Is It Permissible to Use a Nominee for Capital Contribution?

In investment and business activities, there are many cases where actual investors—due to legal constraints, a desire for anonymity, or risk aversion—choose to have others act as nominees on their registration documents. Although many mistakenly believe this is a safe and perfect strategy to conceal their identity, it actually harbors the hidden risk of losing all assets and facing immense legal consequences. Is it legally permissible for a company member to act as a nominee to contribute capital to an enterprise? Let’s clarify the root causes, current legal regulations, and the unpredictable risks of this practice through the article below.

Causes of Using Nominees for Capital Contribution in Enterprises

This behavior stems from various reasons when the actual capital provider (the true investor) wants to establish a company or contribute capital but is hindered by personal circumstances, preventing them from appearing directly on official documents.

• First, failure to meet legal requirements: The person utilizing the nominee arrangement may not meet the legal conditions prescribed by law. For example, according to Clause 2, Article 17 of the Law on Enterprises 2020, certain individuals (such as civil servants, public employees, and police or military officers) are prohibited from establishing, contributing capital to, or managing enterprises to avoid conflicts of interest and ensure integrity in public duties.

• Second, the desire for absolute anonymity: In many cases, an individual may simultaneously manage or own shares in multiple enterprises within the same industry. Publicly revealing their identity could lead to violations of strict competition and antitrust laws, or breach commitments made to other partners. Additionally, some choose to remain anonymous for highly sensitive personal reasons (such as their current employment position, personal reputation, or a desire not to draw the attention of competitors). In these scenarios, the nominee acts as a perfect smokescreen to deceive the market.

• Third, risk aversion: Choosing to stay off official paperwork is often driven by a fear of risk. Business always comes with unpredictable variables, such as financial losses, tax arrears, or complex civil and commercial disputes. By putting someone else on the legal frontline to take the brunt of the impact, the true owner harbors a fragile hope that they can build a firewall to protect their personal assets and safety. They assume that by not having their name on the paperwork, authorities or partners cannot hold them personally liable. However, this is a completely flawed mindset. In reality, the law does not recognize this forced separation. Through professional investigations into cash flows and actual decision-making authority, liabilities can easily spread and directly strike the true operator behind the scenes.

Is It Permissible to Use a Nominee for Capital Contribution?

Stemming from the reasons above, the practice of company members acting as nominees to contribute capital is quite common in reality.

Previously, when disputes arose regarding nominee ownership in an enterprise, Courts would base their judgments entirely on business registration records and operating licenses to determine that the named individual was the sole legal owner of the capital contribution. Consequently, the actual investor, even with proof of funding sources or management roles, found it difficult to claim their rights due to a lack of legal basis. This aligns with the principle that “ownership rights must be publicly registered” under the Civil Code 2015 to protect the interests of third parties and ensure transparency in economic transactions.

However, effective July 23, 2026, the Government issued Decree 296/2026/ND-CP amending and supplementing several articles of Decree 168/2025/ND-CP on enterprise registration. One of the new and notable contents of Decree 296 of 2026 is the strict prohibition of company members acting as nominees for others to contribute capital to an enterprise, as stipulated in Clause 1, Article 1 of this document.

This ban on nominee arrangements was issued synchronously with new regulations requiring enterprises to identify and declare their ultimate beneficial owners. A beneficial owner is an individual who actually owns, directly or indirectly, 25% or more of the charter capital/shares, or is the person who has the power to control the most important decisions of the company (such as appointing the director, amending the charter, dissolving the company, etc.). Enterprises are forced to notify this information to the Business Registration Authority and keep a roster at the company. If there is a change in the actual beneficial owner, the company must update it within 10 days.

Therefore, as of the present moment, the act of a company member acting as a nominee to contribute capital to an enterprise is strictly prohibited. To eliminate this nominee mechanism, the newly promulgated law combines the prohibition of the act with the mandatory requirement for enterprises to clearly identify and declare information about the beneficial owner. This means that if an individual indirectly owns 25% or more of the capital through a nominee, or has the actual power to control key company decisions like appointing a director or amending the charter, the enterprise must declare the identity of that underlying individual to state agencies. This renders the practice of borrowing someone else’s name to hide one’s identity entirely ineffective.

Legal Consequences of Using Nominees for Capital Contribution

Founders of an enterprise must self-declare and bear legal responsibility for the legality and truthfulness of their dossiers.

• Administrative & Licensing Penalties: If state agencies discover a nominee arrangement, the Business Registration Authority will issue a notice canceling the validity of the granted Enterprise Registration Certificate and simultaneously notify tax and competent authorities for handling in accordance with the law. The enterprise will be forced to submit a new, truthful application within 30 days. If the declared content is determined by the police to be forged, the Enterprise Registration Certificate will be permanently revoked.

• Loss of Assets & Rights: Vietnamese law does not recognize the concept of a “nominee” in enterprise ownership; all rights and responsibilities are only granted to the person officially named on the documents. If the nominee becomes greedy, they have the legal right to transfer capital, appoint a new director, or appropriate the company. The actual investor will find it almost impossible to reclaim their rights due to a lack of legal basis for court protection.

• Operational Gridlock: Furthermore, the actual operator (who is not named) will not have the legal standing to sign contracts, receive investment capital, or borrow bank loans, making it extremely difficult for the enterprise to operate and grow.

For in-depth consultation and timely support on legal issues, you can contact BKCLAW via the following information:

• Phone: 0909 073 692

• Email: info@bkclaw.vn

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