V-Shares
The Nam Hai Legal Structure

Ownership Structure

Under this structure a wholly foreign owned enterprise (“WFOE”) is formed by an 
Offshore entity (“Resort BVI”) in Vietnam, which is licensed to develop a resort 
Complex consisting of a hotel and a number of villas (“Resort WFOE”).  Resort 
WFOE is owned by an offshore BVI company (“Resort BVI”).

Another WFOE (“Residences WFOE”) is formed by another offshore entity 
(“Residences BVI”) in Vietnam which is licensed to long‐term lease the villas and
Indochina Resort Residences (Hoi An) Limited (Residences BVI) in Vietnam which is licensed to long term lease the villas and associated land from Resort WFOE. 

Resort BVI is the sole holder of all the ordinary shares of the offshore entity that 
owns Residences WFOE and also owns all the special shares (“V Shares”) issued by 
Residences BVI.

Advantages

• Offshore all the holders of the V Shares are also contractually bound by a set of terms and conditions regarding the use of their villas and common areas  (similar to the concept of a Deed of Mutual Covenant in Hong Kong) to ensure    that the villas are maintained up to a certain standard.

• All the villas are part of the hotel room rental pool program.

• The Nam Hai structure at least assures the holder of the V Share a contractual  right to use the villas for the entire term of the long‐term lease held by Residences WFOE. 

• The Residences WFOE is licensed in Vietnam and this provides certainty that the long-term lease of the villas is recognized under Vietnamese law and  enjoys all the protection of the Investment Law of Vietnam. 

• Residences WFOE is protected under the Investment Law of Vietnam which contains the following investment guarantees:

• Protection against nationalization unless for security and national defense in which case investors will be paid at market price and in respect of foreign investors in freely convertible currency

• Against change in law (if new law is favorable, investors are entitled to benefit of new law; if new law is unfavorable, investors shall retain incentives  or may adjust scope of business or deduct losses from taxable income or may be compensated)

• Uniform application of price rates for goods and services controlled by the State

• Right to purchase foreign currencies

• By owning the V Share issued by Residences BVI which owns wholly Residences WFOE which in turn holds the long-term lease to all the villas in Vietnam, the holder of the V Share de facto has the right to use a specific villa for the duration of the long term lease

The lease is protected from the bankruptcy or creditors of Resort WFOE by   virtue of the laws of Vietnam, which provides that any buyer takes subject to the lease. Resort has recently obtained the right to sell and a structure to allow the V is being explored.

© 2010 The Nam Hai - Reinventing Luxury and Sophistication in Vietnam.