Decree 296/2026/ND-CP: For the First Time, Clear Criteria for Identifying a Company’s Indirect Beneficial Owner

14-08-26 MTParners

The previous rule under Decree 168/2025/ND-CP only covered direct ownership. Decree 296/2026/ND-CP now adds criteria for identifying beneficial owners (BOs) through indirect ownership, family groups, and actual control rights — closing the loophole of splitting ownership stakes to avoid disclosure.

On 23 July 2026, the Government issued Decree 296/2026/ND-CP amending and supplementing Decree 168/2025/ND-CP on enterprise registration, effective on the date of signing. The most significant change is in the amended Article 17: for the first time, the law specifically sets out criteria for identifying a beneficial owner (BO) who holds indirect ownership through an intermediary entity or other legal arrangement — an issue that the previous Decree 168/2025 addressed only in terms of direct ownership. The regulation implements Vietnam’s National Action Plan on Exchange of Information on Request for Tax Purposes, issued together with Prime Ministerial Decision 948/QD-TTg dated 27 May 2026.

Why add rules on indirect ownership?

Under the pre-amendment Decree 168/2025/ND-CP, enterprises identified their BO based solely on direct ownership of 25% or more of charter capital or voting shares. This left a gap for individuals who actually controlled a company through an intermediary company, a holding structure, or a multi-tier ownership chain — a loophole often exploited to conceal the true owner’s identity for tax evasion or money laundering purposes. Decree 296/2026/ND-CP comprehensively revises Article 17, clearly stating that a beneficial owner is one or more individuals who, directly or indirectly, ultimately own or control the enterprise in practice — and a company may have more than one BO at the same time, not limited to a single individual.

Three groups of criteria for identifying a BO under the new Article 17

The Decree establishes a BO-identification mechanism based on three groups of criteria, applied in order of priority:

Ownership criterion (Clause 1): an individual who directly, indirectly, or both directly and indirectly owns 25% or more of charter capital or 25% or more of total voting shares. Indirect ownership is defined as owning this threshold through an organization or other legal arrangement. A group of individuals with a family relationship or a contractual relationship who jointly own 25% or more is also identified as a BO — a new rule aimed at preventing ownership from being split among multiple individuals to avoid disclosure obligations. For partnerships, all general partners are BOs regardless of their capital contribution ratio or voting rights.
Actual control criterion (Clause 2): applies when no individual meets the 25% ownership threshold. In that case, the BO is identified through one or more of the following rights: the right to appoint, remove, or dismiss a majority or all members of the Board of Directors/Members’ Council, or the Chairperson, Director, or General Director; to amend the company charter; to change the organizational structure; to decide financial, investment, and operational policies; or to reorganize or dissolve the enterprise.
Fallback criterion (Clause 3): if no individual meets either of the above criteria, the enterprise identifies the manager with the greatest authority acting on its behalf as the BO (excluding individuals representing state capital).

Review and disclosure process, in order of priority (Article 18)

Enterprises are responsible for proactively identifying their BO — not merely disclosing upon request — by reviewing each level of the ownership structure until the individual with ultimate actual ownership or control is identified. Disclosure to the Business Registration Authority must follow the same order of priority as the three criteria above: first, disclose the individual meeting the ownership criterion; if none, disclose the individual meeting the actual control criterion; if still none can be identified, disclose the manager with the greatest authority. Where the ownership structure involves a legal arrangement governed by anti-money-laundering law, the BO of that arrangement is determined under the relevant specialized regulations.

Practical Impact

The new rule directly affects enterprises with complex ownership structures: foreign-invested companies owned through an overseas parent company, corporate groups with multi-tier holding structures, or family businesses that previously split shares among multiple members so that no individual exceeded the 25% threshold. Previously, such cases might not have required BO disclosure because the old rule only looked at each individual’s direct ownership ratio. Now, with the indirect-ownership and family-group/agreement mechanisms in place, these enterprises must review their entire ownership chain and disclose the individual who genuinely exercises control. Note that, under penalty rules already in effect since 21 July 2026, an enterprise that fails to disclose its BO can be fined up to VND 100 million — compliance risk has risen significantly now that the scope for identifying a BO has been expanded.

Recommendations

Enterprises, particularly those with foreign investment or multi-tier corporate ownership structures, should: (1) review the entire ownership chain from the enterprise level down to the individual who ultimately owns or controls it; (2) check shareholder groups with family relationships or joint-ownership agreements to correctly determine disclosure obligations; (3) prepare documentation evidencing the ownership structure and actual control rights to support disclosure to the Business Registration Authority; and (4) update BO information promptly whenever the ownership structure changes, to avoid the risk of administrative penalties.

MT & Partners Law Firm, with a team of experienced lawyers in corporate and investment matters, is ready to assist with reviewing ownership structures, identifying beneficial owners, and completing disclosure procedures in accordance with the new regulations. Contact hotline 0987140772 or email info@mtpartners.vn for advice.

(*) This article is for reference only and does not replace specific legal advice.

SEO keywords: Decree 296/2026/ND-CP, beneficial owner, indirect ownership enterprise, Decree 168/2025/ND-CP, enterprise registration Vietnam, beneficial owner disclosure, Vietnam corporate legal advisory, MT & Partners Law Firm.