Dear Clients and Partners,

In the rapidly evolving landscape of corporate transparency, the concept of the Ultimate Beneficial Owner (UBO) has shifted from a niche regulatory requirement to a cornerstone of business integrity. With the full implementation of the 2025 Law concerning corporate governance and anti-money laundering (AML), your business must now navigate stricter disclosure mandates. As of May 2026, the era of "anonymous capital" has effectively ended in Vietnam and across most global jurisdictions.

At BLaw Vietnam, we understand that these regulations can appear daunting, particularly for foreign investors and complex corporate groups. This guide is designed to demystify the UBO identification process, ensuring your operations remain compliant, efficient, and transparent.

What is an Ultimate Beneficial Owner (UBO)?

At its core, an Ultimate Beneficial Owner is the natural person: a human being: who ultimately owns or controls a legal entity. While a company’s "legal owner" might be another corporation, a trust, or a holding company, the UBO is the individual at the very top of the chain who reaps the financial benefits or exercises significant influence over the business.

The distinction is critical. A legal owner is a formal designation found on a business license or shareholder register. In contrast, the UBO is the person who holds the "strings" of the entity. Under the 2025 Law, authorities are no longer satisfied with knowing which company owns your business; they want to know which individuals own those companies.

Why the 2025 Law Changes Everything

The regulatory environment in 2026 is significantly different from years past. The 2025 Law was enacted to align Vietnam’s financial transparency with international standards, such as those set by the Financial Action Task Force (FATF). The primary goal is to combat tax evasion, money laundering, and the financing of illicit activities by ensuring that the real people behind corporate structures are identifiable.

For your business, this means that "off-the-shelf" compliance is no longer sufficient. The new laws introduce:

• Mandatory Centralized Registration: All entities must report UBO data to a centralized government database.
• Ongoing Duty to Update: Any change in ownership exceeding a specific threshold must be reported within a strict timeframe (usually 15 days).
• Enhanced Penalties: Non-compliance can lead to the suspension of business licenses, significant monetary fines, and challenges in maintaining corporate bank accounts.

Identifying the UBO: The Three Main Criteria

Identifying a UBO is not always a straightforward task of looking at a shareholder list. The 2025 Law utilizes a multi-layered approach to define ownership and control.

1. The Ownership Threshold (The 25% Rule)

The most common indicator is direct or indirect ownership of a specific percentage of shares or voting rights. In most jurisdictions, including the framework applied in Vietnam for 2026, this threshold is set at 25% or more.

• Direct Ownership: An individual holds 25% of the shares in Company A.
• Indirect Ownership: An individual holds 50% of Company B, which in turn owns 60% of Company A. In this scenario, the individual has a 30% indirect interest in Company A and is therefore a UBO.

2. The Control Criterion

Ownership is only half the story. An individual might own only 5% of the shares but possess the power to appoint the majority of the Board of Directors or veto strategic decisions. Under the 2025 Law, if an individual exercises "effective control" through means other than equity, they are classified as a UBO. This includes control via:

• Shareholder agreements.
• Voting trusts.
• The power to hire or fire senior management.
• Significant influence over financial and operating policies.

3. The Management Fallback (The "Cascading" Rule)

In rare cases where no individual meets the 25% threshold or exercises definitive control, the law requires the identification of a Senior Managing Official. This usually includes the CEO, Managing Director, or the Legal Representative of the company. This ensures that every entity has a "human face" accountable for its actions.

A Step-by-Step Guide to Identifying Your UBOs

To ensure your business remains compliant, our team at BLaw Vietnam recommends a structured, four-step identification process.

Step 1: Map Your Corporate Structure

You must create a comprehensive organizational chart that traces ownership from the local Vietnamese entity all the way up to the individual shareholders. This chart should include all intermediary layers, such as holding companies, trusts, and foundations.

Step 2: Analyze Voting Rights and Agreements

Review your Articles of Association and any Shareholders’ Agreements. Look for clauses that grant specific individuals "special rights" or "golden shares" that might bypass the standard 25% ownership rule.

Step 3: Collect Documentation

Once an individual is identified as a UBO, you must gather their personal information. Under current regulations, this includes:

• Full legal name and any aliases.
• Date and place of birth.
• Nationality and residency status.
• Residential address.
• Nature and extent of the beneficial interest (e.g., "30% indirect shareholding").

Step 4: Verify the Information

The law requires "reasonable measures" to verify that the information provided is accurate. This involves checking government-issued IDs, passports, and corporate registries from the UBO’s home country. For complex international structures, our teams often coordinate with foreign legal counsel to ensure the validity of these documents.

Verification and Documentation: The "Golden Standard"

In 2026, mere self-declaration is rarely enough. Regulated entities, such as banks and legal firms, are now required to perform "Enhanced Due Diligence" (EDD). To streamline your business operations and avoid delays in tax filings or M&A transactions, you should maintain a "UBO File" containing:

1. Certified Copies of IDs: Passports or national ID cards of all UBOs.
2. Proof of Address: Recent utility bills or bank statements.
3. Entity Documents: Shareholder registers and certificates of incorporation for all intermediate companies.
4. Verification Record: A document signed by the Legal Representative confirming that the UBO identification process was conducted diligently.

Common Pitfalls to Avoid

Even seasoned professionals like Long Hoang and Ha Tran have seen companies fall into traps regarding UBO reporting. Here are the most common mistakes:

• Confusing Legal Representative with UBO: Many businesses mistakenly list their General Director as the UBO, even when there are individual shareholders holding more than 25%.
• Ignoring Indirect Ownership: Companies often stop at the first layer of ownership (the parent company) and fail to "look through" to the individuals behind that parent company.
• Failing to Update Changes: If a UBO sells their shares in a parent company in London, the Vietnamese subsidiary must update its records in Vietnam. Failure to do so can lead to compliance "red flags."
• Poor Record Keeping: Not having the supporting documentation (like a passport copy) ready when a bank or the tax authority requests it can halt your business activities for weeks.

How BLaw Vietnam Can Assist Your Business

The nuances of the 2025 Law require a blend of local legal expertise and a global perspective. At BLaw Vietnam, we offer a suite of services designed to optimize your compliance strategy:

• UBO Audits: We review your current corporate structure and identify all individuals who meet the UBO criteria.
• Reporting and Filing: Our Legal Services team handles the formal registration of UBO data with the relevant authorities.
• Structural Optimization: If your current structure is unnecessarily complex, we provide advice on how to streamline your organization while remaining fully compliant.
• Ongoing Monitoring: We help you implement internal systems to track changes in ownership and ensure your filings are always up to date.

Through the above article, it is clear that UBO identification is no longer a "one-time" task but an ongoing commitment to transparency. Whether you are navigating labor regulations or complex tax structures, knowing your UBOs is the first step toward a secure and reputable business presence in Vietnam.

Conclusion

The 2025 Law has ushered in a new era of accountability. While the requirements for identifying Ultimate Beneficial Owners are more rigorous than ever, they also provide a foundation for more stable and trustworthy business environments. By taking proactive steps today, you can protect your business from penalties and position yourself as a leader in corporate governance.

If you are unsure about your company’s UBO status or need assistance with the registration process, we invite you to reach out to our highly qualified team. We are excited to help you navigate these changes efficiently and cost-effectively.

Contact us today to schedule a consultation:

• Visit our Contact Page: blawvn.com/contact
• Learn more about our expertise: blawvn.com/legal-blog
• Meet our specialists: Long Hoang | Tien Tran | Hanh Hoang

We look forward to being your reliable partner in legal excellence.