In the context of the Politburo issuing Resolution No. 68-NQ/TW on the development of the private economy, affirming the role of the private sector as one of the most important driving forces of the economy, and in order to address shortcomings and amend the provisions of the Law on Enterprises 2020 to facilitate production and business activities, on May 9, 2025, the Minister of Finance prepared and submitted the dossier for the draft Law amending and supplementing a number of articles of the Law on Enterprises (the “Draft”) with several proposed amendments and additions compared to the current regulations.
Without discussing the provisions proposed to be abolished and "lowered" to Decree level, in this article, ATA Legal Services will focus solely on analyzing the new provisions in the Draft and providing a preliminary assessment of their potential impacts on individuals and enterprises in the near future.
1. The Draft introduces several new provisions on entities and conditions for establishing and managing enterprises
The Draft expands the categories of entities eligible to contribute capital to establish and manage enterprises, specifically allowing public employees working at public scientific and technological organizations or public higher education institutions to contribute capital, establish, and manage enterprises founded by or with the participation of such organizations, for the purpose of commercializing research results generated by those institutions. This content aligns with the spirit of Resolution No. 193/2025/QH15 of the National Assembly on piloting several special mechanisms and policies to create breakthroughs in the development of science, technology, innovation, and national digital transformation.
In addition, the Draft officially recognizes a new entity – the "individual businessperson" – and assigns the Government the authority to regulate the registration and operation of this category.
Along with expanding eligible entities, the Draft adds provisions to prohibit or restrict the right to establish enterprises for a definite term for certain individuals who have violated tax laws. Specifically: a founder or legal representative of an enterprise who has been notified by the tax authority as not operating at the registered address must fulfill the tax obligations of the enterprise previously declared as inactive before participating in the establishment of or acting as the legal representative of a new enterprise.
In our opinion, this new provision is appropriate, as it helps reduce risks for third parties in transactions involving the enterprise, its shareholders, or managers. At the same time, it contributes to strengthening the accountability of relevant individuals during the establishment and operation of an enterprise.
2. Supplementing regulations requiring enterprises to provide proof of capital contribution completion when registering changes to charter capital
To minimize cases of “fictitious” capital increases, the Draft adds a regulation requiring that registration for changes in charter capital must be accompanied by a copy of documents proving the completion of such capital change. It can be seen that lawmakers are placing great emphasis on managing enterprise capital contributions.
However, ATA believes that this provision in the Draft introduces an element of “control” into the business registration process. This approach does not fully align with the spirit of “shifting from pre-inspection to post-inspection” as outlined in the Resolution. Instead of requiring enterprises to submit additional documents proving capital contribution, the legislators could regulate this issue by making capital contribution one of the subjects of inspection/audit after licensing. The declaration or registration of “fictitious” capital should be subject to heavy sanctions and/or serve as grounds for revoking the Business Registration Certificate, thereby increasing the deterrent effect and the accountability of enterprises.
3. Supplementing regulations to remove obstacles in enterprise operations:
3.1. Resolving difficulties in determining the authority of internal entities/levels within the enterprise
The 2020 Law on Enterprises stipulates that the basis for determining the authority of internal entities/levels of an enterprise (General Meeting of Shareholders/Board of Directors/(General) Director in a joint stock company, or Members’ Council/(General) Director in a limited liability company) is the total asset value recorded in the most recent financial statement (“FS”). However, in practice, under a parent-subsidiary model, determining this value often leads to disputes and disagreements among shareholders, contributing members, and enterprise managers. Specifically, if there is a subsidiary, the parent company will simultaneously have two types of financial statements: consolidated FS and separate FS. The total asset value of the parent company stated in these two FSs is significantly different. Which FS is used often depends on which figure benefits the controlling shareholder group or management.
Therefore, to ensure uniform application and protect the rights of all shareholders and contributing members—especially small shareholders and members—the Draft adds a clear provision that the basis for determining the authority of internal entities/levels within the enterprise is the total asset value stated in the separate financial statement.
3.2. Resolving difficulties in business registration for public companies
The 2020 Law on Enterprises stipulates that joint stock companies must carry out procedures to notify changes in enterprise registration information when there is a change regarding shareholders who are foreign investors—except in the case of listed companies. However, this provision is not appropriate and does not account for the situation of public companies.
According to point a, clause 1, Article 32 of the 2019 Law on Securities, a public company must register its shares for trading on the unlisted public company market (UPCOM) within 30 days from the date the State Securities Commission confirms the completion of public company registration. To be eligible for UPCOM trading, a public company must register and its shareholders must have their shares centrally deposited at the Vietnam Securities Depository and Clearing Corporation. Therefore, a public company does not “directly” manage its shareholders and cannot “update” shareholder information or trading volumes. For this reason, requiring public companies to notify changes to enterprise registration information upon changes involving foreign shareholders is not appropriate and causes difficulty for businesses.
To reflect this reality, the Draft supplements the category of “companies registered for securities trading” as an exemption from the obligation to notify changes to enterprise registration information, similar to the exemption already applied to “listed companies” under the current 2020 Law on Enterprises.
4. Addition of New Regulations on “Beneficial Owner”
This is one of the notable highlights in the current Draft. Accordingly, the Draft introduces a definition of “Beneficial Owner” and supplements the responsibilities of enterprises regarding this matter as follows:
A “Beneficial Owner” of an enterprise refers to individuals who meet one of the following criteria:
(i) Individuals who actually hold, directly or indirectly, 25% or more of the charter capital of the enterprise;
(ii) Individuals who directly or indirectly benefit from more than 25% of the enterprise’s dividends or profits;
(iii) The ultimate individual who has controlling rights over the operations of the enterprise.
In simpler terms, the “beneficial owner” is the true owner of the enterprise. In reality, there are many cases where individuals jointly establish an enterprise and then use it to contribute capital, acquire shares, and expand a network of subsidiaries and affiliates. Even though shareholders of the parent company may not directly hold shares or capital contributions in the subsidiary or affiliate companies, they still effectively control most of the major decisions of the enterprise. Consequently, in many cases, such individuals have abused their control to engage in corruption, money laundering, and other legal violations, causing significant consequences not only for the enterprise itself but also affecting the rights and interests of credit institutions and foreign investors — the key parties funding these enterprises.
To prevent the above issues, the Draft supplements the obligations of enterprises and their managers to collect and timely report information on the “beneficial owner” to the Business Registration Authority, specifically:
- Enterprises must report information on the “beneficial owner” at the time of establishment or within 10 days from the date such information arises.
- Enterprises must retain information about the “beneficial owner” throughout their operation and for at least five years after the enterprise is dissolved, bankrupt, or ceases operations.
- The legal representative of the enterprise is responsible for timely and fully reporting the enterprise(s) where they are a “beneficial owner.”
- Enterprises and their legal representatives must accurately and fully provide information about the “beneficial owner” and cooperate with competent authorities upon request to identify the “beneficial owner.”
Notably, the Draft requires existing enterprises operating before the effective date of the Draft to notify and update information about their “beneficial owner” with the Business Registration Authority at the next business registration update.
According to ATA’s assessment, the addition of provisions on “beneficial ownership” in the Draft, based on anti-money laundering objectives and compliance with international commitments, is entirely appropriate. However, we have the following concerns regarding this regulation:
(i) How can enterprises accurately identify their “beneficial owner”?
According to the Draft, one of the criteria for being deemed a “beneficial owner” is being the “ultimate individual who controls the enterprise.” However, this definition is too vague and may easily be misunderstood in practice. For example, in some cases, individuals who serve as Chairpersons of the Board or General Directors of a company may not hold any shares or only a small percentage, yet their “voice” heavily influences the company's decisions. In practice, a company may have multiple such individuals. So should they all be considered the “ultimate individual with controlling rights”? Based on the semantics of the word “ultimate,” it may imply that only one individual can be the “beneficial owner” of an enterprise. Thus, the Draft or lawmakers should provide clearer regulations or assign the Government the task of issuing specific criteria to help enterprises properly identify such individuals.
(ii) Is this regulation truly suitable for public or listed companies?
As noted in Section 3.2 above, listed and public companies do not directly manage shareholder information or details of shareholder securities transactions. Moreover, when a shareholder, alone or together with related persons, owns 5% or more of the total voting shares of a public company, they are already required to report and disclose such information to the State Securities Commission, the Stock Exchange, and the public. Therefore, requiring public and listed companies to additionally report information on “beneficial ownership” to the Business Registration Authority seems unnecessary, especially when such identification is based solely on shareholding percentages.
The above is an update from ATA Legal Services on the Draft Law amending and supplementing a number of articles of the Law on Enterprises, aiming to help businesses and individuals stay informed and proactively prepare for upcoming changes.
In general, the amendment and supplementation of the 2020 Law on Enterprises is a necessary step and forms an important foundation for promoting the development of enterprises in general and private enterprises in particular. However, we believe that several provisions in the Draft require further consideration and comprehensive assessment before being officially enacted and/or should be accompanied by clear and specific guidance to facilitate practical implementation by enterprises.
Comment: