Vietnam's Amended Enterprise Law
Significant amendments to Vietnam’s Enterprise Law 2020 (Law No. 76/2025/QH15) are set to take effect on July 1, 2025. These revisions introduce crucial changes impacting corporate definitions, shareholder information requirements, public official participation in businesses, and capital adjustments, aiming to enhance transparency and align with broader economic development goals.
Revised Definitions
Several key definitions in Article 4 of the Enterprise Law 2020 have been updated to provide greater clarity:
Term | Enterprise Law 2020 Definition | Amended Law 76/2025/QH15 Definition | Key Change |
Dividends | Net profit paid for each share in cash or other assets. | After-tax profit paid for each share in cash or other assets. | Clarifies that dividends are paid from after-tax profit. |
Market Price of Contributed Capital/Shares | Transaction price at the immediately preceding time, agreed price between buyer and seller, or appraised value. | – For listed/registered securities on the stock trading system: Average transaction price within 30 consecutive days immediately preceding the valuation date, or agreed price between seller and buyer, or appraised value determined by an appraisal organization. | Provides specific methods for listed/registered securities (30-day average) and maintains general methods for unlisted ones. |
Legal Documents of Individuals | One of the following: Citizen ID card, Identity Card, Passport, other legal personal identification documents. | One of the following: Chip-based ID card, Citizen ID card, Passport, other legal personal identification documents. | Includes the new chip-based ID card. |
Beneficial Owner of the Enterprise | Not defined | An individual who actually owns charter capital or has controlling rights over that enterprise, except for direct representatives of 100% state-owned enterprises and representatives of state capital in joint stock companies, two-member or more limited liability companies, as prescribed by law on state capital management and investment in enterprises. | New definition was introduced to clarify who the ultimate individual owner or controller of a legal entity is. |
Mandatory Beneficial Owner Information
A significant addition is the obligation for enterprises to manage and disclose information about their beneficial owners:
- Obligation to Collect & Store: Amended Article 8, Clause 5a, now requires enterprises to collect, update, and store information on their beneficial owners.
- Information Provision to Authorities: Enterprises must provide this information to competent state agencies upon request for the purpose of identifying beneficial owners.
- Required List: Amended Article 11, Clause 1, Point h, mandates that enterprises maintain a list of beneficial owners (if any).
- Initial Registration:
- The Application for Business Registration must now include information about the beneficial owner (if any).
- The Business Registration Dossier must also include a separate “List of Beneficial Owners (if any).”
- Content of List: This list must include full name, date of birth, nationality, ethnicity, gender, contact address, ownership percentage/controlling rights, and legal document details of the beneficial owner.
- Access by Authorities: Competent state agencies can request this information from the National Business Registration Information System free of charge for anti-money laundering purposes.
- Transition for Existing Businesses: Enterprises established before July 1, 2025, must supplement beneficial owner information when they perform their next business registration content change or notification, unless they choose to do so earlier.
- Notification of Changes: Enterprises must notify the business registration authority of any changes in beneficial owner information, except for listed and registered securities companies.
Public Officials' Participation in Businesses
A notable relaxation of previous restrictions, reflecting a push for innovation:
- Previous Rule (Enterprise Law 2020): Cadres, civil servants, and public employees were generally prohibited from establishing and managing enterprises in Vietnam.
- New Exception (Amended Article 17, Clause 2): This prohibition now includes an exception for cases “implemented according to the provisions of law on science, technology, innovation, and national digital transformation.”
- Implication: Cadres, civil servants, and public employees can now establish and manage enterprises if it’s done in line with laws promoting science, technology, innovation, and national digital transformation.
- Capital Contribution: Similarly, amendments to Article 17, Clause 3, allow cadres, civil servants, and public employees to contribute capital, buy shares, or buy contributed capital in joint stock companies, limited liability companies, and partnerships, specifically to implement provisions of laws related to science, technology, innovation, and national digital transformation.
Streamlined Electronic Registration & Capital Adjustments
- Removal of Digital Signature/Business Registration Account Requirement:
- Provisions in Article 26, Clauses 3 and 4, regarding the mandatory use of digital signatures and business registration accounts for enterprise registration procedures have been removed.
- Guidance: The Government will issue detailed guidance on electronic dossiers and procedures for registration.
- Adjustments to Charter Capital Reduction for Joint Stock Companies (JSCs):
- New Condition: A JSC can reduce its charter capital by returning capital to shareholders only if the company has been in operation for at least 2 years (excluding temporary suspension periods) since its establishment, and can ensure payment of all debts and other liabilities after capital repayment.
- New Case Added: JSCs can also return capital as required by the terms/conditions stipulated in shares for shareholders holding redeemable preference shares, as per law and company charter.
Regulations on Private Bond Offerings
Amendments to Article 128 of the Enterprise Law 2020 introduce new conditions for private bond offerings:
- Professional Investors: Professional securities investors participating in purchasing, trading, and transferring private bonds must comply with securities law.
- Additional Conditions for Non-Public JSCs: Joint Stock Companies that are not public companies must meet additional conditions when making private bond offerings:
- Total liabilities (including proposed bond value) must not exceed 05 times the issuer’s equity as per the audited financial statements of the immediate preceding year.
Exemptions: State-owned enterprises, real estate project issuers, credit institutions, insurance/reinsurance/insurance brokerage companies, securities companies, and fund management companies are exempt from this 5x equity ratio, and instead follow relevant specialized laws.
Implications for Businesses in Vietnam
These amendments represent a significant step towards increasing transparency, particularly regarding beneficial ownership, aligning with international anti-money laundering standards. The new provisions also reflect the government’s strategic focus on leveraging science, technology, and innovation, even allowing for public official participation in these critical sectors. Businesses must review their internal processes, especially for collecting and reporting beneficial ownership information, and adapt to the updated definitions and capital adjustment rules to ensure full compliance by July 1, 2025.
How Henrison Law Can Assist
Navigating comprehensive amendments to the Enterprise Law requires a thorough understanding of the new requirements and their practical implications. Henrison Law is well-equipped to provide expert legal guidance to ensure your business remains fully compliant with the updated regulations.
Our services include:
- Beneficial Ownership Compliance: Advising on the collection, storage, and reporting obligations related to beneficial owners, including preparing required lists and updating registration dossiers.
- Corporate Governance Review: Assessing and updating company charters, internal regulations, and operational procedures to align with new definitions and capital adjustment rules.
- Public Official Participation Advisory: Providing legal counsel for public officials or businesses seeking to engage in ventures related to science, technology, innovation, and digital transformation under the new exceptions.
- Business Registration Assistance: Guiding companies through the process of updating business registration information, especially concerning beneficial ownership.
- Private Bond Offering Compliance: Advising non-public joint stock companies on the new conditions and requirements for issuing private bonds.
- Training & Workshops: Conducting tailored sessions for your management and staff to ensure a full understanding of the amended law’s impacts.
Prepare your business for these essential changes. Contact Henrison Law today for tailored legal advice and strategic support to ensure a smooth transition and full compliance with the amended Enterprise Law.
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