3 key legal changes businesses should know from July 01, 2025

Effective from 01 July 2025, the amended Law on Enterprises will officially come into force, bringing several notable updates — especially in the context of Vietnam's ongoing efforts to enhance corporate transparency and align with international governance standards.

Here are 03 key legal changes businesses should proactively prepare for to ensure compliance and mitigate legal risks:

I. BENEFICIAL OWNERSHIP – MANDATORY DISCLOSURE STARTS FROM JULY 01, 2025

⇒ Who qualifies as a "beneficial owner"?

  • A natural person who ultimately owns or controls a company — even if not officially registered as the owner.
  • This does not apply to State representatives in wholly State-owned enterprises or in enterprises with State capital contributions.

⇒ What are the new obligations for companies?

  • Collect, update, and maintain information on the company’s beneficial owner(s);
  • Provide such information to competent authorities upon request;
  • Notify the Business Registration Authority of any changes.

⇒ Why does it matter?

Enhances transparency, supports anti-money laundering (AML) efforts, and meets the standard requirements of international investors and partners.

⇒ Recommendation:

Review your shareholding and ownership structure—particularly if cross-ownership or multi-layer structures are involved.

II. "FALSE DECLARATION OF CHARTER CAPITAL" – NOW CLEARLY DEFINED

⇒ Previous legal position:

While the 2020 Law prohibited false declarations of charter capital, it lacked a clear definition of what constitutes a “false declaration,” making enforcement ambiguous.

⇒ New rule from 2025:

A company that fails to fully contribute the registered charter capital within 90 days of receiving its Enterprise Registration Certificate and does not adjust the registered amount accordingly will be deemed to have made a false declaration.

⇒ Risks of non-compliance:

  • Administrative fines ranging from VND 20 million to VND 100 million;
  • Mandatory adjustment of registered capital to match actual contributed capital;
  • May negatively impact the company’s legal standing in transactions or fundraising.

⇒ Recommendation:

Establish a clear internal timeline for capital contribution and ensure timely updates with the Business Registration Authority.

III. CLARIFICATIONS ON CASES ELIGIBLE FOR CHARTER CAPITAL REDUCTION

⇒ In case of capital reduction due to return of capital contribution

  • Previously, the Enterprise Law 2020 stipulated that a company can only return its capital contribution if it has been operating continuously for 02 years or more from the date of business registration.
  • However, if the company has a period of temporary suspension of business, it is unclear whether that period is counted towards 02 years of continuous business operation or not, causing many businesses to encounter difficulties when applying.
  • To overcome this point, the regulation has been amended to clarify that the period of temporary suspension of business registration will not be counted towards 02 years of continuous business operation so that businesses have a basis for application.

⇒ In case of capital reduction due to shareholders requesting to refund preferred shares

  • The 2020 Enterprise Law recognizes the existence of redeemable preferred shares (Article 118), according to which the company can refund the contributed capital to shareholders upon request or according to the conditions stated in the shares and the Company Charter.
  • However, the law does not clearly stipulate the basis for reducing charter capital in this case, leading to the fact that the enterprise cannot reduce capital corresponding to the refunded capital.
  • With this amendment, the Enterprise Law has revised and supplemented the basis for reducing charter capital when refunding contributed capital to shareholders owning redeemable preferred shares, ensuring consistency in the legal system and applicability in practice.

⇒ Recommendations:

  • Review and update your company charter to reflect these new grounds for capital reduction;
  • Reassess internal policies and procedures related to issuance and redemption of preferred shares.

WHO SHOULD PAY ATTENTION TO THESE CHANGES?

  • Companies established and operating in Vietnam;
  • Companies with multi-layered ownership structures or cross-holdings;
  • Joint-stock companies with institutional shareholders;
  • Businesses preparing for M&A transactions or capital restructuring.

WHAT SHOULD YOU DO TO GET READY?

  • Review your ownership structure and identify beneficial owners;
  • Assess your capital contribution status to avoid non-compliance;
  • Update your charter and internal processes in line with the new requirements;
  • Consult with experienced legal professionals.

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Email: admin@atim.com.vn - Hotline: 028 7301 3679

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