A nominee director arrangement can help businesses meet local representation needs, but it can also create legal and compliance risks when the appointed individual does not reflect the company’s actual ownership or control.
Vietnam has strengthened its beneficial ownership rules under Decree No. 168/2025/NĐ-CP, with Decree No. 296/2026/NĐ-CP further tightening the rules and prohibiting certain nominee capital contribution arrangements.
This guide covers the key legal risks, compliance requirements and regulatory changes businesses should understand before using a nominee director structure in Vietnam.
What is a Nominee Director, and Why Do Investors Need One?
A nominee director is typically a local Vietnamese individual (or entity) appointed to act as the legal representative or director of a company on behalf of the actual investor. In essence, the nominee’s name appears on official company documents and licenses, but they do not truly control or benefit from the business, those rights belong to the foreign or hidden investor (the beneficial owner). The nominee director fulfills statutory requirements (such as the requirement for a resident local director) and handles formalities, while the real investor makes the strategic decisions and owns the economic interests.
Why would an investor require a nominee director in Vietnam? There are several practical reasons:
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Market Access Restrictions: Vietnam restricts or prohibits foreign ownership in certain “conditional” business sectors (e.g. advertising, logistics, real estate, national security-related areas). Foreign investors must comply with Vietnam’s applicable market-access and ownership requirements. Using a nominee to hold capital or ownership interests on behalf of another person cannot be used as a way to bypass these requirements. Decree No. 296/2026/NĐ-CP expressly prohibits owners, shareholders and members from contributing capital in their names on behalf of another person
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Local Presence Requirements: A Vietnamese enterprise must have at least one legal representative residing in Vietnam. This person does not have to be a Vietnamese national, provided they meet the applicable requirements. The legal representative acts on behalf of the enterprise and has statutory responsibilities for how the company is represented and managed. For instance, a nominee director can sign documents, open bank accounts, and liaise with authorities on the company’s behalf without delay.
- Confidentiality and Anonymity: Vietnam’s current enterprise registration framework places greater emphasis on beneficial ownership transparency. Under Decree No. 168/2025/NĐ-CP on enterprise registration, as amended by Decree No. 296/2026/NĐ-CP, businesses must identify and declare individuals who ultimately own or exercise effective control over the enterprise. Decree No. 296/2026/NĐ-CP also expressly prohibits owners, shareholders and members from contributing capital in their own names on behalf of another person. As a result, a legal representative or ownership arrangement should not be used to conceal the actual beneficial owner or circumvent applicable investment requirements.
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Administrative Convenience: Using a nominee can simplify bureaucratic processes. The nominee director, being a local, is familiar with Vietnamese administrative procedures and language, which can streamline compliance (e.g. obtaining licenses, permits, submitting reports). The foreign investor can focus on funding and strategy, while the nominee handles on-the-ground paperwork under the investor’s instructions.
It’s important to note that a nominee director is usually bound by a private agreement or power of attorney to act only per the beneficial owner’s directions. Proper legal contracts (often prepared by corporate service firms or lawyers) ensure the nominee cannot act against the investor’s interests. In a well-structured nominee arrangement, the nominee serves a non-executive, figurehead role, and all real control stays with the investor (beneficial owner).
However, while nominee director arrangements offer convenience and access, they exist in a legal gray area in Vietnam. Historically, Vietnamese law did not explicitly recognise trusts or nominee ownership the way some other countries do. This means such arrangements must be handled cautiously to avoid violating any laws. Next, we will examine the recent legal updates in Vietnam that directly impact the use of nominee directors.
Recent Laws and Regulatory Updates Impacting Nominee Directors
Beneficial ownership disclosure
The Amended Law on Enterprises 2025 introduced a formal beneficial ownership framework, further detailed by Decree No. 168/2025/NĐ-CP. Beneficial owners can include individuals who directly or indirectly own at least 25% of charter capital or voting shares, as well as individuals who exercise specified control rights.
Where declared beneficial ownership information changes, enterprises generally have 10 days to notify the business registration authority under the applicable procedures.
Decree 296/2026: nominee capital contributions prohibited
A significant further development came in July 2026. Decree No. 296/2026/NĐ-CP amended the enterprise registration framework and expressly provides that owners, shareholders and members may not contribute capital to an enterprise in their names on behalf of another person.
This means businesses should not use nominee shareholders or capital contributors to conceal the actual investor or circumvent applicable ownership and market-access requirements.
Strengthened penalties
Decree No. 288/2026/NĐ-CP, effective 21 July 2026, introduced specific administrative penalties relating to beneficial ownership information, including fines for certain failures to supplement, update or provide required information.
Practical Implications for Investors Under the New Nominee Director Regulations
In short, the new regulations demand that investors approach nominee director arrangements with much greater caution and transparency. Foreign investors can still invest in Vietnam confidently, but they must do so in compliance with these rules – often by seeking professional guidance. Local partners or nominees must also understand their enhanced responsibilities. In the next section, we detail the specific risks and legal exposures that arise if one continues to use nominee directors improperly under the new regime.
Under the new rules, anonymity is effectively gone. Foreign investors using nominee directors must now declare themselves as the ultimate beneficial owners to authorities. Even if the nominee’s name appears on public records, regulators and banks will know who truly controls the company. This makes “silent” ownership in restricted sectors no longer realistic.
Compliance requirements have increased for all companies. Businesses must now identify beneficial owners, update changes promptly, and submit proper declarations during incorporation and registration updates. Companies with layered ownership or old nominee structures will face heavier legal and administrative work, with real risks of fines or delays if they fail to comply.
For foreign investors in restricted sectors, the risk is significantly higher. Declaring beneficial ownership exposes any hidden foreign control and may trigger reviews under foreign ownership caps. Authorities can terminate projects deemed sham arrangements. As a result, many investors will need to shift toward joint ventures, formal approvals, or transparent fund structures instead of relying on nominees.
Local nominees are also under greater pressure. They can no longer guarantee secrecy and may face legal exposure if the arrangement is found improper. Informal nominee setups through friends or family are likely to decline, while professional corporate nominee services will operate under stricter controls.
Banks are tightening KYC and AML checks. Companies using nominees will be required to disclose beneficial owners for bank accounts and major transactions. Unclear money flows between “local” companies and foreign investors will raise red flags unless properly documented.
In summary, nominee arrangements now require full transparency and careful legal structuring. While investment in Vietnam remains viable, both foreign investors and local nominees must proceed with far greater caution under the new regime.
Risks and Legal Exposure of Using Nominee Directors Under New Regulations
Using a nominee director in Vietnam has always involved inherent risks due to the unofficial nature of the arrangement. With stricter laws now in place, these risks are significantly amplified. Both the actual investors and the nominee individuals face serious legal and financial exposure if these structures are not handled properly.
Invalid or unenforceable agreements: A private agreement between the parties does not override Vietnam’s mandatory enterprise or investment rules. Under Article 124 of the Civil Code 2015, a transaction created to conceal another transaction may be treated as a sham transaction and declared invalid, while the concealed transaction remains valid only if it independently complies with Vietnamese law. This is particularly relevant to nominee structures: where an agreement is used to conceal the actual owner or circumvent foreign-investor or market-access requirements, the parties cannot rely on the private agreement to establish rights that are inconsistent with the company’s registered ownership or mandatory legal requirements.
Project termination and regulatory sanctions: If authorities determine that a nominee structure is being used to hide illegal foreign ownership, they may revoke the Investment Registration Certificate and terminate the project as a sham investment. Business operations would be forced to stop, and administrative fines may also apply for operating illegally in restricted sectors. Recent enforcement shows that regulators are increasingly targeting nominee structures, especially in conditional industries.
Loss of investment and assets: Because the nominee is the legal owner on record, they have the power to sell assets, transfer shares, or dissolve the company without the foreign investor’s consent. If trust breaks down, the investor may only pursue recovery through lengthy litigation. Courts may recognise the hidden investor only in unrestricted sectors, potentially ordering partial remedies.
However, in prohibited sectors, courts will not validate foreign ownership at all. In such cases, the investor may recover only their initial capital at best, but lose the business entirely. Under the new disclosure rules, failing to declare beneficial ownership violates the law, while declaring it in a prohibited sector exposes the project to termination. This creates a high-risk trap for investors.
Nominee misconduct or disputes: Nominees may exploit their legal position by demanding additional payments, blocking transactions, or seizing control of the company. Investors have very limited legal leverage in such disputes. Many past cases involved informal nominee arrangements through acquaintances, which often ended in extortion or business hostage situations.
Legal liability and penalties for investors: The new regime directly targets undisclosed beneficial owners. Investors who fail to report nominee arrangements now face administrative fines and potential criminal investigation if the conduct is viewed as intentional circumvention of investment laws. Failure to provide accurate beneficial ownership information can result in administrative penalties and remedial requirements. Decree No. 288/2026/NĐ-CP also introduced specific penalties for certain failures to provide or update beneficial ownership information. Reputational damage with banks and partners is also a significant consequence.
Legal representative responsibilities
A legal representative is not simply a name recorded on the company’s registration documents. Under Vietnam’s Law on Enterprises No. 59/2020/QH14, legal representatives have statutory duties to act honestly, prudently and in the best interests of the enterprise. They may be personally liable for losses caused by breaches of these responsibilities. Businesses should therefore clearly define the representative’s authority and responsibilities and ensure the appointment reflects the company’s actual governance structure.
Voidance of transactions and inability to enforce rights: If a nominee structure is declared invalid, related transactions, including property purchases and contracts, may also be voided. The beneficial owner may be left with no enforceable legal rights, even after investing substantial capital and building up the business.
In short, nominee director arrangements in Vietnam now carry heightened legal, financial, and criminal exposure. Both investors and nominees face severe consequences if these structures fail or are deemed unlawful under the tightened regulatory framework.
Ascentium Vietnam’s Nominee Director Service: A Compliant Solution for Investors
Vietnam's current enterprise and investment framework places greater emphasis on transparent ownership, accurate beneficial ownership information and compliance with foreign-investor market-access requirements.
For businesses establishing or operating in Vietnam, the focus should therefore be on choosing a structure that reflects the actual ownership and control of the business while meeting local legal requirements.
Ascentium Vietnam can support businesses with local representation, corporate administration and compliance requirements, helping them maintain the documentation and filings needed to operate in line with applicable regulations.
Where a business requires a locally based legal representative, the role and responsibilities should be clearly documented and aligned with the company's actual ownership and governance structure. Any arrangement involving foreign ownership, restricted market access or beneficial ownership should be reviewed against the current investment and enterprise rules before implementation.
