On 17 June 2025, the National Assembly passed Law No. 76/2025/QH15, amending the Law on Enterprises (“Amended LOE”), which took effect on 1 July 2025. The Amended LOE introduces significant changes to promote transparency and accountability for businesses in Vietnam. It includes new concepts and additional provisions to strengthen existing regulations, fostering a more robust and transparent corporate environment. Additionally, Decree No. 168/2025/ND-CP, issued by the Government on 30 June 2025, regarding enterprise registration (“Decree 168”), took effect, replacing Decree No. 01/2021/ND-CP. Decree 168 provides further details on these amendments.
- The Introduction of the Beneficial Owner Concept
The Amended LOE introduces the concept of a “Beneficial Owner”, under Article 4.35, defined as an individual who directly or indirectly owns charter capital or exercises control over an enterprise. This addition aligns with Vietnam’s obligations as a member of the Asia-Pacific Group on Anti-Money Laundering since 2006, aiming to combat money laundering, terrorist financing, and weapons proliferation.
Accordingly, enterprises established before 1 July 2025 shall conduct several relevant obligations regarding beneficial owner details when updating enterprise registration information, alongside notifying registration changes.
Criteria to determine Beneficial Owner
According to Article 17, Decree 168, a beneficial owner is characterized as an individual who satisfies at least one of the following conditions: (i) direct or indirect ownership of a minimum of 25% of an enterprise’s charter capital or voting shares; (ii) having the authority to make pivotal decisions concerning the enterprise. Such decision-making authority encompasses the appointment or dismissal of the majority or all members of the board of directors, chairman, legal representative, director, or general director; amendments to the company’s charter; alterations to the organizational structure; or decisions regarding the reorganization or dissolution of the enterprise. Indirect ownership is further defined as ownership of at least 25% of charter capital or voting shares through an intermediary organization.
Enterprises Registration Obligations
Enterprise registration documents are now required to include lists of beneficial owners, a mandate designed to promote transparency and ensure precise identification of individuals who ultimately control or derive profit from the company.
Collect and Retain Obligations
Under Article 8.5a of the Amended LOE, enterprises are required to collect, update, and retain information regarding Beneficial Owners. Enterprises must retain beneficial ownership information for at least five years following dissolution or bankruptcy (Article 216.1(g), Amended LOE). These obligations ensure that there is a clear record of ownership that can be referred to if any legal issues arise after the company ceases operations.
Disclosure Obligations
Enterprise founders or enterprises are required to notify the provincial business registration authority regarding beneficial owners. For individual investors, under Articles 18.1 and 18.2 of Decree 168, enterprises must independently identify and report beneficial owners. For organizational shareholders, as outlined in Article 18.3 of Decree 168, enterprises must disclose details of organizations holding at least 25% of voting shares, including the organization’s name, enterprise code or establishment decision number, issuance date and place, head office address, and the proportion of voting shares held in the enterprise.
Besides, under Article 52 of Decree 168, it should be noted that competent state authorities are entitled to access information on beneficial owners from the National Business Registration Information System without charge. Such access is exclusively intended to support efforts in preventing and combating money laundering.
- Prohibited Activities and Accuracy Requirements
The Amended LOE also strictly prohibits the falsification, inaccurate declaration, or dishonest registration of enterprise information. Under Article 16 of the Amended LOE, such prohibition includes fraudulent representations of charter capital, such as overstating capital without full contribution, failing to adjust registered capital as required, or intentionally misvaluing contributed assets. Non-compliance may result in civil and regulatory liabilities for legal representatives. Enterprises are required to ensure the accuracy and truthfulness of all information submitted during registration and throughout their operations to avoid significant penalties.
- Civil Servants and Public Employees Restricted from Enterprise Establishment and Management
Under Article 17.3(b) of the Amended LOE, it explicitly prohibits civil servants and public employees, as defined by the Law on Cadres, Civil Servants, and the Law on Public Employees, from establishing, contributing capital to, or managing enterprises. Exceptions are permitted in cases aligned with the provisions of laws governing science, technology, innovation, and national digital transformation. This restriction is designed to mitigate conflicts of interest and promote ethical governance within the corporate sector.
- New Debt-to-Equity Cap for Private Bond Placement
The Amended LOE establishes specific criteria for private placements and operational conditions for businesses under Article 128.3(c). Non-public companies issuing private bonds are required to adhere to a maximum debt-to-equity ratio of 5:1, as determined by audited financial statements. Exemptions are granted to state-owned enterprises, real estate bond issuers, and certain regulated entities, such as banks, insurers, and securities firms. This leverage cap aims to regulate financial risk and enhance investor protection. Enterprises must review their financial statements to ensure compliance prior to issuing new bonds after 1 July 2025. By imposing this leverage limit, the Amended LOE aligns with securities laws and related decrees, fostering transparency and financial discipline in Vietnam’s corporate bond market while adhering to international regulatory standards.
Additionally, private corporate bond offerings disclosed to the Stock Exchange the Amended LOE’s effective date, remain subject to the prior legal framework under the previous Law on Enterprise Law.
- Market Price Valuation for Capital Contributions or Shares in Vietnam
The Amended LOE establishes clear methodologies for determining the market price of capital contributions and shares, encompassing both listed and non-listed shares under Article 4.14. For shares listed or registered for trading on a securities exchange, the market price is calculated as the average trading price over the 30 consecutive days prior to the valuation date. Alternatively, it may be the price mutually agreed upon by the buyer and seller or the price determined by a licensed valuer. For non-listed or unregistered capital contributions or shares, the market price is defined as the most recent transaction price on the market, the price agreed between the buyer and seller, or the price assessed by a licensed valuer. These methods ensure valuations reflect fair market conditions, providing a reliable foundation for financial and legal purposes.
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Please do not hesitate to contact Dr. Oliver Massmann at [email protected] if you have any questions on the above. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.
