NEW POINTS AND LEGAL RECOMMENDATIONS REGARDING BENEFICIAL OWNERS

Compared with the previous Decree No. 168/2025/ND-CP, Decree No. 296/2026/ND-CP has completely changed the method of identifying and declaring the beneficial owner (Beneficial Owner – BO). The new regulations not only amend the declaration procedures, but also approach the international standards of the Financial Task Force (FATF) and anti-money laundering law.

Decree No. 296/2026/ND-CP officially takes effect from July 23, 2026. Enterprises need to pay attention to this timeline to promptly review and update declaration documents according to new regulations, especially noting regulations prohibiting other people’s names to contribute capital.

Below are 5 core changes and important legal recommendations for businesses and consultants:

I. 5 OUTSTANDING NEW POINTS ABOUT THE BENEFICIAL OWNER

1. Changing the nature of the BO concept

Instead of just rigidly relying on the number “Owning from 25% of charter capital/voting shares”, the new Decree focuses on the nature: the individual directly or indirectly has the ultimate actual ownership or control over the enterprise.

Practical example: Mr. A is not in the name of any shares in Company X, but he controls Company X through a chain of intermediaries and implicit agreements. According to the new regulations, Mr. A is still identified as the beneficial owner.

2. Adding the principle of ‘tracing’

(Look-through) Last Owner
Enterprises are not allowed to stop at declaring direct shareholders/members. Instead, they are required to review and “look through” each level in the ownership structure (no matter how many layers of intermediary legal entities) to identify the natural person who has the ultimate ownership or control.

3. Expansion of the scope of beneficial owner

Decree No. 296/2026/ND-CP closes the previous loopholes for concealing ownership by adding a series of new cases, combined with a complete prohibition of acting as a nominee for capital contributions.

• Group of individuals who have a family relationship own 25% or more.
• Group of individuals who collectively own through implicit contracts or agreements.
• Individuals own through legal agreements (entrustment agreements, trust, etc.) according to the anti-money laundering law.
• All general partners in a partnership are BO, regardless of the capital contribution ratio.

4. Clarification of the “Control” critera

In addition to the right to appoint/remove key personnel or amend the charter, the criteria for the assessing “actual control” are extended including the right to decide:

• Financial policies;
• Investment activities;
•  The enterprise’s core business strategy;
• Reorganization (merger, full division, partial division) or Enterprise dissolution.

5. Establishment of a mandatory sequence for identifying BO

The identification of the BO must now strictly follow the order of priority. Skipping or bypassing steps will lead to inaccuracies in legal records:

• Step 1: Identification based on ownership percentage. Look for individuals with ownership rights of 25% or more (including direct, indirect or cross-ownership through multiple legal entity layers).
• Step 2: Identification based on actual control (Only applicable when Step 1 yields no results). If no one reaches the 25% mark or the ownership is scattered, the individual who holds the “controls” (financial, human resources, charter, investment, etc.)
• Step 3: Identification based on the management title (last solution). If both step 1 and step 2 are applied and still cannot determine who is the real owner, the enterprise must declare the manager with the highest authority (e.g. General Director, Chairman of the Board of Directors/ Members).

II. LEGAL RECOMMENDATIONS

The change from “percentage-based approach” to an “actual control-based approach” aims to eliminate acts of using relatives and intermediate legal entities to avoid obligations. To comply with Decree 296/2026/ND-CP, businesses and consulting units should note:

1. For operating enterprises:

• Conduct internal audit of ownership structure: Groups and groups of companies with cross-ownership structure, multi-layer ownership structures need to immediately review the entire organizational chart to redefine the BO according to the new standard.
• Collect commitments from shareholders/members: Enterprises should ask major shareholders to sign a commitment to clarify whether they are holding shares on behalf of another person (nominees) or are governed by any other agreement. Especially from July 23, 2026, acting as a nominee shareholder or nominee capital contributor is a prohibited act under Decree 296/2026/ND-CP.
• Update shareholder/member registers: ensure internal records always store and update information about BO to be ready to provide when requested by state agencies (especially the anti-money laundering agency).

2. Impacts on M&A and Legal Consulting Activities:

• Enhance legal due diligence: A lawyer cannot just look at the business registration certificate or the shareholder register to assess who ultimately exercises control.
• Conduct enhanced compliance risk assessment: The current false declaration is not only a violation of business registration procedures, but it can lead to very heavy sanctions according to the Law on Prevention and Control of Money Laundering, even affecting the ability of businesses to get bank loans.

Decree No. 296/2026/ND-CP is a significant step towards transparency in the ownership landscape of businesses in Vietnam. Although it will create some additional burden of administrative procedures and review in the short term, in the long run, this regulation will better protect the interests of genuine investors and improve the reputation of the business environment in the international arena.