Dear Clients and Partners,

For years, the "25% rule" has been the North Star for corporate compliance departments, tax professionals, and legal advisors across the globe. The logic was simple: if an individual owned 25% or more of a company’s shares, they were a "Beneficial Owner." If they owned 24.9%, they were, for the most part, invisible to the regulatory radar.

However, as we navigate the second quarter of 2026, the regulatory landscape has shifted beneath our feet. In Vietnam and across international jurisdictions, the binary focus on ownership percentages is being replaced by a more nuanced, risk-based approach to transparency. At BLaw Vietnam, we have observed a significant increase in enforcement actions that look far beyond a simple cap table.

If your business is still relying solely on the 25% threshold to determine its disclosure obligations, you may be exposing your board to unnecessary risk. Here is the truth about beneficial ownership in 2026.

The Technical Foundation: What is the 25% Rule?

To understand why the rule is losing its absolute authority, we must first define it. Traditionally, a beneficial owner is defined as any individual who, directly or indirectly, exercises a significant degree of control over a legal entity. Under standard AML (Anti-Money Laundering) and KYC (Know Your Customer) frameworks, this was quantified as:

1. Equity Interest: Holding 25% or more of the entity's capital or voting rights.
2. Control: Having the power to appoint or remove the majority of the board of directors.
3. Significant Responsibility: Having the authority to direct the management or policies of the company.

While the 25% threshold remains a formal standard in many legislative texts, its practical application has evolved. In 2026, regulators are increasingly focused on the substance of control rather than the form of ownership.

The 2026 Global Shift: Why Percentages Aren’t Everything

Recent international developments have significantly altered the compliance burden for multinational enterprises. For instance, the major regulatory updates in early 2026: including FinCEN’s Order FIN-2026-R001: have signaled a move toward "exceptive relief" for financial institutions regarding re-verification. While this might seem like a loosening of rules, it is actually a pivot toward more targeted, high-risk oversight.

In the Vietnamese context, the push for transparency is driven by the desire to align with FATF (Financial Action Task Force) standards. This means that even if an individual holds only 5% or 10% of a company, they could still be flagged as a beneficial owner if they exercise "effective control" through shareholder agreements, debt instruments, or familial ties.

If you are currently evaluating your disclosure requirements, it is vital to check if you are falling into common traps. We recommend reviewing our recent guide on 7 mistakes you’re making with beneficial owner disclosures and how to fix them to ensure your current reporting is accurate.

Why the 25% Rule Might Mislead Your Board

In 2026, relying purely on the 25% math is a dangerous strategy for several reasons:

1. The "Control" Override

The most significant trend in 2026 is the prioritization of control over equity. If an individual has the power to veto strategic decisions or controls the company’s bank accounts, they are a beneficial owner regardless of whether they own 0% or 100% of the shares. Regulators are now trained to look for "nominee" arrangements where a minority shareholder is actually acting on behalf of a hidden majority interest.

2. Aggregation Rules

Modern transparency laws require the "aggregation" of interests. If a family owns 30% of a company, divided equally among four members (7.5% each), the 25% rule might suggest no disclosure is needed. However, under 2026 standards, these interests are often aggregated if the individuals act in concert, meaning the entire family group: or the patriarch/matriarch: must be disclosed.

3. Increased Scrutiny on Foreign Entities

For businesses operating in Vietnam with foreign parent companies, the disclosure rules have become even more stringent. New regulations in 2026 require a deeper look into the "chain of ownership" until a natural person is identified. This is particularly relevant for those looking for transparency in Vietnam's new disclosure rules.

Beneficial Ownership in the Real Estate Sector

For real estate professionals and investors, the 25% rule has become a central point of contention. As of March 1, 2026, new reporting requirements for real estate transactions have gone into effect globally, specifically targeting the use of shell companies to obscure property ownership.

In Vietnam, the nexus between real estate investment and corporate governance is tightening. When a Special Purpose Vehicle (SPV) is used to acquire land or develop a project, the authorities now demand a full breakdown of who truly benefits from the transaction. A 24% stake no longer guarantees anonymity if that 24% holder is the primary financier of the project.

How to Optimize Your Compliance Strategy for 2026

To stay ahead of these changes, BLaw Vietnam suggests a proactive approach to corporate governance. It is no longer enough to be "technically" compliant; you must be "substantially" transparent.

1. Conduct a "Control Audit": Go beyond your shareholder register. Review your articles of association, shareholder agreements, and loan documents to identify anyone who holds "veto" rights or "management control."
2. Update Your Governance Code: Ensure your internal policies reflect the 2026 Corporate Governance Code. This will help your board understand that transparency is a tool for building investor trust, not just a regulatory hurdle. For more details, see The ultimate guide to the 2026 Corporate Governance Code.
3. Prepare for Digital Reporting: With the full implementation of the July 2026 Tax Administration Law, reporting beneficial ownership will likely be integrated into digital tax portals. Ensuring your data is clean and accurate now will prevent issues with the 2026 Tax Administration Law pitfalls.

The Value Proposition of Transparency

At BLaw Vietnam, we believe that transparency shouldn't be viewed as a burden. Instead, a clear and honest disclosure of beneficial ownership can:

• Streamline Due Diligence: When seeking debt funding or venture capital, having your beneficial ownership data ready and verified accelerates the process.
• Enhance Reputation: In a market where corporate governance is a key metric for ESG (Environmental, Social, and Governance) scoring, transparency is a competitive advantage.
• Minimize Legal Risk: Avoiding the "7 mistakes" of disclosure prevents costly fines and the potential suspension of business licenses.

Through the above insights, it is clear that while the 25% rule remains a part of the legal vocabulary, it is no longer the definitive boundary of beneficial ownership. The "truth" in 2026 is that if you have the power to move the needle for your business, the regulators want to know who you are.

How BLaw Vietnam Can Assist Your Business

Navigating the complexities of Vietnamese and international corporate law requires more than just a checklist; it requires a strategic partner who understands the shifting tides of regulation. Our team of highly qualified legal experts is dedicated to helping you optimize your corporate structure for both compliance and efficiency.

Whether you are a local enterprise adjusting to new disclosure rules or a foreign investor entering the Vietnamese market, we are here to provide clear, actionable advice. We invite you to reach out to our team to discuss how the 2026 beneficial ownership rules impact your specific business model.

Are you ready to bring your corporate governance into 2026?

Contact BLaw Vietnam today for a comprehensive compliance review. We are thrilled to help you navigate these changes and ensure your business remains a leader in transparency and integrity.

Best regards,

The BLaw Vietnam Team