Acting as a Nominee Investor: “Helping Out” Once, Facing Long-Term Legal Risks? 

A concerning reality: Many individuals agree to serve as nominal owners or legal representatives for businesses without actually contributing capital or exercising management control. Many believe this is simply “helping a friend,” but in fact, they are exposing themselves to potential legal liability. Notably, effective from July 23, 2026, Decree No. 296/2026/ND-CP has officially tightened regulations on such practices with clear 

Prohibition on acting as a nominee for capital contribution on behalf of others

One of the most notable new provisions of Decree No. 296/2026/ND-CP is the addition of a prohibition on acting as a nominee to contribute capital on behalf of others. Specifically, as amended and supplemented in Clause 1, Article 4 of Decree No. 168/2025/ND-CP:

“Founders or enterprises shall self-declare business registration dossiers and shall be legally responsible for the legality, truthfulness, and accuracy of information declared in business registration dossiers and reports. Owners, shareholders, and members of the company shall fully comply with regulations on contributed assets as stipulated in Clause 2, Article 34 of the Enterprise Law, and shall not act as nominees for others to contribute capital to the enterprise.”

This provision imposes a direct legal obligation on owners, shareholders, and members of the company. Capital contributors must be the actual registered holders of their contributed capital and must comply with the regulations on contributed assets under the Enterprise Law. The addition of this provision aims to eliminate the practice of using legal entities to conceal true owners, contributing to a healthier investment and business environment.

Legal consequences of violations

Acting as a nominee for capital contribution is not merely a violation of business registration regulations but also carries serious legal risks:

• Civil liability: Nominees may be held liable for the financial and legal obligations of the enterprise in their capacity as owners or capital-contributing members, despite not actually owning the capital.
• Administrative liability: Untrue declarations in business registration dossiers may be subject to administrative penalties as prescribed by law.
• Criminal liability: In serious cases, nominee arrangements may be prosecuted for “fraud against customers” or other offenses related to commercial fraud, depending on the nature and consequences of the act.

Identification and declaration of beneficial owners of enterprises

In addition to the prohibition on nominee capital contributions, Decree No. 296/2026/ND-CP also introduces detailed provisions on the identification of beneficial owners of enterprises to enhance transparency in ownership structures.

Accordingly, a beneficial owner is one or more individuals identified based on the following criteria:

• An individual who directly or indirectly holds 25% or more of the charter capital or 25% or more of the total voting shares of the enterprise. Where a group of individuals with family relationships or under a contract jointly holds 25% or more, all individuals in such groups are beneficial owners. For partnerships, all general partners are beneficial owners regardless of their capital contribution or voting ratios.
• Where no individual meets the ownership criteria, the enterprise identifies the beneficial owner through other methods of actual control, such as the power to appoint, dismiss, or remove a majority or all members or the Chairman of the Board of Directors or Members’ Council, the Director or General Director; the power to amend the enterprise’s charter; to change the organizational structure; to decide on financial policies, investment, and operations; or to reorganize or dissolve the enterprise.
• Where no individual meets the above criteria, the enterprise identifies the individual who is the senior manager with the highest authority to act on behalf of the enterprise.

Enterprises are responsible for declaring and notifying information about beneficial owners to the business registration authority. Declarations shall follow a priority order: individuals meeting ownership criteria first; if none, individuals with actual controlling rights; and finally, the senior manager with the highest authority.

Legal recommendations for individuals and enterprises

To avoid legal risks arising from nominee arrangements, individuals and enterprises should consider the following:

• Do not accept nominee arrangements: Regardless of the reason, individuals should not agree to act as nominal owners, capital-contributing members, or legal representatives for an enterprise in which they do not genuinely participate in capital contribution or management.
• Review ownership structures: Enterprises should conduct a thorough review of their ownership structures to ensure that all capital-contributing members are the genuine owners of their respective capital portions, with no nominee arrangements in place.
• Declare complete beneficial owner information: Enterprises are legally obliged to identify and accurately declare beneficial owners in accordance with the provisions of Decree No. 296/2026/ND-CP.
• Update legal records: If nominee arrangements are discovered, the enterprise should promptly carry out procedures to adjust or change capital-contributing members to bring operations back into full compliance with legal regulations.

Conclusion

Decree No. 296/2026/ND-CP, effective from July 23, 2026, marks an important tightening of state management over business registration activities. The prohibition on nominee capital contributions, together with the requirement for transparent declaration of beneficial owners, reflects the regulatory authority’s clear stance: to eliminate “phantom enterprises,” “nominal owners,” and practices that misuse legal entities to conceal true owners. Furthermore, the promotion of information technology applications and the streamlining of administrative procedures demonstrate the Government’s reform efforts to facilitate business operations.

“Helping a friend” by acting as a nominee for an enterprise is no longer a simple favor but carries significant and unpredictable legal risks. Individuals and enterprises must enhance their awareness and strictly comply with legal provisions to protect their legitimate rights and interests, while contributing to building a transparent and healthy business environment.