The law amending the Enterprise Law 2020 (Amended Enterprise Law 2020), effective 1 July 2025, introduces the following key changes:

1. The New Beneficial Owner Regime

1.1. The Amended Enterprise Law 2020's most significant change is the introduction of a Beneficial Owner (BO) regime, designed to enhance transparency and align Vietnam with international anti-money laundering standards.

Who are BOs?

1.2. The Amended Enterprise Law 2020 defines a BO as the individual who ultimately owns or controls an enterprise. The recently issued Decree 168/2025 on enterprise registration (Decree 168/2025) further clarifies the specific criteria for identifying a BO. In particular, an individual is considered a BO if they meet one of the following conditions:

1.2.1. Ownership Test: Directly or indirectly owning at least 25% of

(a) the charter capital of the enterprise; or

(b) the total voting shares of the enterprise.

Indirect ownership is defined as owning through other organisation(s). Even though the Decree 168/2025 does not make it clear to how the indirect ownership would be determined, the Agency for Private Enterprise and Cooperative Development (APED) under the Ministry of Finance gave an ‘unofficial’ example to the determination of indirect ownership as follows: Nam, an individual who owns 80% of Company A (who owns 50% of Company Z), would be considered a BO of Company Z who indirectly
owns 40% (80% x 50%) of Company Z.

1.2.2. Control Test: Holding the right to ‘control’ (chi phối) the approval of one of the following matters of the enterprise:

(a) appointment or dismissal of (a) all or the majority of the Board of Directors, (b) the Chairperson of the Board of Directors (Hội Đồng Quản Trị) or Board of Members (Hội Đồng Thành Viên), (c) the Director or General Director, (d) the legal representative of said enterprise;

(b) amendment of said enterprise’s charter;

(c) changes to the management structure of the enterprise; and

(d) reorganisation and dissolution of the enterprise.

1.3. The change in terminology from “decisively direct” (chi phối có tính quyết định) in an earlier draft to “direct the approval” (chi phối việc thông qua) in the final Decree 168/2025 creates ambiguity. It is now less clear whether the Control Test is limited to ‘positive control’ (the power to approve) or if it also captures ‘negative control’ (the power to veto). The latter interpretation, if correct, would mean that an individual holding only veto rights would be considered a BO under this test.

Identifying and declaring BO

1.4. While the definition of a BO includes indirect ownership, the Decree 168/2025 appears to narrow an enterprise's declaration obligation to the first layer of ownership, i.e. direct BO. This suggests that the initial burden on an enterprise is to identify its direct BOs.[1]

1.5. In addition, a joint stock company must declare its institutional shareholders holding to 25% or more of its total voting shares.

1.6 The declaration of BO must be made upon the initial establishment of the enterprise. Existing enterprises (established before 1 July 2025) must submit their BO information during their first registration of any change to their enterprise's registration details since 1 July 2025.

Who can access the information on BO?

1.7 Competent state authorities can request BO information from the National Business Registration Portal free of charge for anti-money laundering purposes. It appears that the information of BOs in the National Business Registration Portal will not be publicly accessible.

2) New Condition for Private Bond Offerings:

2.1. For non-public JSCs, a new debt-to-equity ratio requirement to issue private bonds is introduced. The company's total debt (including the value of the bonds to be issued) must not exceed five times its equity, based on the previous year's audited financial statement. Certain regulated entities, like credit institutions and real estate companies, are exempt.

2.2. This new requirement, while is said to protect bondholders by setting standards similar to public offerings, is unnecessary for private offerings, where buyers are typically professional investors who understand the risks. Furthermore, the rule could limit access to capital for issuers who genuinely need funding and have willing investors.

2.3. It is also unclear if the debt-to-equity test for a holding company will be based on its standalone or consolidated financial statements. This lack of clarity could lead to practical issues, especially if an issuer meets the requirement using its standalone financial statements but fails when using its consolidated statements.

3. Clarification on False Declaration of Charter Capital

3.1. Article 16.5 of the Amended Enterprise Law 2020 provides a clearer definition of the prohibited act of "false declaration of charter capital" (kê khai khống vốn điều lệ).

3.2. Under the Enterprise Law 2020, this act was broadly defined as declaring a higher charter capital than the amount actually contributed. The Amended Enterprise Law 2020 narrows this definition by clarifying that the violation occurs when a company fails to contribute the registered capital without subsequently carrying out the procedure to adjust its charter capital as required by law.

3.3. This is a significant clarification. It means that failing to contribute the capital within the 90-day period is not automatically considered a false declaration. The key violation is the failure to rectify this discrepancy by legally adjusting the registered charter capital downwards to reflect the actual contributed amount. Based on this clarification, it is now arguable that the Amended Enterprise Law 2020 may not capture a "round-tripping" capital contribution where a shareholder contributes capital, which the company then immediately lends back to the shareholder and the shareholder could then re-contribute the same funds until the registered charter capital amount is met.

4. Refining definition of Market Price

4.1. The definition of "Market Price" (Giá thị trường) for listed companies is upto include the average transaction price over the preceding 30 days. This aims to better reflect true value and prevent manipulation. However, the effectiveness of this provision may be limited, as it does not explicitly require factoring in trading volumes or excluding trades by interested parties, which could still allow for price distortion.

5. Charter Capital Reduction from Repurchasing Redeemable Preference Shares

5.1. A clear legal basis for charter capital reduction is added for when a company repurchases redemption preference shares. This is a welcome technical fix that resolves a long-standing issue where JSCs struggled to register capital reductions in such cases.

6. Exemption from Notifying Changes to Foreign Shareholder Information

6.1 Publicly listed companies and companies registered for trading on the UPCoM exchange are now exempt from the requirement to notify the business registration agency of changes in their foreign shareholders' information, as this is already managed by securities platforms.

This article is written by Ha Thanh Phuc with the support of Le Thanh Nhat.

Vietnam Business Law