Nguyen Thi Thanh Xuan, Nguyen Thanh Tram, and Le Phuoc Duy Lam
Vision & Associates[1]
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| A production workshop of Thuan Phuong Embroideries Garments Co., Ltd. in Ho Chi Minh City__Photo: Thanh Vu/VNA |
More subjects eligible to participate in establishing and managing enterprises
Once prohibited under the 2020 Law on Enterprises (the 2020 Law), now the 2025 Law Amending a Number of Articles of the Law on Enterprises (the 2025 Law) allows cadres, civil servants and public employees to participate in establishing and managing enterprises in the fields of science, technology, innovation and digital transformation.
This provision is intended to be consistent with the Law on Science and Technology and National Assembly Resolution 193/2025/QH15 on pilot implementation of a number of special mechanisms and policies to create breakthroughs in the development of science, technology, innovation and national digital transformation. At the same time, this provision opens up opportunities for experts (regardless of whether they are cadres, civil servants and public employees) in the field of technology to participate in doing business and promoting innovation. Technology companies from different economic sectors, including domestic private sector and foreign-invested sector are expected to benefit from these amendments.
Personal liability of enterprises’ legal representatives
According to the 2020 Law, an enterprise’s legal representative was only personally liable for damage caused to the enterprise in certain violations mentioned in Article 13.1. For example, failing to properly perform rights and obligations in an honest, careful and best manner to ensure the legitimate interests of the enterprise; or failing to promptly notify related interests. As per the 2025 Law, the legal representative of an enterprise must be personally liable for damage caused to the enterprise, not only limited to the above-mentioned violations but also extended to all other violations, as prescribed by other laws.
This provision aims to enhance the accountability of the legal representative, ensuring that he is always aware and acts honestly, carefully, and in the best interests of the enterprise, in all cases. This is also expected to help minimize abuse of power and personal gain by the legal representative, while improving the quality of corporate governance in conformity with international practices. Companies, including foreign-invested enterprises, are recommended to review their charters, clearly define the rights and obligations of their legal representatives to determine specific responsibilities, especially for companies having more than one legal representative.
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| Printed circuit board manufacturing line at the factory of Japan-invested Mektec Manufacturing Corporation (Vietnam) Ltd. in Thang Long II Industrial Park, My Hao ward, Hung Yen province__Photo: Vu Sinh/VNA |
Declaration, notification and retention of information on beneficial owners
For the first time, the 2025 Law supplements the definition of beneficial owner of an enterprise with legal person status, who is an individual who has actual ownership of the charter capital or has control over that enterprise. This provision is intended to meet international commitments on preventing and combating money laundering and terrorist financing, especially in response to the requirements of the Financial Action Task Force and the Asia-Pacific Group on Money Laundering, while contributing to reducing anonymous ownership, tax evasions or commercial frauds. The Government will issue a Decree specifying criteria for determining beneficial owners.
Following the above-mentioned provision, an enterprise needs to pay attention to the following obligations:
(i) To collect, update and retain information on beneficial owners of the enterprise; to provide information to competent state agencies to identify beneficial owners of the enterprise upon request;
(ii) To notify the business registration agency when there is a change in information about beneficial owners, except listed companies and companies registered for securities trading; and,
(iii) To post the list of beneficial owners of the enterprise (if any) at the head office or other location specified in the company’s charter; the retention period must comply with law.
For an enterprise registered after the 2025 Law takes effect, in addition to the information and documents prescribed by the 2020 Law, a dossier for enterprise registration must include additional information and documents related to the beneficial owner of the enterprise (if any). As for an enterprise established before the effective date of the 2025 Law, the declaration of additional information about the beneficial owner of the enterprise (if any) will be made at the same time as the latest performance by the enterprise of the procedures for registering changes in enterprise registration contents or notifying changes in enterprise registration contents, unless the enterprise requests supplementing such information earlier.
Declaration of enterprise registration dossiers or dossiers for registration of changes in enterprise registration contents, charter capital and valuation of assets contributed as capital
In addition to the prohibited acts when declaring enterprise registration dossiers or dossiers for registration of changes in enterprise registration contents, the 2025 Law adds certain prohibited acts, including: (i) falsifying the contents of dossiers; and (ii) falsely declaring charter capital through the act of failing to fully contribute the charter capital as registered without registering for charter capital adjustment in accordance with law.
Compared to the 2020 Law, the 2025 Law emphasizes the requirement on registration for charter capital adjustment if the committed capital is not contributed in full (this provision is only mentioned in Decree 122/2021/ND-CP regulating administrative sanctions in the field of planning and investment) and, at the same time, more tightly controls the valuation of assets contributed as capital. This provision aims to increase transparency and honesty in declaring dossiers for enterprise registration or dossiers for registration of changes in enterprise registration contents in general and capital declaration in particular, thus helping overcome the situation where enterprises “inflate” their charter capital to create false reputation. Regarding this content, enterprises are recommended to use independent and objective appraisal mechanisms (e.g., hiring an independent valuation unit) to ensure transparency, objectivity and honesty.
Debt limit and conditions for issuance of corporate bonds
The 2025 Law adds the Debt-to-Equity Ratio criterion to conditions for enterprises to privately place their corporate bonds. Specifically, the total debt of the issuing institution (including the value of bonds planned to be issued) must not exceed five times the equity of that institution, based on the audited financial statements of the year preceding the year of bond issuance. This provision applies to joint stock companies other than public companies in order to control bond payment risks. However, this provision does not apply to issuers that are state enterprises, enterprises issuing bonds to implement real estate projects, credit institutions, insurers, reinsurers, insurance brokers, securities companies, and securities investment fund management companies, because these entities will have to comply with other relevant laws.
During the transition period, the 2025 Law stipulates that private placements of corporate bonds, for which pre-placement information disclosure contents have been submitted to the concerned Stock Exchange before the effective date of the 2025 Law, will continue to comply with the 2020 Law and relevant regulations.
In addition to the above notable provisions, the 2025 Law also amends some other provisions to make it clear or to create more favorable conditions for enterprises in their organization and operation.
List of shareholders entitled to attend the General Meeting of Shareholders
The 2025 Law amends and supplements a provision that the list of shareholders entitled to attend the General Meeting of Shareholders will be established based not only on the Shareholder Register as under the previous regulations but also on the Securities Owner Register, to be consistent with the current practice of joint stock companies.
Shareholders’ right to convene meetings
For a joint stock company without a Supervisory Board, the 2025 Law clarifies that if the Board of Directors does not convene a General Meeting of Shareholders as required, within the next 30 days, a shareholder or a group of shareholders owning 5 percent or more of the total number of common shares (or a smaller percentage as stipulated in the company charter) will have the right to convene the General Meeting of Shareholders in order to overcome the shortcomings of the 2020 Law in the application for the model of joint stock companies without a Supervisory Board when it is necessary to convene the General Meeting of Shareholders.
Responsibilities of shareholders when requesting convention of the General Meeting of Shareholders
The 2025 Law supplements a provision that shareholders or groups of shareholders are fully responsible before law for the accuracy and truthfulness of documents and evidence(s) provided to competent authorities when requesting convention of the General Meeting of Shareholders. This aims to increase transparency and accountability of shareholders or groups of shareholders when they wish to request the convention of the General Meeting of Shareholders.
Dissolution of enterprises
The 2025 Law adds the word “shareholder” next to the word “member” to remedy the shortcomings of the 2020 Law when the latter only stipulated the case of an enterprise being dissolved when the minimum number of members is no longer enough (while ignoring the case of an enterprise being dissolved in the event the minimum number of shareholders is no longer sufficient) as required by the Law on Enterprises within six consecutive months without completing procedures for enterprise transformation.-
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