From July 1, 2025, Vietnam will officially implement the regulation on “Ultimate Beneficial Owners” (UBO) within the Law on amending and supplementing certain articles of the Law on Enterprises, marking a significant turning point in efforts to enhance corporate transparency and combat money laundering. However, this new regulation also poses some significant challenges, especially for foreign investors with complex ownership structures.
Specifically, according to the Law on amending and supplementing certain articles of the Law on Enterprises No. 76/2025/QH15 (“Law on Enterprises 2025”), passed by the National Assembly on 17 June 2025, enterprises are required to provide the business registration authority with “a list of ultimate beneficial owners of the enterprise, if any”, when registering their business. Enterprises that were registered before 1 July 2025 will be required to supplement information on their ultimate beneficial owners when carrying out procedures for registering changes to enterprise registration details.
When the concept of ultimate beneficial owner was introduced, many legal experts raised concerns about potential conflicts with the core principles of the Civil law system, as the concept of ultimate beneficial owner originates from the Common law system. This article does not address matters related to legal systems but instead focuses solely on issues relevant to foreign investors’ activities in Vietnam.
Why is the concept of “ultimate beneficial owner” introduced?
The inclusion of the ultimate beneficial owner concept in the Law on Enterprises 2025 is seen as Vietnam’s way of complying with Recommendation 24 of the Financial Action Task Force (FATF) on anti-money laundering (AML). This decision became even more urgent after Vietnam was placed on FATF’s “grey list”. The main objective is to increase corporate transparency and combat illegal financial activities such as fraud, tax evasion, corruption, and terrorist financing. The concept of ultimate beneficial owner is also expected to address “shadow ownership”, where individuals or organizations control businesses without publicly disclosing their identities, which has been a loophole for corruption and money laundering.
Who is an ultimate beneficial owner?
According to Clause 35, Article 4 of the Law on Enterprises 2025, an ultimate beneficial owner of an enterprise with legal entity status is an individual who actually owns the charter capital or has the right to control that enterprise. This regulation excludes direct owner representatives in state-owned enterprises with 100% charter capital and representatives of state capital in joint-stock companies and limited liability companies with two or more members, as stipulated by law on the management and investment of state capital in enterprises.
Thus, it should be understood that the ultimate beneficial owner only pertains to enterprises with legal entity status (excluding private enterprises and business households), and the ultimate beneficial owner must be understood as an individual who has actual ownership of capital or control over that enterprise.
Obligations of enterprises regarding ultimate beneficial owner
From July 1, 2025, when registering a business, enterprises must provide the business registration authority with a “list of the enterprise’s ultimate beneficial owners – if any”. Enterprises established before this date will also need to supplement information about the ultimate beneficial owner when carrying out business registration content amendment procedures. The list of beneficial owners shall include the following key information: “full name; date of birth; nationality; ethnicity; gender; contact address; ownership ratio or controlling rights; and information on the legal identification documents of the ultimate beneficial owner of the enterprise”[1].
Enterprises have the obligation[2] to “Collect, update, and retain information about the enterprise’s ultimate beneficial owners; provide information to competent state agencies when requested to identify the ultimate beneficial owners of the enterprise”. For new enterprise registration procedure[3], the list of ultimate beneficial owners must be submitted along with the enterprise establishment registration dossiers. During operation, if there is any change in ultimate beneficial owner information, the enterprise must also notify the business registration authority (this regulation does not apply to listed companies and companies registered for securities trading).
Competent state agencies have the right to request the business registration authority to provide information on the enterprise’s ultimate beneficial owners for anti-money laundering purposes, without incurring fees. The Government will issue detailed regulations on the criteria for identification, entities responsible for declaration, and the declaration, provision, retention, and sharing of this information[4].
For enterprises established before July 1, 2025, the supplementation of information about the ultimate beneficial owner and information to identify the ultimate beneficial owner will be carried out concurrently at the time the enterprise performs the nearest business registration content amend mentor notification of business registration content amendment, unless the enterprise requests to supplement the information earlier. Thus, from July 1, 2025, all enterprises subject to providing ultimate beneficial owner information must provide this information to the business registration authority when carrying out procedures for changing/adjusting business registration content.
Challenges for foreign investors
The implementation of the ultimate beneficial owner concept is considered an important step for Vietnam, aligning with international standards. However, this regulation also poses significant challenges for the multi-layered ownership structures of foreign investors, especially in restricted investment sectors.
Many foreign-invested enterprises currently operating in Vietnam do so through intermediary legal entities, also known as holding companies. Foreign investors often use multi-layered structures to optimize taxes, manage risks, or for other strategic reasons. The question arises: with this regulation, will these enterprises have to disclose information about the actual individual beneficial owner behind many layers of intermediary legal entities in various countries?
This new regulation is expected to help management agencies more easily “pierce through” ownership layers to identify the ultimate owner, thereby detecting cases of investment limit violations or fraud. The issuance of a detailed guiding decree from the Government will further clarify the identification criteria and the entities required to report ultimate beneficial owners. It is anticipated that when the decree is promulgated, there may be some exclusions or specific regulations on the direct capital ownership ratio of individuals in the enterprises subject to this reporting.
Businesses and investors are awaiting specific guidelines to ensure compliance with this new regulation.
Stay tuned for upcoming articles on this topic by LNT & Partners.
[1] Clause 5 Article 25 Law on Enterprises 2025
[2] Article 8 and Article 11 Law on Enterprises 2025
[3] Articles 20, 21, 22 and 23 Law on Enterprises 2025
[4] Article 33, clause 5 Article 217 Law on Enterprises 2025
