Clause 1, Article 31 of the draft law includes the concept of ‘beneficial owner’ in business registration documents, and the requirement about public disclosure of information, as well as the obligation for enterprises to notify the Business Registration Agency of any changes to beneficial ownership information.

The law compilation committee decided to add the provisions about ‘beneficial owner’ because the Asia-Pacific Group on Money Laundering (APG), of which Vietnam is a member, said Vietnam needs to fix deficiencies in its anti-money laundering framework to ensure the effectiveness of the anti-money laundering mechanism.

Vietnam particularly lacks regulations ensuring access to the information about beneficial ownership.

During group discussions at the ongoing National Assembly session on May 10, Finance Minister Nguyen Van Thang outlined two main reasons for amending the Enterprise Law: addressing shortcomings to fulfill anti-money laundering commitments, and reducing administrative procedures to ease burdens on businesses.

Of the 23 amendments in the draft (16 revisions and seven new additions), one-third relate to anti-money laundering regulations.

"This is an urgent issue, which forces the compilation committee to include these provisions to meet the requirements of the Financial Action Task Force (FATF). May is the deadline for Vietnam to comply with FATF standards to avoid being blacklisted," Thang explained.

Regarding the term "beneficial owner", Thang said many have questioned why a simpler term wasn’t used. However, this was not possible as 'beneficial owner' is directly adopted from FATF terminology, a technical requirement.

Previously, the National Assembly’s Economics and Financial Committee recommended not defining "beneficial owner" in detail in the Enterprise Law. It said it would be better to assign the Government to specify criteria for identifying beneficial owners, aligned with the Anti-Money Laundering Law’s provisions on "beneficial owners of organizational clients".

Nguyen Manh Hung, a member of the National Assembly’s Economics and Financial Committee, said the Anti-Money Laundering Law does not explicitly mention "beneficial owner," Clause 2, Article 10 requires banks to report, identify, and update information on beneficial owners.

New launch pad for enterprises

The Politburo, Party Chief, and Prime Minister have issued strong directives to reduce administrative procedures by at least 30 percent. According to Thang, amending the Enterprise Law aligns with this goal.

Thang cited examples of market entry procedures in the draft law aimed at reducing administrative burdens for businesses. Additionally, shifting to individual identification-based management, rather than traditional paperwork, necessitates legal updates to reflect current realities.

Another issue under consideration at this session relates to the Science and Technology Law, specifically allowing public servants to contribute capital to establish enterprises.

Thang proposed two options. First, amending Clauses 2 and 3, Article 17 of the Enterprise Law to come in line with the Science and Technology Law. Second, awaiting the National Assembly’s approval of amendments to the Law on Public Servants in October.

"We lean toward including the provision allowing 'public servants to contribute capital to establish enterprises' in the Enterprise Law at this session to ensure consistency between the two laws,” he said, explaining that if the provision is not amended immediately, the Enterprise Law will have to be amended once more, after the Law on Public Servants takes effect.

Hung noted that a series of Central Committee resolutions aim to remove barriers and drive enterprise growth. Recently, the goal of reaching 2 million enterprises by 2030 was set, while the current figure is just 940,000. To reach that end, Vietnam needs to have over 200,000 new enterprises annually from now until 2030.

The Central Committee has highlighted the "strategic quartet" of four resolutions: Resolution 57 on Science, Technology, and Innovation; Resolution 59 on International Integration; Resolution 66 on Reforming Law-Making and Enforcement; and Resolution 68 on Private Economic Sector Development.

Hung believes that it is necessary to thoroughly study all these four resolutions to integrate them into the Enterprise Law, thereby institutionalizing them and providing a foundation to meet the 2 million enterprise target by 2030.

The amendments and supplements in the draft Law adhere to principles ensuring the freedom of business, reforming administrative procedures, improving the investment and business environment, and enhancing the effectiveness of state management over enterprises.

The draft Law aims to institutionalize the Party’s viewpoints and policies on administrative reform, creating a favorable environment for enterprises to enter the market.

Tuan Nguyen