Ultimate Beneficial Owner:
A mandatory legal obligation
under the Law on Enterprises 2025
From July 1, 2025, the amended and supplemented Law on Enterprises 2025 (“Law on Enterprises 2025”) officially takes effect. One of the important and far-reaching changes is the requirement for enterprises to identify, declare, and notify information about the Ultimate Beneficial Owner (“UBO”).
This requirement is not merely a matter of legal compliance; it reflects a global trend toward ownership transparency, anti-money laundering, counter-terrorist financing, and maintaining a healthy investment environment.
1. Who is an Ultimate Beneficial Owner?
Under Article 17 of Decree No. 168/2025/ND-CP, a UBO is an individual who ultimately owns or controls the enterprise, including but not limited to the following cases:
(a) Direct or indirect ownership:
- Holding 25% or more of charter capital in a limited liability company or partnership;
- Holding 25% or more of the total voting shares in a joint stock company.
Indirect ownership is determined through a chain of intermediary ownership by multiplying the ownership ratios at each level to calculate the final ownership ratio.
(b) Control over the Enterprises:
Control refers to the power to decide or veto key matters of the enterprises, including:
- Appointment or removal of a majority or all of the members of the board of directors, chairman of the board, members’ council, legal representative, general director or director;
- Amendment or supplementation of the company’s charter;
- Reorganization or dissolution of the company;
- Restructuring of the enterprise’s governance model.
2. Who is obligated to declare UBO?
All legal entities established under the Law on Enterprises 2025 must comply. Specifically:
| Must Declare UBO | Not Required to Declare UBO |
| One-member limited liability companies | State-owned enterprises |
| Multi-member limited liability companies | Sole proprietorships |
| Joint stock companies (except listed) | Listed companies |
| Partnerships | Public companies registered for stock trading |
Especially, joint stock companies must also declare information about any institutional shareholder holding 25% or more of voting shares to assist in determining indirect UBOs.
3. When must UBO declaration be made?
(a) Time of declaration:
| Type of Enterprise | Declaration Timeline |
| Established before July 1, 2025 | Upon the next registration update after July 1, 2025 or earlier on a voluntary basis |
| Established from July 1, 2025 | At the time of initial business registration |
| During operation | When there is a change in UBO information or in institutional shareholders holding ≥25% |
(b) Responsible parties:
- The enterprise founder is responsible for declaration at the time of incorporation;
- The enterprise is responsible for updating and reporting during operation.
4. What information must be declared?
Enterprises must provide the following details:
(a) Identification details of the UBO: full name, date of birth, gender, nationality, ethnicity, legal identification documents, and contact address;
(b) Ownership ratio or confirmation of control rights (if applicable);
(c) Information on institutional shareholders owning ≥25% of voting shares (applicable to joint stock companies);
(d) Maintain and update a complete file (in paper or electronic form) at the enterprises.
5. Declaration method and legal consequences?
(a) Enterprises shall submit the UBO declaration via the National Business Registration Portal to the Provincial Business Registration Office where the company is headquartered.
(b) Failure to declare, incorrect or delayed declaration may result in:
- Administrative sanctions;
- Rejection of enterprise registration or business change applications;
- Legal risk exposure in case of suspicion of money laundering or lack of business transparency.
6. What should enterprises do?
To comply with this new legal obligation, enterprises should proactively take the following steps:
(a) Review their current ownership structure and develop a detailed ownership diagram if intermediary layers exist;
(b) Accurately determine the UBO based on ownership ratios and control rights as prescribed;
(c) Assign internal personnel or engage legal advisors to handle UBO declaration, updating, and record keeping;
(d) Monitor internal changes that may affect UBO status;
(e) Proactively communicate internally and coordinate with shareholders and related organizations to ensure transparency and cooperation during the declaration process.
Declaring and updating UBO information is not only a mandatory legal obligation but also a key factor in transparency and corporate credibility for investors, banks, and business partners. Compliance with UBO regulations helps enterprises mitigate legal risks, enhance legal standing, and improve access to capital in an increasingly transparent and globalized business environment.
LE THANH DUY – Partner
HUYNH THI HAU – Head of Licensing Department
