Key Updates Under the Amended Enterprise Law 2025

Effective from 1 July 2025, the Amended Enterprise Law introduces several significant changes that impact both enterprises and investors in Vietnam. These updates aim to enhance transparency, improve corporate governance, and address long-standing regulatory gaps. Below is a summary of the most notable developments.

1. Introduction of the “Beneficial Owner” Concept

One of the most important additions is the formal recognition of the “Beneficial Owner”—defined as an individual who ultimately owns or controls an enterprise, excluding those acting solely as representatives of the State in wholly state-owned enterprises or in joint-stock/multi-member limited liability companies under the Law on Management and Use of State Capital.

Identification Criteria

An individual is deemed a beneficial owner if they meet either of the following conditions:

• Ownership Threshold: Directly or indirectly hold at least 25% of the charter capital or 25% of total voting shares of the enterprise. Indirect ownership includes holding such interests through intermediary organizations.
• Control Rights: Possess the authority to approve key corporate decisions, such as:

• Appointment or removal of most or all members of the Board of Management or Board of Members;
• Appointment or dismissal of the legal representative, Director, or General Director;
• Amendments to the company charter;
• Changes to the company’s organizational structure;
• Decisions on reorganization or dissolution.

This provision is designed to capture individuals who exercise control through nominee arrangements, ensuring transparency across all layers of ownership.

2. Mandatory Disclosure of Beneficial Ownership

Enterprises are now required to declare their beneficial owners at the time of business registration and to update this information whenever changes occur. Existing enterprises must disclose such information upon their next amendment to enterprise registration details.

Additionally, companies must maintain internal records of beneficial ownership and provide such information to competent authorities upon request.

3. Definition of “Market Price” for Shares and Capital Contributions

The amended law introduces a clearer definition of “market price”, which is critical for transactions involving share transfers and capital valuation.

For Non-Listed Shares:

• The most recent market transaction price;
• A price mutually agreed upon by the buyer and seller;
• A valuation conducted by a licensed valuation firm.

For Listed Shares:

• The average trading price over the 30 days preceding the valuation date;
• A mutually agreed price;
• A valuation by a licensed valuation firm.

This clarification provides a more transparent and consistent basis for valuing both listed and non-listed equity, addressing prior ambiguities—especially for private companies.

4. Charter Capital Reduction via Redeemable Preference Shares

Previously, while the concept of redeemable preference shares was recognized, the law lacked a mechanism for reducing charter capital when such shares were refunded. This created uncertainty for both enterprises and regulators.

The 2025 amendment now explicitly allows charter capital reduction when a company returns contributed capital to holders of redeemable preference shares, either upon request or under conditions specified in the share certificates and company charter. This change strengthens legal certainty and enhances investor confidence by formalizing exit rights.

Conclusion

The Amended Enterprise Law 2025 marks a significant step forward in aligning Vietnam’s corporate governance framework with international standards. By introducing the concept of beneficial ownership, clarifying valuation principles, and addressing gaps in capital management, the law enhances transparency and legal certainty for both domestic and foreign investors.

Enterprises should proactively review their internal governance structures, shareholding arrangements, and compliance procedures to ensure alignment with the new requirements.