Following recent legislative reforms aimed at increasing corporate transparency and aligning Vietnam’s legal framework with international anti-money laundering (AML) standards, the government has taken a significant step forward with the issuance of Decree No. 168/2025/ND-CP on enterprise registration (“Decree 168”). Effective from 1st July 2025, Decree 168 replaces Decree No. 01/2021/ND-CP and introduces, for the first time, comprehensive rules on identifying and disclosing a beneficial owner of enterprise with legal personality (“BO(s)”).
This development follows closely the enactment of Law No. 76/2025/QH15 on Amendments to the Law on Enterprises, which was passed just one month earlier (the “Amended Enterprise Law 2025”) and officially introduced the concept of BOs into Vietnamese legislation. A BO is defined as a natural person who directly or indirectly owns or controls an enterprise, excluding persons acting as representatives of state ownership in wholly state-owned enterprises or representatives of state capital in joint stock companies or multi-member limited liability companies, as provided by the laws. This marks a turning point in Vietnam’s efforts to meet Financial Action Task Force (FATF) compliance requirements and strengthen the integrity of its business ecosystem.
While Decree 168 provides a foundation for identifying BOs, two criteria remain complex and somewhat ambiguous in implementation: indirect ownership and control rights. Both elements present challenges for enterprises as they attempt to interpret and apply the new requirements in practice.
Indirect Ownership
Decree 168 specifies that an individual is deemed to have indirect ownership when they hold 25 per cent or more of the charter capital or total voting shares of an enterprise through another organization. Although this is a step forward in defining indirect ownership, Decree 168 stops short of clarifying how this should be calculated, and whether businesses are obligated to trace and identify the ultimate natural person at the end of an ownership chain.
One widely recognized method to determine indirect ownership is the ownership chain approach. This involves multiplying ownership percentages through each layer of a corporate structure. For instance, if a natural person owns 70 per cent of Company A, and Company A owns 40 per cent of Company B, the individual would be considered to indirectly hold a 28 per cent stake in Company B.
However, this approach can be easily circumvented. In complex structures involving three or four intermediary companies – for example, a 100%-98%-50.1%-50.1% ownership chain – the final calculated indirect interest may fall just below the 25 per cent threshold (e.g., 24.6%), despite the individual having de facto control over the enterprise.
When voting shares are involved, the calculation of ownership thresholds become more complex. Total voting shares typically include both common shares and voting preference shares, each of which may carry different voting rights. These variations must be appropriately accounted for when determining control or ownership percentages.
Currently, Decree 168 does not explicitly require companies to declare BOs who meet indirect ownership criteria. However, for joint-stock companies, there is a mandatory requirement to report organizational shareholders owning at least 25 per cent of the total voting shares – a mechanism intended to assist authorities in identifying BOs who meet indirect ownership criteria. This raises the question: are state authorities expected to take the lead in determining BOs based on such disclosures?
Over time, as the legal framework stabilizes, enterprises may be formally required to declare BOs who meet indirect ownership criteria in full, in line with FATF expectations and international practice. To mitigate future compliance risks, companies should begin proactively reviewing ownership layers and identifying ultimate BOs as part of their internal risk management procedures.
Control Rights
Another complex area under Decree 168 lies in the interpretation of “control rights”. According to Decree 168, an individual is considered a BO if they have the right to control the outcome of at least one of the following corporate decisions:
i. Appointment, removal, or dismissal of a majority or all members of:
- The Board of Directors;
- The Chairman of the Board of Directors;
- The Chairman of the Members’ Council; and
- The legal representative, director, or general director.
ii. Amendments to the company’s charter;
iii. Changes to the company’s governance structure; and
iv. Reorganization or dissolution of the company.
Control is deemed to exist when decisions cannot be passed without the approval of a particular individual, or when a particular individual has the power to veto such decisions even if such decisions meet the voting threshold prescribed by law.
Control may be exercised either directly or indirectly through a variety of contractual or informal mechanisms, including private agreements among shareholders or members, arrangements based on individual business reputation or market-driven influence, control rights held by founding shareholders or the advisory authority of consultants – each of which may result in de facto control.
Disclosure of individuals with control rights may be a sensitive issue for certain companies. However, under current regulations, companies are responsible for self-assessing and truthfully declaring such individuals based on the actual exercise of control, without the need to submit supporting documentation.
Failure to provide truthful or accurate information in the enterprise registration dossier or in any dossier related to changes in enterprise registration, including details of BOs, it may result in administrative penalties ranging from VND20,000,000 to VND30,000,000.
In cases involving complex shareholder agreements, joint venture agreement, or informal and private contractual relationships, as well as ownership structures with multiple layers of intermediary entities, determining whether an individual meets the threshold for “control rights” may be challenging and require careful analysis.
Recommendations for Enterprises
In response to the fresh Amended Enterprise Law 2025 and Decree 168, enterprises should proactively take steps to ensure full compliance with the new regulations on BO.
First, it is essential for enterprises to conduct a comprehensive review of their current ownership and governance structures to identify individuals who may qualify as BOs, whether through direct ownership, indirect ownership, or control rights. This assessment is critical not only for accurate disclosure but also for mitigating future legal and regulatory risks.
Second, enterprises should establish clear internal procedures for gathering, verifying, and maintaining BO information. These procedures should be formalized within the organization’s compliance framework and supported by proper documentation to ensure transparency, accountability and audit readiness.
Third, given the complexity of the new regulations, particularly the nuanced definitions of indirect ownership and control rights, enterprises are encouraged to consult legal experts. Professional advice will help ensure accurate interpretation and application of the law, maintain regulatory compliance and align with international best practices.
Looking Ahead
Decree 168 marks a pivotal moment in Vietnam’s corporate regulatory landscape. While implementation may present certain challenges, the clear direction of travel is toward enhanced transparency, stronger accountability, and closer alignment with international standards.
Enterprises that take early action to understand and integrate BO requirements into their operations will not only reduce legal and compliance risks but also strengthen their reputation and improve their attractiveness to investors in an increasingly globalized market.
