The concept of a beneficial owner (“BO”) of a legal-entity is well established and has long been recognized in the laws of many developed countries. In Vietnam, the term was introduced in the 2022 Law on Anti-Money Laundering was incorporated into the Law on Enterprises for the first time through amendments enacted in 2025, together with its implementing decrees. To date, beneficial ownership remains a relatively new concept within the Vietnamese business community, and the implementation of relevant regulations continues to present certain practical challenges.
Concept and Purpose
Under Article 4.35 of the 2025 Law on Enterprises and Article 3 of Decree No. 296/2026/ND-CP, a beneficial owner (“BO”) of an enterprise is one or more individuals who directly or indirectly own its charter capital or exercise ultimate control over the enterprise in practice. Identifying a BO requires more than examining the percentage of capital ownership or voting shares held; it also involves assessing the ownership structure, relevant agreements, and mechanisms through which control is exercised in practice.
A BO is always the individual who ultimately owns or controls the enterprise, even where ownership or control is exercised through intermediary organizations or individuals. These regulations aim to make ownership structures more transparent, identify the individuals who ultimately own or control an enterprise, prevent the concealment of control, and ensure that declared BO information is complete and accurate.
Enterprise responsibilities for identifying Beneficial Owners
Enterprises are required to report BO information not only upon establishment but also throughout their operations. Under Decree No. 296/2026/ND-CP, within 10 days of any change in BO information or a previously declared ownership percentage, enterprises — including listed companies and companies registered for trading — must submit a list of BOs using Form No. 10, Appendix I of Circular No. 121/2026/TT-BTC to the provincial business registration authority.
To fulfill this obligation, enterprises must identify their BO and prepare the relevant list in accordance with the order of priority prescribed in Article 3 of Decree No. 296. This approach helps identify the individuals who ultimately own or control the enterprise in practice, particularly where ownership structures involve multiple layers or where control cannot be determined solely on the basis of ownership percentages. The process is as follows:
First, identify beneficial owners based on ownership criteria.
A BO is an individual who directly, indirectly, or through a combination of both, owns at least 25% of the enterprise’s charter capital or total voting shares. Where a group of individuals who are related by family ties as defined by law, or who are parties to a joint ownership agreement, collectively meets this threshold, every individual in the group is identified as a BO. Enterprises must examine the entire ownership structure, relevant agreements, and related relationships rather than relying solely on formal ownership records.
Second, identify beneficial owners based on individual control rights.
If no individual meets the ownership criteria, or there are grounds to conclude that an individual who meets those criteria is not the BO, the enterprise must proceed to identify the individual who exercises ultimate control in practice. Such control rights include the power to appoint or dismiss managers; amend the charter; change the organizational structure; determine financial, investment, and operational policies; and decide on the reorganization or dissolution of the enterprise. Identification must be based on the enterprise’s charter, internal regulations, and the actual exercise of these powers.
Third, identify the beneficial owner based on the senior manager with the greatest authority.
If the BO cannot be identified under either of the two criteria above, the enterprise must designate an individual with the greatest managerial authority to act on behalf of the enterprise as its BO, excluding representatives of state capital. The selection must be based on actual authority, internal regulations, and decision-making practices; it must not automatically default to a title such as Chair of the Board of Directors, Director, or legal representative.
Legal risks in identifying, reporting, and retaining Beneficial Ownership information
Enterprises are responsible for making their own declarations and are legally accountable for the lawfulness, truthfulness, and accuracy of the information contained in their filings, including BO information. Accordingly, they must proactively identify and accurately declare this information.
Under Decree No. 288/2026/ND-CP, enterprises may face administrative penalties for violating their obligations to provide BO information, specifically: (i) Fines of VND 30–70 million: Making untruthful or inaccurate declarations of BO information, or information used to identify a BO, in enterprise registration filings. (ii) Fines of VND 50–70 million: Failing to report or provide information upon request or providing untruthful or inaccurate information to a competent state authority.
Recommendations for Enterprises
As this is a new legal procedure, enterprises should proactively establish processes for identifying, declaring, and retaining BO information rather than treating the requirement as a mere notification formality. They should retain the declared list of BO together with supporting documents, such as the register of members, register of shareholders, enterprise charter, internal regulations, and key decisions relevant to the verification process.
In addition, enterprises should establish mechanisms requiring shareholders, members, and relevant parties to provide, confirm, and update BO information. They should also review this information whenever changes occur in the ownership structure, voting rights, agreements between parties, or actual control arrangements. Clearly setting out these obligations in the enterprise charter will help ensure their continued effectiveness and enforceability.
Compliance with BO regulations not only helps enterprises mitigate legal risks but also enhances transparency in their ownership structures, strengthens corporate credibility, and builds trust among existing and prospective investors.
