Understanding what are the penalties for failing to declare beneficial owners in Vietnam is receiving special attention from the business community, investors, and legal professionals as the regulatory framework on corporate information transparency and anti-money laundering in Vietnam is being comprehensively tightened in accordance with international standards. Making transparent the identity of the individual who genuinely holds controlling power behind a legal entity is not merely a routine administrative compliance obligation to identify the beneficial owner of a company in Vietnam, but is also directly linked to strict administrative sanctions most recently updated under Decree No. 288/2026/ND-CP. The article below provides a detailed and comprehensive analysis of the legal regulations, penalty levels, and legal risks surrounding this issue, alongside guidance on utilizing beneficial owner declaration services in Vietnam.
What is a beneficial owner under current Vietnamese regulations?
The concept of a beneficial owner was first clearly internalized into domestic law in the Law on Anti-Money Laundering and was subsequently standardized and expanded substantially within the field of enterprise registration through the Law amending and supplementing a number of articles of the Law on Enterprises alongside its detailed guiding decrees.
Pursuant to Clause 35, Article 4 of the Vietnamese Law on Enterprises 2020, as amended and supplemented in 2025, the beneficial owner of an enterprise is understood as an individual who actually owns or holds controlling power over an economic organization. These are individuals standing behind layers of intermediary legal entities, holding the highest decision-making power or enjoying actual economic benefits from the operations of the enterprise.
Criteria to identify the beneficial owner of a company in Vietnam under the latest regulations
Pursuant to Article 17 of Decree No. 168/2025/ND-CP, as amended and supplemented by Decree No. 296/2026/ND-CP, the method to determine the beneficial owner of an enterprise as one or more individuals is stipulated as follows:
Criterion on ownership rights (Criterion 1)
- Individuals directly or indirectly owning 25% or more of the capital in an enterprise: An individual who directly or indirectly, or both directly and indirectly, owns 25% or more of the charter capital or 25% or more of the total voting shares of the enterprise is determined to be the beneficial owner of the enterprise.
- A group of individuals with family relationships or contractual agreements directly or indirectly owning 25% or more of the capital in an enterprise: Decree No. 296/2026/ND-CP also supplements the case of determining the beneficial owner for a group of individuals who have family relationships or have an agreement to jointly own the enterprise. Accordingly, where a group of individuals with family relationships or a contract jointly owns-directly, indirectly, or both directly and indirectly-25% or more of the charter capital or 25% or more of the total voting shares of the enterprise, the enterprise must identify all individuals within this group as beneficial owners.
- General partners of a partnership: All general partners are determined to be beneficial owners of the partnership, regardless of their capital contribution ratio or voting rights ratio at the enterprise.
Criterion on actual controlling power (Criterion 2)
Where an individual does not satisfy Criterion 1 regarding the ownership ratio, or where there are grounds indicating that the individual identified under the above criterion is not the beneficial owner of the enterprise, the enterprise shall determine the beneficial owner through other methods in accordance with the law or in practice.
Control is exercised through one or more of the following rights:
- The right to appoint, dismiss, or remove the majority or all of the members or the chairperson of the board of directors, the majority or all of the members or the chairperson of the members’ council, the director, or the general director;
- Amending and supplementing the charter of the enterprise;
- Changing the organizational structure;
- Deciding on the financial, investment, and operational policies of the enterprise;
- Reorganizing or dissolving the enterprise.
Enterprise manager with the highest authority (Criterion 3)
In cases where, after applying Criterion 1 and Criterion 2 mentioned above, the beneficial owner still cannot be determined, Decree No. 296/2026/ND-CP stipulates that the enterprise must identify one individual who is the enterprise manager holding the highest authority to act on behalf of the enterprise as the beneficial owner, excluding individuals representing state capital portions at the enterprise.
Order of declaring beneficial owner information for Vietnamese companies
Pursuant to Article 18 of Decree No. 168/2025/ND-CP, as amended and supplemented by Decree No. 296/2026/ND-CP, the enterprise founder and the enterprise bear the responsibility to identify the beneficial owner of a company in Vietnam and to declare and notify the Business Registration Office of the information regarding the beneficial owner of the enterprise.
The declaration of information regarding the beneficial owner is carried out in the following order:
- Declare and notify the Business Registration Office of the information of the individual satisfying Criterion 1 regarding ownership rights.
- Where an individual does not satisfy Criterion 1, or where there are grounds indicating that the individual identified under Criterion 1 is not the beneficial owner of the enterprise: Declare and notify the Business Registration Office of the information of one or more individuals satisfying Criterion 2 regarding actual controlling power.
- Where no individual satisfies Criterion 2: Declare and notify the Business Registration Office of the information of the individual under Criterion 3.
Administrative penalties under Decree No. 288/2026/ND-CP for failing to declare beneficial owners in Vietnam
Pursuant to Clauses 4 and 5, Article 46 of Decree No. 122/2021/ND-CP, as supplemented by Clause 1, Article 3 of Decree No. 288/2026/ND-CP, the regulations are as follows:
“Article 46. Violations regarding enterprise establishment
… 4. A fine ranging from 50,000,000 VND to 100,000,000 VND shall be imposed for one of the following acts:
… c) Failing to declare information about the beneficial owner of the enterprise (if any), or information to determine the beneficial owner of the enterprise (if any) at the time the enterprise carries out establishment registration procedures.
5. Remedial measures
… d) Forcible supplementation of information about the beneficial owner and information to determine the beneficial owner for the violation specified at Point c, Clause 4 of this Article.”
Accordingly, if an enterprise fails to declare its beneficial owner, it will be subject to administrative sanctions as follows:
Monetary fines
In cases where an enterprise has a beneficial owner but fails to declare the beneficial owner information of the enterprise at the time of carrying out enterprise establishment registration procedures, it shall be subject to an administrative fine ranging from 50,000,000 VND to 100,000,000 VND.
Note: The monetary fine level mentioned above applies to organizations. Where an individual commits the violation, the monetary fine level equals one-half of that applicable to an organization.
Remedial measures
In addition to being sanctioned according to the monetary fine level mentioned above, if an enterprise fails to declare its beneficial owner, it is also compelled to supplement the information regarding the beneficial owner.
Common violations related to beneficial owners in Vietnam
In compliance practice, enterprises may fall into the following groups of legal violations:
- Failing to declare information about the beneficial owner in the initial enterprise establishment registration dossier.
- Failing to carry out procedures to notify changes or update information promptly when there are fluctuations in beneficial owner information (changes in ownership ratios exceeding thresholds, changes in controlling power, or changes in key personnel).
- Making untruthful declarations, committing fraudulent declarations, or providing inaccurate information regarding the identity, ownership ratio, or actual controlling power of the beneficial owner in order to conceal the actual controlling subject.
Solutions and recommendations from legal experts at Viet An Law for Vietnamese enterprises compliance
Internal review process to identify the beneficial owner
To completely eliminate the risk of being penalized, the first step an enterprise must take is to conduct a comprehensive review of its capital ownership structure, list of shareholders or capital-contributing members, and shareholders’ agreements (if any).
Enterprises need to apply the statutory criteria (direct or indirect ownership ratios of 25% or more and voting control power) to accurately recognize who is the actual beneficial owner standing behind layers of legal entities.
Completing dossiers, notification procedures, and periodic information updates
Immediately after determining the identity of the beneficial owner, the enterprise must urgently compile an internal retention list and carry out procedures to notify and promptly update the provincial-level business registration office in strict accordance with the provisions of the latest legal instruments, especially complying with the new points of Decree No. 288/2026/ND-CP.
Any fluctuation in the shareholder structure or controlling power within the company must be updated into the legal dossier immediately upon occurrence.
The role of specialized corporate legal consultancy and beneficial owner declaration services in Vietnam
Due to the complexity of cross-ownership structures, foreign investment, and the sophisticated system of criteria for determining controlling power, self-executing the declaration sometimes easily leads to errors or the omission of important legal information.
Therefore, partnering with professional legal practice organizations and utilizing beneficial owner declaration services in Vietnam at a reputable provider is the optimal solution to help enterprises ensure absolute corporate legal safety, streamline governance processes, and prevent all sanction risks from state authorities.
Frequently asked questions
Are small and medium-sized enterprises (SMEs) required to declare beneficial owners?
Yes. The obligation to declare beneficial owners applies generally to all types of enterprises (limited liability companies, joint-stock companies, and partnerships) under current corporate law regulations, regardless of whether their scale is large or small, provided that there are individuals who satisfy the statutory criteria on ownership or control.
If an enterprise changes shareholders but fails to update beneficial owner information, under which legal instrument will it be penalized?
This act will be sanctioned as an administrative violation in the field of planning and investment under specialized sanctioning decrees, with sanctions especially tightened under the supplementary provisions of Decree No. 288/2026/ND-CP.
Can an individual owning less than 25% of shares ever be considered a beneficial owner?
Yes. Even without reaching the 25% capital ownership ratio, if that individual holds actual controlling power over important decisions of the enterprise (such as the right to appoint the majority of the members of the board of directors or the right to amend the company charter), they are still determined to be a beneficial owner.
Who bears primary responsibility if an enterprise declares inaccurate beneficial owner information?
The legal representative of the enterprise, alongside the individuals who directly prepare and sign the declaration dossier, must bear primary legal responsibility before state authorities for the truthfulness and accuracy of the information.
Can an enterprise authorize a law firm to carry out beneficial owner declaration procedures?
Yes. An enterprise can entirely use legal services and beneficial owner declaration services in Vietnam from reputable law organizations to receive consultancy support, review ownership structures, and have a representative carry out procedures to declare and update information accurately and lawfully.
The above is our legal advice and answer to the question of what are the penalties for failing to declare beneficial owners in Vietnam? If you require consultancy on identifying, declaring, or updating beneficial owner information under the new regulations, please contact Viet An Law for timely and accurate support.
