal framework. According to Point d, Clause 1, Article 1 of the Amended Enterprise Law 2025:

“35. The beneficial owner of an enterprise with legal entity status (hereinafter referred to as the enterprise’s beneficial owner) is an individual who has actual ownership of the charter capital or exercises control over the enterprise, except for: (i) the authorized representative of the State in a wholly state-owned enterprise; and (ii) the representative of state capital in a joint-stock company or a two-member limited liability company, as prescribed by the law on management and investment of state capital in enterprises.”

Accordingly, a beneficial owner is defined as an individual who meets either of the following conditions:

– Has actual ownership of the enterprise’s charter capital; or

– Has control or dominant influence over the enterprise’s management and decision-making.

1.2. Criteria for Determining Beneficial Ownership under Decree 168/2025/NĐ-CP

Under Article 17 of Decree No. 168/2025/NĐ-CP, an individual is deemed a beneficial owner if he or she:

– Directly owns at least 25% of the charter capital or 25% of the total voting shares of the enterprise;

– Indirectly owns 25% or more of the charter capital or shares through an intermediary organization; or

– Has control over at least one key aspect of the enterprise’s governance, such as:

• • Appointment or dismissal of a majority (or all) members of the Board of Directors, General Director, or Legal Representative;

  • Amendment of the charter or organizational structure;

  • Reorganization, merger, or dissolution of the company.

The 25% threshold aligns with international standards and is widely adopted across jurisdictions in identifying beneficial ownership.

2. Why Beneficial Ownership Disclosure Matters

2.1. Enhancing Transparency and Accountability

Transparency regarding the true controllers of an enterprise is a growing global legal standard. The inclusion of beneficial ownership requirements helps to:

– Prevent the use of legal entities for tax evasion, money laundering, or corruption;

– Promote public disclosure and transparency, enabling regulators, investors, and partners to understand the actual ownership structure;

– Strengthen corporate governance, accountability, and investor confidence, especially for large or foreign-invested enterprises.

2.2. Alignment with International Standards and FATF Recommendations

The Financial Action Task Force (FATF) requires all member states, including Vietnam, to establish mechanisms to identify and disclose beneficial owners as part of anti–money laundering and counter-terrorism financing measures.

Vietnam has previously faced the risk of being placed on the FATF “grey list” due to insufficient transparency in business ownership. The new legal requirements represent a significant step forward, helping Vietnam maintain its international credibility, attract FDI, and avoid increased cross-border transaction costs.

3. Reporting Responsibilities and Disclosure Timeline

3.1. Cases Requiring Disclosure

According to Article 18 of Decree No. 168/2025/NĐ-CP, enterprises must declare their beneficial owners in the following cases:

Additionally, in cases involving multi-tiered indirect ownership through parent companies or intermediary entities, the enterprise must identify the ultimate individual who holds actual ownership or control.

3.2. Timing of Disclosure

– For enterprises established after July 1, 2025: Beneficial ownership information must be declared at the time of business registration.

– For existing enterprises established before July 1, 2025: Immediate declaration is not mandatory. However, beneficial ownership information must be added when the enterprise amends its business registration details.

4. Guidance on Declaration and Data Management

4.1. Required Documents for Declaration

Enterprises must submit the following:

– List of Beneficial Owners (Form IV-11, Appendix to Decree No. 168/2025/NĐ-CP);

– Personal identification information, ownership/control rights, and ownership percentage;

– For institutional shareholders: enterprise name, business registration number, address, and ownership ratio.

4.2. Methods of Declaration and Submission – Online or In Person

– Declarations can be made directly via the National Business Registration Portal or in person at the provincial Business Registration Office;

– Enterprises may choose to submit either hard copies or digitally signed electronic files, depending on the applicable regulations and authority requirements.

4.3. Record-Keeping and Periodic Updates: Legal Responsibilities

– Enterprises must maintain a written (paper or electronic) list of beneficial owners;

– Update the information whenever there are changes in ownership structure or control rights;

– Where control is exercised indirectly, the enterprise must specify the nature of such control (e.g., appointment rights, charter amendments, etc.).

5. Penalties for Non-Compliance: What Businesses Should Know

5.1. Legal Consequences of Failure to Declare or Misreporting

Enterprises that fail to declare or provide inaccurate/incomplete information may face:

– Administrative penalties (specific sanctions to be guided under a separate decree);

– Difficulties in financial operations such as obtaining loans, bidding, opening bank accounts, or conducting international transactions;

– Suspicion of money laundering and increased scrutiny from financial institutions;

– Exclusion from IPO or M&A transactions due to lack of transparency during audits or due diligence.

5.2. Benefits of Timely Compliance and Recommendations

– Enhanced transparency: Enables tax authorities, partners, and banks to clearly understand the company’s ownership structure;

– Facilitates auditing, IPOs, and M&A transactions: Now a standard requirement under international due diligence frameworks;

– Prevents internal disputes: Reduces risks of nominee ownership or hidden control arrangements.

5.3. Legal Expert Recommendations: How Businesses Should Prepare

– Review the ownership and control structure to accurately identify all beneficial owners;

– Prepare and verify personal identification documents for each beneficial owner;

– Submit declarations whenever there are changes in business registration details;

– Maintain and periodically update records to ensure ongoing compliance;

– Consult corporate legal advisors to prevent violations arising from misinterpretation of the new rules.

From July 1, 2025, beneficial ownership disclosure is no longer optional — it becomes a mandatory legal obligation. This marks an important step in enhancing transparency and integrity within Vietnam’s business environment, while serving as a prerequisite for accessing FDI, IPO, M&A, and other international opportunities.

To mitigate legal risks and maximize the advantages of this new regulation, enterprises should fully understand the identification criteria, comply with the declaration timeline, and work closely with legal professionals throughout the process.

If your business requires expert assistance with beneficial ownership declaration, or legal advisory services related to foreign investment, IPOs, or mergers and acquisitions, please contact LexConsult & Partners — your strategic legal partner for sustainable and transparent growth.

 

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