What is a beneficial owner of an enterprise? Declaration obligations and administrative penalties under current regulations
Who qualifies as a beneficial owner of an enterprise? Join CBI Law Firm in exploring the criteria for identifying beneficial owners, the obligations to declare and update beneficial ownership information, and the applicable administrative penalties under the Law on Enterprises, Decree No. 168/2025/ND-CP, and its latest amendments and supplements.
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1. What Is a Beneficial Owner of an Enterprise?
In corporate governance, information about shareholders, capital-contributing members and legal representatives is generally clearly reflected in enterprise registration records. However, individuals whose names appear as the registered owners of capital do not necessarily have actual control over, or ultimately benefit from, the enterprise’s operations.
In practice, ownership and control of an enterprise may be exercised through multiple layers of ownership, intermediary entities or legal arrangements. Accordingly, identifying the individuals who ultimately own or exercise control over an enterprise is essential to enhancing corporate transparency and supporting anti-money laundering efforts.
Under Article 17 of Decree No. 168/2025/ND-CP, as amended and supplemented by Decree No. 296/2026/ND-CP, a beneficial owner of an enterprise having legal personality means one or more individuals who ultimately own or exercise actual control over the enterprise, directly or indirectly, excluding individuals representing state capital in the enterprise.
Accordingly, a beneficial owner is not necessarily an individual whose name appears directly on the Enterprise Registration Certificate, the register of members or the register of shareholders. An individual may be identified as a beneficial owner even where their ownership or control is exercised through one or more intermediary entities.
It should be noted that this regulation aims to identify the ultimate individual owner or controller of an enterprise, rather than merely identifying the entity that directly holds the contributed capital or shares.
2. Criteria for Identifying the Beneficial Owner of an Enterprise
Pursuant to Article 17 of Decree No. 168/2025/ND-CP, as amended and supplemented by Article 3 of Decree No. 296/2026/ND-CP, the identification of beneficial owners is based on criteria relating to ownership and actual control. Specifically:
2.1. Individuals Directly or Indirectly Owning at Least 25% of the Charter Capital or Voting Shares
An individual is identified as a beneficial owner if they directly or indirectly, or through a combination of direct and indirect ownership, hold at least 25% of the enterprise’s charter capital or at least 25% of its total voting shares.
Indirect ownership refers to a situation in which an individual holds at least 25% of the enterprise’s charter capital or total voting shares through other entities or legal arrangements.
Notably, Decree No. 296/2026/ND-CP has supplemented the criteria applicable to groups of individuals who are related by family ties or have entered into an agreement to jointly own capital. Accordingly, where a group of individuals has family relationships as specified in Clause 22, Article 4 of the Law on Enterprises, or has entered into an agreement to jointly own, directly or indirectly, or through a combination of both forms, an aggregate interest of at least 25% of the enterprise’s charter capital or voting shares, each individual in that group is identified as a beneficial owner.
For partnerships, all general partners are identified as beneficial owners, regardless of their capital contribution ratios or voting rights in the enterprise.
2.2. Individuals Exercising Actual Control over the Enterprise
Where no individual satisfies the aforementioned ownership threshold, or there are grounds to believe that an individual identified based on the ownership criteria is not the actual beneficial owner, the enterprise must further identify individuals who exercise control over the enterprise through other means, whether under applicable laws or in practice.
Pursuant to Clause 2, Article 17 of Decree No. 168/2025/ND-CP, as amended by Decree No. 296/2026/ND-CP, control may be exercised through one or more of the following rights:
- The right to appoint, dismiss or remove a majority or all members or the Chairperson of the Board of Directors, a majority or all members or the Chairperson of the Members’ Council, or the Director or General Director;
- The right to amend or supplement the enterprise’s Charter;
- The right to change the enterprise’s organizational structure;
- The right to make decisions on the enterprise’s financial, investment and operational policies;
- The right to reorganize or dissolve the enterprise.
This demonstrates that the identification of beneficial owners is not limited to the ownership ratios of capital contributions or shares recorded in official documents. Enterprises must also examine relevant agreements, voting rights and decision-making mechanisms to identify the individuals who actually have the ability to exercise control over their operations.
2.3. Identifying the Manager with the Highest Level of Authority Where No Individual Meets the Above Criteria
Where no individual satisfies the ownership or actual control criteria under Clauses 1 and 2, Article 17 of Decree No. 168/2025/ND-CP, the enterprise shall identify the individual who is the enterprise manager with the highest level of authority to act on behalf of the enterprise as its beneficial owner.
This provision does not mean that the legal representative or the Director/General Director automatically qualifies as a beneficial owner in every case. An enterprise may only apply this criterion where no individual satisfies the aforementioned ownership or control criteria. An individual representing state capital in the enterprise is not eligible to be identified under this criterion.
3. Responsibilities of Enterprises Regarding Beneficial Ownership Information
Declaring beneficial ownership information is not merely an administrative procedure carried out when an enterprise is established. Under current regulations, enterprises are also required to proactively identify, update and retain such information throughout their operations.
Specifically, Articles 18 and 19 of Decree No. 168/2025/ND-CP, as amended and supplemented by Decree No. 296/2026/ND-CP, impose the following key responsibilities:
3.1. Identifying and Fully Declaring Beneficial Ownership Information
Founders and enterprises are responsible for identifying beneficial owners in accordance with the criteria under Article 17 of Decree No. 168/2025/ND-CP and declaring and notifying the business registration authority of the relevant information.
The identification process must involve reviewing each level of the enterprise’s ownership structure until the individual who ultimately owns or exercises actual control over the enterprise is identified. Where the ownership structure involves a legal arrangement governed by anti-money laundering laws, the beneficial owner of such legal arrangement shall be identified in accordance with the relevant provisions of anti-money laundering legislation.
In particular, under the declaration mechanism revised by Article 18 of Decree No. 168/2025/ND-CP, enterprises must follow this order of priority:
- First, declare the information of individuals who satisfy the ownership criteria under Clause 1, Article 17;
- Second, if no individual satisfies the ownership criteria, or there are grounds to believe that an individual identified under these criteria is not the actual beneficial owner, the enterprise must declare the information of one or more individuals who satisfy the actual control criteria under Clause 2, Article 17;
- Third, if no individual satisfies either of the above groups of criteria, the enterprise must declare the information of the individual who is the manager with the highest level of authority to act on behalf of the enterprise under Clause 3, Article 17.
Therefore, enterprises should not rely solely on the list of direct shareholders or capital-contributing members to fulfil their declaration obligations. The review must also take into account multi-layered ownership structures and actual control rights.
3.2. Notifying the Business Registration Authority of Changes to Beneficial Ownership Information
Pursuant to Clause 1, Article 52 of Decree No. 168/2025/ND-CP, within 10 days from the date on which any change occurs to the beneficial ownership information or the previously declared ownership ratio, the enterprise must notify the provincial-level business registration authority.
The notification dossier includes:
- A notification of changes to enterprise registration contents;
- A list of the enterprise’s beneficial owners.
Accordingly, whenever a change occurs to a beneficial owner or a previously declared ownership ratio, the enterprise should proactively review the relevant information and complete the update procedures within the statutory time limit, rather than waiting until its next application for changes to enterprise registration contents.
Note for enterprises currently in operation:
Enterprises established before 1 July 2025 that have not yet supplemented their beneficial ownership information should pay attention to the transitional provisions under Clause 1, Article 3 of Law No. 76/2025/QH15. The Ministry of Finance issued Official Letter No. 16558/BTC-DNTN dated 16 October 2026, requesting provincial and municipal Departments of Finance to disseminate information, provide guidance and urge enterprises to declare beneficial ownership information in accordance with applicable laws.
3.3. Retaining Beneficial Ownership Information
Under Article 19 of Decree No. 168/2025/ND-CP, enterprises are responsible for retaining the List of Beneficial Owners declared and notified to the business registration authority, either in physical or electronic form.
This responsibility is important to ensure that information can be cross-checked between the enterprise’s internal records and the information declared to state authorities. Enterprises should establish mechanisms for retaining and updating records whenever changes occur to their ownership structure, capital contribution ratios, voting shares or actual control rights.
3.4. Providing Information upon Request by Competent State Authorities
In addition to their declaration and record-retention obligations, enterprises must ensure that they are able to provide beneficial ownership information upon request by competent state authorities in accordance with applicable laws.
Such information serves state management purposes, particularly anti-money laundering efforts and the verification of individuals who actually own or exercise control over enterprises.
Accordingly, enterprises must ensure that the information provided is complete, accurate and consistent with the information previously declared, while maintaining appropriate supporting documents to explain their ownership structure and actual control arrangements when necessary.
4. Administrative Penalties for Violations of Beneficial Ownership Regulations
Failure to declare, inaccurate declaration or failure to update beneficial ownership information may expose enterprises to administrative penalties.
The principal legal basis for such penalties is Decree No. 122/2021/ND-CP on administrative penalties in the fields of planning and investment, as amended and supplemented by Decree No. 288/2026/ND-CP (effective from 21 July 2026).
Notable violations and applicable penalties include:
4.1. Making False or Inaccurate Declarations
Pursuant to Article 43 of Decree No. 122/2021/ND-CP, as amended by Article 1 of Decree No. 288/2026/ND-CP, an enterprise may be subject to a fine ranging from VND 30,000,000 to VND 70,000,000 for making false or inaccurate declarations of beneficial ownership information or information used to identify beneficial owners in its enterprise registration dossier or the relevant notification dossier for changes to such information.
This provision emphasizes the requirement that declared information must be truthful and accurate. Enterprises must not only complete the relevant procedures within the prescribed time limits but also ensure that information concerning the individuals who ultimately own or control the enterprise accurately reflects the actual circumstances.
4.2. Late Notification or Failure to Notify Changes to Information
Pursuant to Article 44 of Decree No. 122/2021/ND-CP, as amended by Article 2 of Decree No. 288/2026/ND-CP, failure to notify changes to beneficial ownership information within the prescribed time limit may be subject to penalties based on the duration of the delay, as follows:
| Duration of delay | Applicable penalty |
|---|---|
| 1–10 days overdue | Warning |
| 11–30 days overdue | VND 10,000,000–20,000,000 |
| 31–90 days overdue | VND 30,000,000–40,000,000 |
| 91 days or more overdue | VND 50,000,000–60,000,000 |
In addition, where an enterprise fails to notify changes to beneficial ownership information or information used to identify beneficial owners as required, it may be subject to a fine ranging from VND 30,000,000 to VND 70,000,000.
For enterprises established before 1 July 2025, failure to supplement beneficial ownership information and information used to identify beneficial owners when carrying out their most recent procedures for registration or notification of changes to enterprise registration contents may result in a fine ranging from VND 70,000,000 to VND 100,000,000 under Clause 6, Article 44, as amended.
4.3. Failure to Declare Beneficial Ownership Information upon Enterprise Establishment
Under the provisions added to Article 46 of Decree No. 122/2021/ND-CP by Decree No. 288/2026/ND-CP, an enterprise may be subject to a fine ranging from VND 50,000,000 to VND 100,000,000 if it fails to declare beneficial ownership information (if any) or information used to identify beneficial owners (if any) when carrying out the enterprise establishment registration procedures.
In addition to the fine, the enterprise may also be required to supplement the beneficial ownership information and information used to identify beneficial owners in accordance with applicable regulations.
4.4. Failure to Provide Information or Providing Inaccurate Information upon Request by Competent Authorities
Pursuant to Article 48 of Decree No. 122/2021/ND-CP, as amended by Article 4 of Decree No. 288/2026/ND-CP, enterprises may be subject to the following penalties:
- VND 20,000,000–30,000,000: Failure to provide reports or information containing all required contents, or failure to provide them within the prescribed time limit upon request, including beneficial ownership information.
- VND 50,000,000–70,000,000: Failure to submit reports or provide information upon request, or submitting reports or providing information that is untruthful or inaccurate upon request, including beneficial ownership information.
Depending on the violation, enterprises may also be subject to remedial measures, such as being required to supplement missing information or submit reports and provide information in accordance with applicable regulations.
Accordingly, legal risks do not arise solely when an enterprise carries out its establishment registration procedures or registers changes to its enterprise registration contents. Failure to maintain accurate information or comply with requests from competent authorities to provide information may also result in administrative penalties.
5. What Should Enterprises Do to Ensure Compliance with Beneficial Ownership Regulations?
In light of increasingly specific requirements concerning transparency in enterprise ownership and control structures, reviewing beneficial ownership information should be regarded as part of an enterprise’s ongoing corporate governance and legal compliance activities.
To mitigate potential risks, enterprises should consider taking the following steps:
First, review the entire ownership structure. Enterprises should examine their lists of members and shareholders, capital contribution ratios, voting share ratios and intermediary ownership layers to identify the ultimate individual owners.
Second, assess actual control rights. In addition to ownership ratios, enterprises should review relevant agreements, rights to appoint management personnel, and rights to make decisions on financial, investment and operational policies in order to identify individuals who have the ability to exercise control over the enterprise.
Third, verify previously declared information. Enterprises should check the consistency between beneficial ownership information notified to the business registration authority and their internal records, while identifying any information that needs to be updated under current regulations.
Fourth, establish a mechanism for updating information upon changes. Whenever a change occurs to a beneficial owner or a previously declared ownership ratio, the enterprise should determine the date on which the change occurred and submit the relevant notification within 10 days in accordance with Article 52 of Decree No. 168/2025/ND-CP.
Fifth, retain records and supporting documents. The List of Beneficial Owners must be retained in physical or electronic form. In addition, enterprises should maintain documents evidencing their ownership structure, relevant agreements and the grounds for identifying actual control rights, so that they can provide explanations when necessary.
6. Corporate Legal Advisory and Compliance Support Services at CBI Law Firm
Identifying beneficial owners can become complicated for enterprises with multi-layered ownership structures, corporate shareholders or members, foreign investors, or arrangements involving the allocation of control rights. In such cases, relying solely on direct capital contribution ratios may not be sufficient to accurately identify the individuals who ultimately own or control the enterprise.
With experience in corporate and investment legal advisory services, CBI Law Firm provides support to enterprises in reviewing ownership structures, analyzing actual control rights, identifying beneficial owners, and preparing declaration and notification dossiers in accordance with applicable laws.
Proactively identifying and accurately declaring beneficial ownership information not only helps enterprises fulfil their legal obligations but also contributes to greater transparency in corporate governance, reduced legal risks and stronger confidence among business partners and investors.
Contact CBI Law Firm to review and complete your beneficial ownership declaration obligations, ensuring that your enterprise operates in compliance with applicable laws.
This article was prepared by Legal Specialist Nguyen Truc Vy and reviewed by Lawyer Vu Pham Thu Huong.
This article is intended to provide general legal information only and does not constitute legal advice in relation to any specific case. The legal provisions cited herein are effective as of the date of publication but may have been amended, supplemented, replaced or expired by the time readers refer to them. Accordingly, readers are advised to consult a lawyer before applying these provisions to their specific circumstances.
