On 17 June 2025, the National Assembly promulgated the Law on Amending the Law on Enterprises (“Amended LOE 2025”). The Amended LOE 2025 is set to take effect on 1 July 2025. The Amended LOE 2025 introduces several key changes that aim to enhance transparency and accountability within businesses operating in Vietnam. These changes include new concepts and supplementary provisions to existing regulations, laying the groundwork for a more robust and transparent corporate environment. Below are the key takeaways:
I. Beneficial Ownership Disclosure Now Mandatory in Enterprise Records
One of the key changes involves the concept of beneficial ownership within enterprises. This concept is newly introduced to enhance corporate transparency, aligning with practices used in other jurisdictions. A beneficial owner is defined as an individual who ultimately owns the charter capital or holds controlling rights over the enterprise, excluding state representatives in state-owned enterprises. The amendments bring several obligations for enterprises regarding their beneficial owners:
Registration Documentation
Registration documents for companies must now include lists of beneficial owners. This requirement aims to enhance transparency and allow for the accurate tracking of who ultimately controls or profits from the company.
Retention and Disclosure
Enterprises are now obligated to collect, update, and store information regarding their beneficial owners. This information must be provided to competent state agencies upon request. Enterprises must retain beneficial ownership information for at least five years following dissolution or bankruptcy. Lists of beneficial owners, including detailed personal information such as name, birth date, nationality, and ownership percentage, must be maintained. This retention policy ensures that there is a clear record of ownership that can be referred to if any legal issues arise after the company ceases operations.
Notification Requirements
Any changes in beneficial ownership must be reported to the business registration authority, except for publicly listed companies and those registered on stock exchanges. This ensures that any shifts in control or ownership are promptly recorded and monitored, preventing any potential misuse or concealment of information.
Implementation and Compliance
The government will provide detailed guidelines on the criteria for identifying beneficial owners, the entities required to declare this information, and the procedures for its collection, retention, and sharing. These guidelines will help businesses understand their obligations and the steps they need to take to remain compliant with the new law.
Due to these amendments, the use of nominee structures for enterprises may no longer be feasible. The new regulations require detailed and transparent disclosure of beneficial ownership, which could render nominee arrangements impractical.
For enterprises established before 1 July 2025, the Amended LOE 2025 allows information on beneficial owners to be updated at the time of the next registration change (or earlier if the enterprise opts to do so). This avoids imposing separate compliance procedures.
Government authorities will be granted free access to this data for purposes such as anti-money laundering enforcement.
II. Prohibited Actions and Accuracy Obligations
Amendments to Article 16 emphasize the prohibition of falsifying, inaccurately declaring or dishonestly registering enterprise information. This includes fraudulent claims about charter capital, which means that overstating charter capital without contributing the full amount or failing to adjust the registered capital accordingly, and intentional misevaluation of contributed assets.
Violations can lead to civil and regulatory liability for legal representatives. Enterprises must ensure that all information provided during registration and operation is accurate and truthful to avoid severe penalties.
III. Restrictions on Establishing and Managing Enterprises
Certain individuals, including government officials and public employees, are restricted from establishing or managing enterprises unless stipulated under laws related to science, technology, innovation, and digital transformation. This restriction aims to prevent conflicts of interest and ensure ethical governance within businesses.
IV. New Debt-to-Equity Cap for Private Placement
The Amended LOE 2025 also mandates the criteria for private placement and conditions under which businesses must operate. Non-public companies issuing private bonds must now meet a maximum debt-to-equity ratio of 5:1, based on audited financial statements. Exemptions apply to state-owned enterprises, real estate bond issuers, and certain regulated entities (e.g., banks, insurers, and securities firms).
This cap is designed to control financial leverage and enhance investor protection. Enterprises should review their balance sheets to ensure compliance before any new issuance after 1 July 2025. By setting a clear ceiling on leverage, the Amended LOE 2025 reinforces existing provisions under securities laws and related decrees governing the bond issuance, aligning Vietnam’s regulatory approach with international norms while promoting transparency and financial discipline in the corporate bond market.
The Amended LOE 2025 allows private corporate bond offerings that were disclosed to the Stock Exchange before 1 July 2025 to remain governed by the previous legal framework (specifically, Law No. 59/2020/QH14 as amended by Law No. 03/2022/QH15). These offerings are exempt from the new requirements introduced in the Amended LOE 2025, ensuring continuity and legal certainty for issuers who initiated the process under the earlier regulations.
V. Market Price Determination for Capital Contributions or Shares in Vietnam
The Amended LOE 2025 specifies methods to determine market prices of capital contributions or shares, including listed shares and non-listed shares. For listed shares or shares registered for trading on the securities exchange system, the market price will be the average trading price over the 30 consecutive days preceding the valuation date. Alternatively, it can be the price agreed upon between the buyer and the seller or the price determined by a licensed valuer.
For capital contributions or shares that are not listed or registered for trading, the market price is defined as the most recent transaction price on the market, the agreed price between the buyer and the seller or the price assessed by a licensed valuer. These methods ensure that the valuation reflects fair market conditions and provides a reliable basis for financial and legal purposes.
VI. Post-Registration Oversight and Decentralized Supervision
Provincial-level authorities, such as the People’s Committees, now have the responsibility to issue and implement transparent procedures for enterprise registration checks. They are also tasked with coordinating the sharing of data on enterprise legal status and shifting from pre-approval to post-inspection enforcement, in line with Resolution 68-NQ/TW on private economic development. This change emphasizes the Government’s focus on risk-based oversight rather than prior restraint.
*Disclaimer:
The information contained in this article is for general informational purposes only and does not constitute legal advice or a legal opinion. Readers should not act or rely on any information herein without seeking professional legal advice specific to their circumstances. The views expressed are those of the authors and may not reflect any official views of VILAF.