Vietnam is currently one of the most attractive places in the world for foreign investment. With an investment-focused political climate, Vietnam is currently drawing entrepreneurs and large, established companies alike. One controversial method that investors employ to enter Vietnam is investment through a local nominee.
In its simplest form, a common nominee structure consists of a foreign investor providing funds to a local nominee. The funded amount is then used by the local nominee to invest in a target local company whose business lines may be subject to foreign ownership limits under Vietnam’s laws and WTO commitments, or where the foreign investor might otherwise face roadblocks. The nominee then contractually acts on behalf and at the direction of the foreign investor in matters relating to the investment and operation of the local company.
These agreements range in complexity from the simple, straight-line example set out above, to complex agreements that are carried out in many different stages, utilizing numerous different investment vehicles. The use of local nominees is not uncommon and some agencies specialize in providing nominee services.
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