In a significant move to modernize Vietnam’s corporate regulatory framework, the National Assembly officially promulgated the Law on Amending the Law on Enterprises (the “Amended EL 2025”) on 17 June 2025. The Amended EL 2025 takes effect from 1 July 2025, marking a pivotal shift in corporate governance, transparency and compliance obligations for enterprises and investors operating in Vietnam.
To help stakeholders navigate these changes, we would like to summarize the most impactful revisions and their implications below.
Enhanced Regulation on Beneficial Owners (BOs)
One of the most notable changes in the Amended EL 2025 is the introduction of strict regulations on beneficial ownership, aiming at strengthening corporate transparency and combat fraud, tax evasion, corruption, money laundering, and terrorism financing.
Definition of BO
Under the Amended EL 2025, the concept of a BO is defined in general terms, establishing general principles consistent with the Law on Anti–Money Laundering No. 14/2022/QH15 dated 15 November 2022. Accordingly, a BO is an individual who has actual ownership of charter capital or who has the power to control the enterprise, excluding any representatives of the State in state – owned enterprises.
Detailed criteria for identifying BOs, along with mechanisms for declaration, reporting, and data sharing, will be outlined in a forthcoming Government decree.
Enterprises’ Obligations with Respect to BOs
Enterprises must collect, update, and maintain records of their Bos, and provide such information to competent state authorities upon request. They must also retain a list of BOs (if any) at their head office or another location specified in their charter.
Registration Requirements
At the time of initial enterprise registration, enterprises must submit a list of BOs (if any). Any subsequent changes to the information on BOs must be duly notified to the business registration authority, except in the case of listed companies and companies registered for securities trading.
For enterprises established prior to the effective date of the Amended EL 2025, the BOs’ information update requirement shall be met concurrently with the next registration procedure for the changes of enterprise registration contents, unless the enterprise opts to submit earlier. This approach helps reduce administrative procedures burden and compliance costs for enterprises.
Business registration authorities will have broader authority to request enterprises to report on their compliance with the Enterprise Law 2020 (as defined below), including obligations relating to BOs. In addition, business registration authorities must retain BOs’ information for at least five (5) years following the enterprise’s dissolution or termination. Competent authorities will also be empowered to access BOs’ information stored in the National Enterprise Registration Information System for anti-money laundering purposes free of charge.
As a result of these amendments, nominee structures may become unviable for enterprises. Besides, these new regulations will significantly increase the compliance tasks, requiring the establishment of robust internal procedures to collect, monitor and update BOs’ information. Failure to comply may expose enterprises and individuals to legal risks. Enterprises should review their ownership structures and internal systems for collecting, managing, storing, and updating BOs related information to ensure readiness when the new regulations come into force.
Clearer Guidelines on Market Price Determination for Shares
The Amended EL 2025 provides clearer guidance on the determination of market price for listed shares or shares registered for trading on the securities exchange system. Specifically, the market price shall be determined based on (i) the average trading price over the thirty (30) consecutive days preceding the valuation date, (ii) the price agreed upon between the buyer and the seller, or (iii) the price assessed by a licensed valuer.
For capital contributions or shares that are not listed or registered for trading on the securities exchange system, the method for determining market price remains unchanged, the market price shall be determined based on (i) the most recent transaction price on the market, (ii) the agreed price between the buyer and the seller, or (iii) the price assessed by a licensed valuer.
These provisions aim to standardize valuation practices, reduce disputes, and support fairer transactions in both public and private markets.
Clear Definitions to Combat Misrepresentation and Fraud
The Amended EL 2025 introduces a clear definition of the act of misrepresenting charter capital (“kê khai khống vốn điều lệ” in Vietnamese), that declaring a charter capital amount greater than the actual amount contributed at the statutory deadline, without registering the amendment in accordance with the law. The Amended EL 2025 provides a clearer legal basis for enforcement and eliminates interpretational inconsistencies.
Moreover, Amended EL 2025 supplement a prohibited act applicable to enterprises is submitting falsified registration documents (“kê khai giả mạo hồ sơ” in Vietnamese), thereby reinforcing legal grounds for sanctions against fraudulent conduct during enterprise registration.
These definitions will provide a legal basis for authorities to more effectively detect and sanction violations, strengthening the integrity and transparency of enterprise registration practices.
Revised Conditions and Procedures for Enterprise Registration
Under the Amended EL 2025, government officials, public employees, and civil servants may still be allowed to establish enterprises or contribute capital to enterprises in accordance with laws on science, technology, innovation, and national digital transformation. This provision is aligned with national policies to promote science, technology, innovation, and digital transformation and is expected to facilitate technology transfer, accelerate the commercialization of research, and foster innovation in key industries.
Furthermore, individual applicants are no longer required to submit judicial record certificates when registering a new enterprise. Where necessary, business registration authorities will coordinate directly with public security agencies. This amendment is expected to streamline administrative procedures, reduce burdens for businesses, and shorten the enterprise establishment timeline.
Strengthening Governance of Joint Stock Companies (JSCs)
Debt-to-Equity Ratio for Private Bond Issuance
For JSCs that are not public companies, private bond placements must comply with a new debt-to-equity ratio cap: total liabilities (including the bonds to be issued) must not exceed five (5) times the equity as reflected in the latest audited financial statements, subject to certain exceptions for specific types of enterprises. The new condition will improve investor protection by ensuring that companies issuing bonds maintain a reasonable financial leverage.
Private bond placements for which the issuer has submitted the required information disclosure to the Stock Exchange prior to the effective date of the Amended EL 2025 (i.e., before 1 July 2025) may proceed under the existing Law on Enterprises No. 59/2020/QH14, amended by Law No. 03/2022/QH15 (the “Enterprise Law 2020“).
Additional Amendments to Strengthen the Legal Framework Governing JSCs
In JSCs without an Inspection Committee, if the Board of Directors fails to convene the General Meeting of Shareholders in accordance with Article 140.2 of the Enterprise Law 2020, shareholders (or groups of shareholders) holding at least 5% of the total ordinary shares, or a lower percentage as specified in the company’s charter, shall have the right to convene the meeting within thirty (30) days thereafter. This amendment is expected to enhance shareholder rights and provides an effective mechanism for minority shareholders to convene meetings in cases of management inaction.
The Amended EL 2025 further expands the circumstances under which a JSC may reduce its charter capital, allowing such reduction where the company repurchases shares in response to requests from shareholders holding redeemable preferred shares. This addition serves to close gaps in the Enterprise Law 2020 and ensures comprehensive regulation of all relevant cases.
Moreover, the Amended EL 2025 clarifies that a JSC must dissolve if it fails to maintain the minimum required number of shareholders (e.g., three (3) shareholders) for six consecutive months without converting into an appropriate form of enterprise. The clearer standard will ensure timely dissolution of non-compliant enterprises and enhance market order.
Enhanced Regulatory Oversight and Data Sharing
The Amended EL 2025 adds a provision requiring agencies managing specialized enterprises to integrate and share enterprise registration information with the National Enterprise Registration Information System. Improved data sharing will enhance regulatory oversight and strengthen inter-agency cooperation, contributing to more effective enterprise management.
In addition, provincial-level People’s Committees are responsible for organizing the business registration authorities and issuing transparent procedures for verifying registration matters. This shift from pre-approval control to post-registration supervision reflects the Government’s commitment to streamlining processes while maintaining robust oversight.
Progressive Proposals Omitted from the Amended EL 2025
While the Amended EL 2025 introduces several important reforms to modernize Vietnam’s corporate legal framework, it omits a number of progressive proposals that were included in the draft outline released on 8 January 2025 (the “Draft Outline”)[1]. These omissions represent missed opportunities to further enhance legal clarity and corporate governance.
Unrealized Clarification on Charter Governance Flexibility
While the Enterprise Law 2020 permits detailed governance provisions within the charter of the company, it does not clearly delineate the scope of deviations permitted from the statutory framework. The Draft Outline addressed this by requiring that the charter of the company explicitly detail the principles or establish the maximum and minimum limits for provisions on organizational management and corporate governance. However, these regulations were not included in the Amended EL 2025.
Missed Harmonization with the Civil Code
The Draft Outline sought to resolve inconsistencies between the Enterprise Law 2020 and other regulations (e.g., the Civil Code) to ensure legal coherence. Nevertheless, these proposed changes are absent from the Amended EL 2025, including:-
- Regarding the functions and responsibilities of legal representatives, the Draft Outline amends Article 12.1 to align with the Civil Code, clarifying that a legal representative acts on behalf of the enterprise in executing and performing civil transactions.
- With respect to enterprise branches, the Draft Outline revises Article 44 to affirm that a branch does not possess independent legal personality, ensuring consistency with civil law principles.
Epilogue
The Amended EL 2025 introduces several significant proposals aimed at refining the legal framework for enterprises, thereby bringing about substantial changes to Vietnam’s business environment. Enterprises should proactively reassess their operational models and ensure full compliance with the forthcoming legal requirements.
We are closely monitoring the draft decree that addresses matters delegated by the National Assembly to the Government for further regulation. These include provisions on application dossiers, registration processes and procedures, inter-agency coordination in enterprise registration, online business registration via electronic information networks, criteria for identifying BOs, and other BO-related regulations. We will provide detailed analyses of these developments to assist enterprises in navigating the evolving regulatory landscape.
Timely insights will be shared to help enterprises stay informed and compliant.
For further information, please contact:
Pham Thi Thanh Lan, Partner, Indochine Counsel
lan.pham@indochinecounsel.com
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[1] Please refer to this link: https://vibonline.com.vn/du_thao/du-thao-de-nghi-xay-dung-luat-doanh-nghiep-sua-doi
