The landscape of corporate transparency in Vietnam underwent a seismic shift with the implementation of the 2025 Law on Enterprise. Effective July 1, 2025, the legal framework regarding Ultimate Beneficial Owners (UBO) is no longer a peripheral compliance matter: it is now a central pillar of corporate governance. At BLaw Vietnam, we have observed that while many multinational and local firms are eager to comply, the transition from "on-paper" ownership to "actual" control disclosure is fraught with technical pitfalls.
Understanding who truly pulls the strings of a company is the primary objective of these new regulations, aligning Vietnam with international Anti-Money Laundering (AML) and "Know Your Customer" (KYC) standards. However, the complexity of shareholder mapping often leads to administrative errors that can result in significant penalties or delays in business licensing.
To help you navigate this transition, we have identified the seven most common mistakes enterprises are making with UBO declarations and how you can optimize your compliance strategy to avoid them.
1. Miscalculating the 25% Ownership Threshold
Perhaps the most frequent error we encounter is a misunderstanding of the mathematics behind the declaration. Under the 2025 Law and Decree No. 168/2025/NĐ-CP, a beneficial owner is defined as an individual who ultimately owns or controls 25% or more of the charter capital or voting shares of an enterprise.
Many businesses mistakenly believe that the threshold remains at the majority level (over 50%) or that it only applies to direct shareholders. If an individual holds exactly 25%, they must be declared. Failing to account for this specific percentage can lead to an incomplete filing, which the authorities may view as a deliberate omission of control. For a deeper dive into why this specific number was chosen and how it affects your structure, you may find our analysis on whether the 25% rule really matters in 2026 particularly insightful.
2. Failing to Trace Indirect Ownership (The "Hidden" Owners)
In complex corporate groups, the beneficial owner is rarely the person listed on the Business Registration Certificate. A common mistake is stopping the search at the first layer of corporate shareholding.
The 2025 Law requires you to perform comprehensive shareholder mapping. This means tracing ownership through intermediary entities, holding companies, and offshore vehicles until you identify the natural person (the human being) at the top of the chain.
Example: If Individual A owns 60% of Parent Co, and Parent Co owns 50% of your Vietnam Subsidiary, Individual A is an indirect owner of 30% of the Vietnam Subsidiary. Because 30% exceeds the 25% threshold, Individual A must be declared as a UBO. Ignoring these mathematical links is a critical compliance failure.
3. Missing the Strict 10-Day Notification Window
Efficiency is the hallmark of the new regulatory environment. The 2025 Law on Enterprise mandates that any change in the information of a beneficial owner must be notified to the authorities within 10 days from the date the change occurs.
Many HR and legal teams are accustomed to longer grace periods or end-of-quarter updates. However, the 10-day rule is rigid. This requirement mirrors other high-pressure reporting rules recently introduced in Vietnam, such as the 3-day reporting rule for foreign talent. Delaying the update of your UBO registry not only risks administrative fines but can also stall other corporate actions, such as bank account updates or capital transfers.
4. Confusing "Legal Owner" with "Beneficial Owner"
It is vital to distinguish between a Legal Owner (the entity or person named in the legal documents) and the Beneficial Owner (the person who enjoys the benefits of ownership or exercises ultimate control).
A common mistake is declaring a corporate entity as the beneficial owner. Under the new law, a beneficial owner must be a natural person. You cannot list "Global Holdings Ltd" as the UBO; you must identify the individuals who own or control Global Holdings Ltd. This distinction is fundamental to the transparency requirements of the 2025 Law. If your internal leadership is struggling with these definitions, reviewing the 2026 corporate governance principles can help align your board’s understanding of their roles.
5. Overlooking the "Control" Criterion Beyond Equity
While the 25% rule is the primary metric, it is not the only one. The 2025 Law stipulates that an individual can be a beneficial owner if they exercise ultimate control through other means, even if they hold 0% of the shares.
Mistakes often occur when businesses fail to declare:
- Individuals who have the power to appoint or remove a majority of the Board of Directors.
- Individuals who influence strategic decisions through shareholder agreements or "nominee" arrangements.
- Individuals who have the right to direct the management and policies of the company.
If you are only looking at the cap table, you are missing half the picture. This oversight can lead to significant director liability issues if the authorities determine that control was intentionally masked.
6. Submitting Inaccurate or Incomplete Personal Data
The level of detail required for a UBO declaration is extensive. The authorities now require:
- Full legal name and date of birth.
- Nationality (including all nationalities held by the individual).
- Detailed contact and permanent addresses.
- Identification numbers (Passport or National ID) with expiry dates.
- The specific nature and extent of the beneficial interest.
A frequent error is providing a business address instead of a residential address for the UBO, or failing to update the declaration when a passport is renewed. In the digital age of 2026, the Department of Planning and Investment (DPI) databases are increasingly linked with immigration and tax records. Inconsistencies can trigger audits. For a quick refresher, see our guide on Vietnam’s new beneficiary owner rules explained in under 3 minutes.
7. Neglecting the Internal UBO Register
Compliance does not end with a filing at the DPI. The 2025 Law on Enterprise requires every company to maintain an internal register of beneficial owners at its head office.
Many businesses make the mistake of assuming that once the online portal is updated, their job is done. However, during a tax audit or a specialized inspection, authorities may request to see your internal records. These records must be kept up-to-date and must match the information filed with the government. Failing to maintain this internal "source of truth" is a violation that can complicate future M&A transactions or internal restructurings.
How to Streamline Your UBO Compliance
Through the above analysis, it is clear that UBO declaration is no longer a "set and forget" task. It requires an active, ongoing commitment to transparency. To optimize your process, we recommend the following steps:
- Conduct a Comprehensive Audit: Map out your entire ownership structure to the level of natural persons.
- Standardize Data Collection: Create a standard template for UBOs to provide their personal information, ensuring all required fields under the 2025 Law are covered.
- Appoint a Compliance Officer: Designate a specific individual responsible for monitoring changes in ownership and ensuring the 10-day notification window is met.
- Integrate with Registration Updates: Whenever you amend your Business Registration Certificate (for capital increases, address changes, etc.), proactively verify and update your UBO information.
In addition to UBO compliance, businesses in 2026 are facing a wave of new regulations, from minimum wage hikes to complex transfer pricing audits. Staying ahead of these changes is essential for maintaining a "clean" legal standing in Vietnam.
Partner with BLaw Vietnam
Navigating the intricacies of the 2025 Law on Enterprise requires more than just filling out forms; it requires a strategic understanding of how the authorities interpret "control" and "transparency."
At BLaw Vietnam, our highly qualified team of legal experts has a proven track record of helping international and local enterprises navigate complex regulatory shifts. We are thrilled to assist you in auditing your ownership structures, mapping your shareholders, and ensuring that your UBO declarations are both accurate and timely.
If you are concerned about your current UBO status or need assistance with a complex shareholder mapping exercise, we invite you to reach out to us. Let us help you eliminate the stress of compliance so you can focus on growing your business in Vietnam’s vibrant economy.
Contact BLaw Vietnam today for a consultative review of your corporate governance framework.