On June 17, 06, the National Assembly passed the Law amending and supplementing a number of articles of the Law on Enterprises. and effective from July 01, 07. Accordingly, the amended and supplemented Law has provided new regulations on the concept of beneficial owner of an enterprise, assigning the Government to provide specific guidance on criteria for determining and sanctions for violations when not providing information.
1. What is a beneficial owner?
Pursuant to Article 4 Enterprise Law 2020 (amended and supplemented by point d, clause 1, Article 1) Law No. 76/2025/QH15), stipulates the concept of Beneficial Owner of an enterprise as follows:
“35. The beneficial owner of a legal entity enterprise (hereinafter referred to as the beneficial owner of the enterprise) is an individual who has actual ownership of the charter capital or has the right to control that enterprise, except for the case of the direct representative of the owner at an enterprise in which the State holds 100% of the charter capital and the representative of the State capital portion at a joint stock company or a limited liability company with two or more members according to the provisions of law on management and investment of State capital in enterprises.”
Thus, the beneficial owner of an enterprise can be understood as the actual owner of the charter capital of the enterprise or the person behind it who has the right to control the operations and important decisions of the enterprise, although it is not required to be named on the business registration documents. In addition, this provision does not apply to cases where the representative of the State's capital in an enterprise in which the State holds 100% of the charter capital or the representative of the State's capital in joint stock companies and LLCs with 2 or more members.
2. Criteria for determining beneficial owners of enterprises from July 01, 07
Pursuant to the provisions of Article 17 Decree 168 / 2025 / ND-CP Regarding business registration, the criteria for determining the beneficial owner of a business are determined when an individual meets one of the following criteria:
- An individual directly or indirectly owns (for example: Investing through another company) 25% or more of the charter capital or 25% or more of the total voting shares of an enterprise.
Note: Indirect ownership is when an individual does not directly own the target enterprise but through another company or organization holds ownership of 25% or more in the target enterprise.
- An individual has the right to control the approval of at least one of the following issues: Appointment, dismissal or removal of the majority or all members of the board of directors, chairman of the board of directors, chairman of the board of members; legal representative, director or general director of the enterprise; amendment and supplementation of the enterprise's charter; change of the company's management structure; reorganization and dissolution of the company.
- An indirect owner as prescribed in Point a, Clause 1 of this Article is an individual who owns 25% or more of the charter capital or 25% or more of the total number of voting shares of an enterprise through another organization.
Thus, individuals who meet one of the above criteria will be considered beneficial owners of the enterprise and will be declared in the declaration of beneficial owner information and information to determine the beneficial owner of the enterprise.
3. Objective of declaring beneficial owners of enterprises
On June 16, 06, the Vietnamese Government signed a commitment with the Financial Action Task Force (FATF) on preventing and combating money laundering, terrorist financing, and the financing of proliferation of weapons of mass destruction, including 2023 specific actions. However, Vietnam is currently on the FATF's "Gray List". If there is no change in the legal framework, including the content on beneficial ownership, the FATF may consider putting our country on the "Black List". This will affect the investment and business environment and the Vietnamese economy.
The purpose of developing regulations on collecting beneficial owner information is to find out the ultimate individual who actually controls and governs the investment and business activities of the enterprise.
Completing this regulation will contribute to improving Vietnam's anti-money laundering ranking and making the investment and business environment transparent and healthy, attracting investors, and contributing to preventing and combating money laundering crimes.
These measures will directly impact the efficient operation of the financial system and indirectly affect many economic, political and social aspects of the country. Therefore, it is extremely necessary to build a mechanism to collect, update and store information on beneficial owners of enterprises.