HM&P lawyer shared challenges in implementing the declaration of beneficial owners as required by the amended Law on Enterprises

From July 1, 2025, the identification and declaration of information about beneficial owners has become a mandatory legal obligation for enterprises under the amended Law on Enterprises. This is an important reform step, in order to enhance transparency in business activities,  at the same time, it meets international standards on money laundering prevention. However, the process of implementing this obligation has in fact posed many obstacles for businesses in determining the right subjects to declare, the time of implementation, as well as preparing the necessary information in accordance with the law. In a face-to-face interview with the Voice of the People of Ho Chi Minh City (VOH) on August 1, 2025, Lawyer Nguyen Nhat Duong, representative of HM&P Law Firm ("HM&P"), specifically analyzed the legal issues surrounding this regulation, from the legal basis of the regulation, the correct understanding of "beneficial owners", to practical notes that businesses need to pay special attention to ensure full and timely compliance.

Why is it necessary to identify the beneficial owner?

According to Lawyer Duong, the addition of the regulation on beneficial owners to the Law on Enterprises comes from the urgent requirement to improve transparency and control of cash flow in enterprises, especially in the context that Vietnam is a member of the Financial Action Organisation (FATF) and participates in the OECD's BEPS Initiative.

This regulation also helps the authorities prevent the abuse of legal entities to evade taxes, launder money or conceal assets. Previously, the concept of beneficial owner only appeared in the Law on Prevention and Combat of Money Laundering, but now it has been integrated into the corporate legal system – a step to unify and enhance the effectiveness of the transparency obligation.

Properly understand the concept of "beneficial owner"

According to current regulations, an individual is identified as a beneficiary owner when:

• Directly owning 25% or more of charter capital in a limited liability company or partnership;
• Owning 25% or more of voting shares in a joint-stock company;
• Have the right to control or dominate important decisions such as appointment, dismissal, amendment of the charter, reorganization or dissolution of the company.

An important point that Lawyer Duong would like to emphasize here is that even if the ownership rate is low, the individual who has the actual controlling right according to the charter can still be considered as the beneficial owner.

Which enterprises must declare and when to update?

The declaration of information about beneficial owners is not applied to all types of enterprises, but is only limited to certain subjects according to the provisions of the amended Law on Enterprises. Accordingly, this declaration obligation mainly applies to types of enterprises with complex ownership structures and potential risks of being taken advantage of to hide cash flow. In contrast, state-owned enterprises, private enterprises and companies that have listed or registered for securities trading are not subject to declaration.

Regarding the time of implementation, lawyer Duong said that enterprises are responsible for declaring information on beneficial owners right at the time of establishment, and updating them when there are changes related to the ownership ratio, shareholders or the person with actual control. These changes must be notified to the business registration authority within 10 days from the date they arise. Particularly for businesses established before July 1, 2025, information about beneficial owners must be supplemented from the effective date of the law.

Situations that are often misleading in reality

Lawyer Duong also noted some situations where it is easy to miss the obligation to declare:

• Conversion of business type: for example, from a limited liability company to a joint-stock company;
• Increase/decrease charter capital, receive more members/shareholders;
• Changing the shareholder structure leads to a change in actual dominance.

HM&P recommends that businesses establish a mechanism for periodic review of ownership and control structures, and integrate the declaration of beneficial owners into procedures for changing business registration, such as changes in charter capital, type of business or founding shareholders. This approach saves time, costs and minimizes risks.

At the end of the interview, lawyer Duong affirmed: "Regulations on beneficial owners are an inevitable part of the process of standardizing corporate information and global financial integration. However, in order for compliance not to become a burden, businesses need to be specifically guided and accompanied by a team of legal experts with practical experience."

The identification and declaration of beneficial owners is not only a requirement to comply with the provisions of the amended Law on Enterprises, but also an essential step to improve transparency in corporate governance, prevent money laundering and protect the investment environment. However, with many technical regulations, businesses need to understand correctly, do it correctly and promptly to avoid unnecessary legal risks. With in-depth consulting experience in the field of corporate law, HM&P is ready to accompany businesses in reviewing the ownership structure, identifying the right beneficial owners and fully implementing the declaration and update procedures in accordance with current legal regulations.

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