Beneficial owners of enterprises: three identification criteria from 23 July 2026.

1. Enterprises must identify the individuals who actually own or control them

The Law on Enterprises introduced the concept of the beneficial owner from 1 July 2025. Enterprises must now identify the individual who really owns or controls them, rather than stop at the members or shareholders on paper.

The rules as originally drafted set out two identification criteria. A year of practical application showed that these two criteria did not cover every situation arising, in particular for enterprises with a dispersed or multi-layered ownership structure, with the result that many enterprises were unable to identify any person as a beneficial owner for declaration purposes. Decree No. 296/2026/ND-CP adds a third criterion and a group aggregation rule in order to address that gap.

This article analyses the identification criteria under the rules currently in force, the obligation to declare and to update, the sanctions, and the difficulties that remain for foreign invested enterprises.

2. The regime rests on the Law on Enterprises and its implementing decrees

3. The regime stems from anti-money laundering requirements

This concept did not come from purely domestic needs. In June 2023, the Financial Action Task Force on anti-money laundering placed Vietnam on its list of jurisdictions under increased monitoring, with a series of recommended actions. A key action is a legal framework on beneficial ownership that gives the competent authorities timely, adequate and accurate access to this information.

That background explains two features of the rules. First, the objective is to trace through to the ultimate individual, so every intermediate layer of legal entity must be reviewed all the way through. Second, the concept of the beneficial owner already existed in the Law on Anti-Money Laundering 2022 and applies to reporting entities such as banks and financial institutions when carrying out customer identification. The Law on Enterprises adds a second channel, namely centralised registration with the business registration authority.

Because the two channels exist side by side, an enterprise cannot refuse when a bank asks for beneficial ownership information to open an account: the bank is fulfilling its anti-money laundering obligations, not making an arbitrary request.

4. Beneficial owners are identified by three criteria applied in order

4.1. The Law defines a beneficial owner by actual ownership or control

The Law on Enterprises defines the beneficial owner of an enterprise with legal personality as an individual who actually owns its charter capital or has the power to control it. The definition excludes the representatives of state capital in enterprises wholly owned by the State, and in joint stock companies or multi-member limited liability companies.

4.2. The three criteria must be applied in a mandatory order

The rules now in force set three criteria for identifying the beneficial owner, applied in a mandatory order.

The order is mandatory. An enterprise may not pick the most convenient criterion: it must apply the ownership criterion first, then the control criterion, and only if neither produces a result may it apply the fallback.

4.3. Holdings of family groups and parties to an agreement are aggregated

This is the addition made by Decree No. 296/2026/ND-CP with the widest scope of impact. Where a group of individuals having a family relationship, or owning jointly under a contract or agreement, holds an aggregate ratio of 25% or more, then each individual within the group is a beneficial owner.

This rule changes the outcome for many family businesses. Before, if four siblings each owned 20%, none reached 25%, and the enterprise could conclude it had no beneficial owner under the ownership criterion. Under the current rules, the group's combined 80% exceeds the threshold, so all four must be declared.

For foreign investors, the rule directly affects family office structures and shareholder groups bound by voting agreements.

4.4. There is no settled method for multi-layered indirect ownership

The current rules define indirect ownership as ownership through another organisation, but do not say how to calculate it across several layers. In practice, advisers read the rules in two ways.

The first reading is to multiply the ratios cumulatively layer by layer. Where an individual owns 70% of company A abroad and A owns 100% of company C in Vietnam, that individual indirectly owns 70% of company C and is a beneficial owner.

The second reading is to test the threshold at each layer. Where the individual reaches the controlling threshold at the upper layer and the upper layer organisation reaches the threshold at the lower layer, the individual is regarded as the beneficial owner of the entire chain, without multiplying the ratios.

The two methods give different results for long chains. Suppose an individual owns 40% of company A, A owns 60% of company B, and B owns 100% of company C in Vietnam. Multiplying through gives 24%, below the threshold; testing each layer makes the individual a beneficial owner.

Until there is uniform guidance, the prudent course is to declare on whichever method gives the wider result, and keep a file explaining the method used.

5. When to declare depends on when the enterprise was established

5.1. New enterprises declare in their incorporation file

A new enterprise declares its beneficial owners in its establishment registration application.

5.2. Enterprises established before 1 July 2025 declare at their next registration change

An enterprise supplements its beneficial ownership information at the time it carries out the next procedure for registering a change to the contents of its enterprise registration or for notifying a change, unless the enterprise files earlier on its own initiative.

This is an unusual design: the obligation is not tied to a fixed date but arises at the next change to the enterprise registration. An enterprise with no changes has not yet reached its deadline.

The design also creates a practical risk. Enterprises often discover the obligation just when they urgently need another procedure, such as changing the legal representative or increasing capital. Tracing the beneficial owner through an overseas structure then holds up the whole application.

5.3. Listed companies do not notify changes

Listed companies and companies registered for securities trading do not have to notify changes in beneficial ownership, because securities law already requires disclosure.

5.4. Changes must be notified within 10 days

Changes in beneficial ownership must be notified within 10 days. The provincial business registration office under the Department of Finance receives the notice, or the hi-tech park management board for enterprises in such a park.

5.5. Enterprises should use the latest forms

Circular No. 121/2026/TT-BTC, effective from 21 August 2026, amends the enterprise registration forms, including the beneficial owner declaration form. Because the change is so recent, enterprises should download the form from the National Business Registration Portal when they file, rather than use a saved copy.

The information to be declared for each beneficial owner comprises full name, date of birth, nationality, ethnicity, gender, contact address, ownership ratio or power of control, and the details of the individual's legal identification documents.

6. The list of beneficial owners must be kept by the enterprise

The Law on Enterprises now includes the list of beneficial owners among the documents an enterprise must keep. The enterprise keeps them at its head office or another place stated in its charter, on paper or electronically.

The business registration authority keeps beneficial ownership information for at least 5 years after the enterprise is dissolved or declared bankrupt.

7. High fines reflect Vietnam's international anti-money laundering commitments

Decree No. 288/2026/ND-CP amends Decree No. 122/2021/ND-CP to add new sanctions and raise fines for these breaches.

The remedial measure is an order to supply the missing beneficial ownership information. The fines above apply to organisations; individuals are fined half, under the general rule for administrative sanctions in this field.

The VND 70 to 100 million range is high compared with other enterprise registration fines. This reflects the role of beneficial ownership in Vietnam's international anti-money laundering commitments: it is not an ordinary administrative obligation.

8. Foreign invested enterprises face practical difficulties

8.1. Tracing across several jurisdictions is often hard

The main difficulty lies not in the rules but in collecting the information. A Vietnamese enterprise must trace the ultimate controlling individual through several layers of entities in different jurisdictions, yet has no legal means to force an overseas parent company or investment fund to provide the information.

For an investment fund with hundreds of investors, identifying which individual reaches 25% at the last layer is often impossible in practice.

8.2. A manager may be recorded as the beneficial owner

If neither of the first two criteria identifies an individual, the enterprise must declare the manager with the greatest powers, usually the general director or the legal representative in Vietnam.

The enterprise should discuss this with that person in advance. The person will appear as a beneficial owner in state records, even though they hold no capital. Credit institutions and regulators may use this information for customer due diligence, and the person should know the consequences beforehand.

8.3. Nominee holdings in capital contributions are prohibited

Decree No. 296/2026/ND-CP expressly prohibits holding capital in another person's name. The rule targets nominee structures once common among foreign investors in sectors with ownership caps. Enterprises that still use such structures should reassess their legal risk, because the person who actually controls the enterprise must now be declared.

8.4. Enterprises should keep a file evidencing reasonable efforts

The rules currently in force do not state clearly what the legal consequences are where an enterprise has made efforts but is unable to identify a beneficial owner under the first two criteria. Pending guidance, an enterprise should retain a file comprising: a complete ownership chart by layer; the ownership ratio at each layer; shareholders' agreements and control agreements; and the written requests for information sent to the parent company or fund abroad, together with the responses received.

The file serves two purposes: it shows that the enterprise took the obligation seriously, and it explains why the fallback criterion was used.

9. What enterprises should do

1. Review now, without waiting for the next registration change. Identifying beneficial owners in a multi-layer structure can take weeks or months. Acting early prevents this obligation from holding up another urgent procedure.
2. Family businesses should recalculate under the group aggregation rule. A conclusion reached before 23 July 2026 that there is no beneficial owner may no longer hold.
3. Record the method used to calculate indirect ownership and why, since the rules on multi-layer calculation are not yet settled.
4. Talk in advance to the person who will be declared under the fallback criterion, and explain what it means to be recorded as a beneficial owner.
5. Keep the two channels consistent. The information given to the business registration authority and to banks under anti-money laundering law should match, because the two may be cross-checked.
6. Set up an internal update process that meets the 10-day deadline, especially if the shareholder base changes often.
7. For nominee structures, reassess the risk in light of the duty to declare the person in actual control and the ban on holding capital in another person's name.