Beruflich Dokumente
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THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt as to
the action you should take, please seek advice immediately from your stockbroker, bank manager, solicitor, accountant or other
independent financial adviser authorised under the Financial Services and Markets Act 2000.
If you have sold or transferred all of your Ordinary Shares in Indochina Capital Vietnam Holdings Limited, please send this
document and the Form of Proxy or Form of Direction (but not any accompanying personalised Form of Election) to the
purchaser or transferee or to the stockbroker, bank or other agent through whom the sale or transfer was effected for
transmission to the purchaser or transferee.
Shareholders resident in the United States (“United States Shareholders”) should be aware that any securities issued by
Indochina Capital Vietnam Holdings Limited under the recommended Portfolio Split will be issued pursuant to an exemption
from registration under Section 3(a)(9) of the United States Securities Act of 1933, as amended (the “Securities Act”), and will
be issued exclusively to existing security holders of Indochina Capital Vietnam Holdings Limited and no commission or other
remuneration will be paid or given directly or indirectly by Indochina Capital Vietnam Holdings Limited for soliciting the
exchange under the recommended Portfolio Split. Such securities may be offered, sold, assigned, pledged, hypothecated,
transferred or otherwise disposed of (each, a “transfer”) by you only if such securities are registered under the Securities Act
and any applicable state securities laws or if such transfer is made pursuant to an exemption from registration under the
securities act and such state securities laws after providing an opinion of counsel to such effect in form reasonably satisfactory
to Indochina Capital Vietnam Holdings Limited.
INDOCHINA CAPITAL
VIETNAM HOLDINGS LIMITED
(incorporated in the British Virgin Islands with registered number 1011258)
For the attention of United States Shareholders: This exchange offer or business combination is made for the securities of a
foreign company. The offer is subject to disclosure requirements of a foreign country that are different from those of the United
States. Financial statements included in the document, if any, have been prepared in accordance with foreign accounting
standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under the federal securities laws, since the
issuer is located in a foreign country, and some or all of its officers and directors may be residents of a foreign country. You
may not be able to sue a foreign company or its officers or directors in a foreign court for violations of the U.S. securities laws.
It may be difficult to compel a foreign company and its affiliates to subject themselves to a U.S. court’s judgment.
You should be aware that the issuer may purchase securities otherwise than under the exchange offer, such as in open market
or privately negotiated purchases.
Notice of an extraordinary general meeting of Indochina Capital Vietnam Holdings Limited to be held at One Bunhill Row,
London EC1Y 8YY on 3 September 2009 at 10.00 a.m. is set out at the end of this document. Shareholders are requested to
complete and return any accompanying Form of Proxy and Depository Interest Holders are requested to complete and return
the enclosed Form of Direction as applicable in accordance with the instructions printed thereon so as to be received by Capita
Registrars, Proxy Department, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU, United Kingdom as soon as
possible and in any event by no later than 5.00 p.m. on 28 August 2009 in the case of the Form of Direction and no later than
10.00 a.m. on 1 September 2009 in the case of the Form of Proxy.
A personalised Form of Election for use by Qualifying Shareholders who hold their Ordinary Shares in certificated form and
who wish to convert some or all of their Ordinary Shares into Realisation Shares (if the Portfolio Split is implemented) also
accompanies this document. Depository Interest Holders who hold Depository Interests representing Ordinary Shares will not
receive a Form of Election and should refer to Part V of this document for details of how to participate in the Portfolio Split
(if it is implemented). For a conversion to be effective, the Portfolio Split must be implemented and the Form of Election
completed and returned to Capita Registrars, Corporate Actions, The Registry, 34 Beckenham Road, Beckenham,
Kent BR3 4TU, United Kingdom as indicated on the Form of Election, or instructions issued in CREST, as applicable, so as
to be received as soon as possible and in any event by no later than 1.00 p.m. on 1 September 2009.
Your attention is drawn to the section on Risk Factors in Part I of this document. Shareholders should, however, read the whole of
this document.
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CONTENTS
Page
EXPECTED TIMETABLE 3
ACTION TO BE TAKEN 4
DEFINITIONS 41
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EXPECTED TIMETABLE
Record Date for participation in the recommended Portfolio 5.00 p.m. on 16 July 2009
Split (if implemented)
Latest time and date for receipt of Forms of Direction for 5.00 p.m. on 28 August 2009
the Extraordinary General Meeting
Latest time and date for receipt of Forms of Proxy for the 10.00 a.m. on 1 September 2009
Extraordinary General Meeting
Latest time and date for receipt of Forms of Election and 1.00 p.m. on 1 September 2009
instructions in CREST for the recommended Portfolio Split
(if implemented)
Unless otherwise stated, all references to time in this document are to London time.
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ACTION TO BE TAKEN
Shareholders and Depository Interest Holders have two decisions to make which should
be taken only after reading this document in its entirety, taking into account all factors
relevant to the Shareholder’s personal circumstances and, if in any doubt as to any aspect
or consequence of the implementation of the Portfolio Split, obtaining independent
financial advice.
First, Shareholders and Depository Interest Holders should decide whether to vote in
favour or against the Special Resolution which must be passed if the recommended
Portfolio Split is to be implemented.
Directions as to how the votes attaching to your Ordinary Shares or Depository Interests
should be exercised can be given by completing and returning the Form of Proxy or Form of
Direction enclosed herewith as applicable.
Second, Shareholders and Depository Interest Holders should decide whether to elect for
some or all of their Ordinary Shares or Depository Interests to convert into Realisation
Shares if (and only if) the Special Resolution is approved and the recommended Portfolio
Split is implemented.
No further action is required if you do not wish for any of your Ordinary Shares or
Depository Interests to convert into Realisation Shares if the recommended Portfolio Split is
implemented.
Elections to convert can be made on the Form of Election enclosed herewith (for Ordinary
Shareholders holding Shares in certificated form only) or by issuing instructions in CREST
as described in Part V of this document.
All Shareholders are strongly recommended to exercise the votes attaching to their Ordinary
Shares in favour of the Resolutions, by completing the enclosed Form of Proxy and/or
attending the Extraordinary General Meeting in person or in the case of Depository Interest
Holders by completing the enclosed Form of Direction as applicable.
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PART I
RISK FACTORS
In considering whether to vote in favour of implementing the Portfolio Split and/or to elect for the
Portfolio Split if it is implemented as described in this document, Shareholders should have regard to the
following risk factors, as well as reading the remainder of this document carefully. Additional risks that
are not currently known to the Directors, or that the Directors currently deem immaterial, may also have
an adverse effect on the Company, the Ordinary Shares and/or the Realisation Shares.
Shareholders should be aware that past performance is not necessarily indicative of likely future
performance. The price and/or Net Asset Value of the Ordinary Shares and the Net Asset Value of the
Realisation Shares may go down as well as up.
A. General risk
Investments
The assets of the Company are subject to stock market fluctuations and other risks inherent in
investing in securities. In addition, the Company invests in Vietnamese securities and these can be more
volatile and/or illiquid than those in other, more developed markets. The foregoing, if the Portfolio
Split is implemented, may affect the value of the Continuation Portfolio or the Realisation Portfolio
and the realisable value (if any) of the Ordinary Shares and/or Realisation Shares. Furthermore, there
can be no guarantee that any appreciation in the value of the assets of the Company will occur or that
the investment policy applicable to the Continuation Portfolio or to the Realisation Portfolio will be
achieved.
Economic conditions
Changes in economic conditions including, for example, interest rates, rates of inflation, industry
conditions, the price and availability of foreign exchange, competition, political and diplomatic events
and other factors, could substantially and adversely affect the Company’s prospects, as well as, if the
Portfolio Split is implemented, the value of the Realisation Portfolio, the price and realisable value of
Ordinary Shares and the value and timing of sums that fall to be distributed to Realisation
Shareholders.
Currency fluctuations
The Company’s bank accounts are denominated in US dollars, but substantially all of its investments
are made and realised in Vietnam Dong, hence it is exposed to changes in currency exchange rates. The
Company may face difficulty, when seeking to convert one currency to the other, in obtaining sufficient
amounts of the currency required. This may impact materially, if the Portfolio Split is implemented, on
the timing and/or amount(s) Realisation Shareholders receive that represent the net proceeds from the
disposal of the Realisation Portfolio, as well as on the value of the Ordinary Shares.
Taxation
Levels of taxation may change. Investors should have regard to the information in relation to taxation
in the BVI, Vietnam, the United Kingdom and the United States set out in Part VII of this document.
Shareholders who are in any doubt as to their tax position or who are subject to tax in a jurisdiction other
than the BVI, Vietnam, the United Kingdom or the United States should consult an appropriate
independent professional adviser.
The Realisation Shares carry restricted rights to vote and otherwise participate in the Company in
comparison to the Ordinary Shares. Details of the rights attaching to the Realisation Shares are set out
in Part VI of this document.
Realisation
If the recommended Portfolio Split is implemented, this may possibly lead to speculation as to the
prospects for the Company, the companies in which it is invested and other foreign investment funds
investing in Vietnam. This in turn may have an adverse effect on the realisable value of the Realisation
Shares, the Realisation Portfolio, the value of the Ordinary Shares and the Continuation Portfolio and
the assets of the Company, in particular (but not only) in the short and potentially medium term.
The exact timing, form and value of payments to holders of Realisation Shares is uncertain and will
depend, amongst other things, on the speed and price at which each of the assets in the Realisation
Portfolio can be sold and converted into US dollars. The sale of some assets may only be possible at
prices substantially less than the prices quoted for the holdings on the relevant stock exchange or the
values used to calculate the Net Asset Value per Ordinary Share and/or Realisation Share.
The sale of the assets in the Realisation Portfolio may accordingly take time to achieve and no
representation can be made as to the timing, or quantum, of the receipts by Shareholders that represent
the net proceeds from the disposal of the Realisation Portfolio.
Fixed costs
As the Realisation Portfolio is realised and the proceeds are distributed, the Continuation Portfolio will
bear an increasing proportion of the fixed costs of the Company relative to the Realisation Portfolio
and will, once the Realisation Portfolio has been realised and distributed in its entirety, bear such fixed
costs in their entirety.
Portfolio separation
If the Realisation Portfolio has insufficient funds or assets to meet all of the debts or liabilities
attributable to it, on a winding up of the Company or otherwise, such a shortfall would become
attributable to the Continuation Portfolio; and if the Continuation Portfolio has insufficient funds or
assets to meet all of the debts or liabilities attributable to it, on a winding up of the Company or
otherwise, such a shortfall would become attributable to the Realisation Portfolio.
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PART II
INDOCHINA CAPITAL
VIETNAM HOLDINGS LIMITED
(incorporated in the British Virgin Islands with registered number 1011258)
31 July 2009
Introduction
On 17 April 2009 we sent you a circular containing details of proposed new investment management
arrangements and a potential split of the Company’s investments into two separate portfolios. The
circular also contained a notice convening an extraordinary general meeting of the Company. In light
of subsequent feedback from shareholders who opposed the terms of the potential split and had
interests in aggregate sufficient to prevent the special resolution required to implement the portfolio
split being passed, the Board decided not to proceed with the portfolio split and an appropriate
resolution was passed at the extraordinary general meeting held on 11 May 2009.
Since that meeting, the Board has appointed Mr Eric Brock and Mr Eitan Milgram as non-executive
directors and is seeking your endorsement of these appointments by the passing of an ordinary
resolution approving each such appointment.
Eric A Brock is a partner and portfolio manager at Clough Capital Partners, LP, a Boston based
investment advisor he helped found in 2000. Prior to founding Clough Capital Partners, Mr Brock
spent more than 15 years in equity research, investment banking and accounting in a broad array of
industries. He began his career as an accountant with Ernst & Young and also spent several years as a
leveraged finance investment banker with Bear Stearns & Co.
Eitan Milgram has worked at Weiss Capital LLC since April 2000 as Portfolio Manager, Head of
Trading and Head of Operations and is currently Executive Vice President of Weiss Capital. He has
served on the board of directors of seven publicly traded corporations, including Investec European
Growth and Income, Morley Absolute Growth and Premier Asian Asset Trust and has advised
numerous corporations on reorganisations and restructurings.
The Board and its advisers have also had extensive discussions with parties representing a significant
proportion of the Company’s issued share capital. As a result of these discussions, the Board
announced, on 14 July 2009, that it intended to recommend new proposals to Shareholders for a split
of the Company's portfolio into a realisation portfolio and a continuation portfolio with shareholders
on the register at 5.00 p.m. on 16 July 2009 being given the opportunity to choose (subject to certain
limits) in which portfolio(s) they wish to be invested and thereby whether or not to stay invested in the
Company.
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The Board is now pleased to put forward revised and recommended proposals for new management
arrangements and to provide full details of the recommended split of the Company’s portfolio into a
Realisation Portfolio and a Continuation Portfolio (represented by Ordinary Shares).
The purpose of this document is to provide you with details of these revised proposals and the
resolutions necessary for their implementation, which are to be proposed at the Extraordinary General
Meeting of the Company, to be held on 3 September 2009. You should note that the new investment
management arrangements and Portfolio Split are conditional on the passing of the Special Resolution
to be proposed at the Extraordinary General Meeting. If the Special Resolution is approved and
holders of more than 65 per cent. or more of the Ordinary Shares elect to convert into Realisation
Shares the Board will not implement the recommended Portfolio Split but will instead place the entire
portfolio of the Company on a realisation footing.
Shareholders holding an aggregate of 15,034,687 Ordinary Shares (32.95 per cent. of the issued share
capital) have irrevocably undertaken to vote in favour of the Special Resolution.
Shareholders are referred to Part I of this document where a number of risk factors associated with the
recommended Portfolio Split are described.
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The Realisation Portfolio will be managed by the Investment Manager on the same terms as the
existing management agreement except that the only management fee will be 1 per cent. of each
distribution made by the Company to Realisation Shareholders.
The intention is that the cash and more liquid assets in the Company's portfolio will be transferred to
the Realisation Portfolio, subject to a cash reserve of approximately $4.5 million being retained in the
Continuation Portfolio for liquidity purposes. This is expected to enable Realisation Shareholders to
receive the net realisation proceeds of the Realisation Portfolio sooner and with less exposure to
changes in the Vietnamese securities markets than under the portfolio split proposals published in
April. There is, however, likely to be a foreign exchange exposure and no representation can be given
as to the size or timing of the sums Realisation Shareholders will receive.
At the same time, the Continuation Portfolio will have a higher initial Net Asset Value per share,
because of the 15 per cent. discount to the NAV per Ordinary Share at which each Realisation Share
is to be initially valued. The Continuation Portfolio will initially be fully invested, except for the cash
held for liquidity purposes, in listed equities, OTC holdings and private equity.
For illustrative purposes only, and on the assumptions that (i) the recommended Portfolio Split is
implemented; (ii) exactly 55 per cent. of existing Ordinary Shares elect to convert into Realisation
Shares; and (iii) Implementation took place on 30 June 2009, the initial composition of the
Continuation Portfolio and the Realisation Portfolio would be as follows:
The portfolio analysis has been extracted without adjustment from the unaudited management
accounts of the Company as at 30 June 2009 and takes no account of any income, expenses or change
in the value of investments since that date.
Part IV contains details of the strategy, performance and outlook for the Company provided by the
Investment Manager and some comments on the Company’s portfolio together with certain comments
as to the current market outlook for Vietnam provided by Dragon Capital.
The Board has agreed that the Investment Manager and, if the recommended Portfolio Split is
implemented, ICV Management should continue carefully to monitor events and developments at
government, trade and company level, with the plan to tailor the investment decisions concerning the
Continuation Portfolio to developments as they unfold.
Dragon Capital Group Limited was established in 1994 and has total assets under management in
excess of US$1 billion and more than 100 employees.
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Pursuant to the terms of the Joint Venture Agreement, Dragon Capital will provide, through ICV
Management, investment management and advisory services to the Continuation Portfolio. The
Investment Manager will continue to be responsible, through ICV Management, for fund accounting,
compliance, investor relations and other operational matters.
The board of directors of ICV Management will comprise five directors, two representatives of the
Investment Manager (initially Richmond Mayo-Smith and Peter R. Ryder) and two representatives of
Dragon Capital (initially John Shrimpton and Dominic Scriven) with the fifth board member Dr Marc
Faber (Director of Indochina Capital Corporation and chairman of one of Dragon Capital’s funds)
who is to be the first Chairman and is a joint nomination.
The management fees payable by the Company in respect of the Continuation Portfolio will be
unchanged, except that the management fee will be based on the Net Asset Value of the Continuation
Portfolio rather than the Net Asset Value of the Company and the performance fee will be based on
the Net Asset Value per Ordinary Share with an initial hurdle (before the performance fee becomes
payable) of $9.83 per Ordinary Share.
The other terms of the Continuation IMA with ICV Management are not materially different to the
terms of the existing agreement with the Investment Manager. However, under the Continuation IMA
ICV Management will operate, for compliance and regulatory purposes, as if it is a member of the
Dragon group of companies.
Dragon Capital also operates the International Finance Corporation's Exclusion List (details of which
are set out in paragraph 4 in Part VIII of this document) mutatis mutandis in relation to funds under
management. Dragon Capital has confirmed that none of the current holdings of the Company fall
within the IFC Exclusion List and has estimated that the list prohibits investment in companies
representing less than 1 per cent. of the total market capitalisation of companies listed on the
Vietnamese securities exchanges.
The Continuation IMA also includes a covenant by ICV Management, Dragon Capital and the
Investment Manager that each will each use its best endeavours to avoid subjecting the Company to
taxation in Vietnam, the United States or the United Kingdom and the attention of Shareholders is
drawn to Part VII which describes certain taxation aspects of the Company and the recommended
Portfolio Split.
The Board believes that the proposed investment management arrangements for the Continuation
Portfolio and the Realisation Portfolio (which will be managed by the Investment Manager as described
above) provide a solution for the management of the Company’s portfolio that is beneficial for all
Shareholders and recommends their approval by the passing of the Special Resolution to be proposed
at the Extraordinary General Meeting.
In this event, Dragon Capital will not be involved in the realisation process, which would be carried out
by the Investment Manager on the terms of its existing investment management agreement with the
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Company except that the management fees will be reduced, with effect from the Extraordinary General
Meeting, to a management fee of 0.75 per cent. of Net Asset Value for the first year reducing to
0.50 per cent. for the second year and 0.25 per cent. thereafter, plus a fee of 1 per cent. of each
distribution to Shareholders (both before and after any liquidation commences) in the first year, 0.75
per cent. in the second year and 0.5 per cent. thereafter, together with an incentive fee equal to 10 per
cent. of any sum that a Shareholder receives by way of liquidation dividend in excess of the Net Asset
Value per Share on the last business day before the change in investment policy becomes effective. The
Board would expect to write to Shareholders when the disposal of the portfolio has been substantially
completed with a view to the formal commencement of the liquidation and dissolution process.
Realisation Shares
The rights that will attach to the Realisation Shares if the recommended Portfolio Split is implemented
are described in Part VI. The Realisation Shares will be redeemable but the Board does not intend to
redeem any Realisation Shares except as part of a distribution of the net proceeds of the realisation of
the assets allocated to the Realisation Portfolio (which is made, or made available, to all Realisation
Shareholders).
Taxation
Comments on certain aspects of the general tax treatment of the Portfolio Split in the BVI, Vietnam,
the United Kingdom and the United States are set out in Part VII of this document, to which
Shareholders are referred.
Shareholders who are in any doubt as to their tax position or who are subject to tax in a jurisdiction other
than the BVI, Vietnam, the United Kingdom and the United States should consult an appropriate
independent professional adviser.
Whether or not you wish to elect for Realisation Shares and regardless of whether you intend to be
present at the Extraordinary General Meeting, you are requested to complete and return the
accompanying Form of Proxy or Form of Direction (as applicable) in accordance with the instructions
printed thereon, so as to be received by the Registrars as soon as possible, and in any event no later
than 5.00 p.m. on 28 August 2009 in the case of the Form of Direction and 10.00 a.m. on
1 September 2009 in the case of the Form of Proxy. The completion and return of the Form of Proxy
will not preclude Shareholders from attending the Extraordinary General Meeting and voting in
person should they so wish. Depository Interest Holders who wish to attend the meeting should
contact the Depository, Capita IRG Trustees Limited, The Registry, 34 Beckenham Road, Beckenham,
Kent BR3 4TU, United Kingdom.
The conversion of Ordinary Shares into Realisation Shares will become effective on the registration in
the BVI of the Special Resolution adopting the Company’s new Memorandum and Articles. From that
time the Company will publish the Net Asset Value of the Continuation Portfolio and the Net Asset
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Value per Ordinary Share, and, until such time as the Net Asset Value of the Realisation Portfolio is
less than $1 million, the Net Asset Value of the Realisation Portfolio and the Net Asset Value per
Realisation Share, and not the Net Asset Value of the Company.
First, Shareholders should decide whether to vote in favour or against the Special Resolution which
must be passed if the recommended Portfolio Split is to be implemented.
Directions as to how the votes attaching to your Ordinary Shares should be exercised can be given by
completing and returning the Form of Proxy or Form of Direction enclosed herewith as applicable.
Second, Shareholders should decide whether to elect for some or all of their Ordinary Shares to convert
into Realisation Shares. Please note that this election will only take effect if the Special Resolution is
approved and the recommended Portfolio Split is implemented.
No further action is required if you do not wish for any of your Ordinary Shares to convert into Realisation
Shares if the recommended Portfolio Split is implemented. Elections to convert some or all of their
Ordinary Shares can be made by Qualifying Shareholders on the Form of Election enclosed herewith or by
Depository Interest Holders by issuing instructions in CREST as described in Part V of this document.
Depository Interest Holders should be aware that Realisation Shares will only be capable of being held in
certificated form and will not be admitted to CREST.
All Shareholders are strongly recommended to exercise the votes attaching to their Ordinary Shares in
favour of the Resolutions, by completing the enclosed Form of Proxy and/or attending the Extraordinary
General Meeting in person or by completing the enclosed Form of Direction as applicable.
The completion and return of the Form of Proxy will not preclude you from attending the meeting and
voting in person should you so wish. Depository Interest Holders who wish to attend the meeting
should contact the Depository, Capita IRG Trustees Limited, The Registry, 34 Beckenham Road,
Beckenham, Kent BR3 4TU, United Kingdom.
Shareholders’ attention is drawn to Part V of this document which sets out further details of the action
to be taken by Shareholders in relation to the recommended Portfolio Split and Part VI which sets out
the rights attaching to the Realisation Shares.
Irrevocable undertakings
The Company has received irrevocable undertakings from certain institutional Shareholders to vote in
favour of the Special Resolution in respect of a total of 15,034,687 Ordinary Shares representing
32.95 per cent. of the Company’s issued share capital. Details of these irrevocable undertakings are set
out in paragraph 3 of Part VIII of this document.
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Recommendation
The Board considers that the two recent Board appointments, the proposed new management
arrangements and the recommended Portfolio Split are in the best interests of the Company and its
Shareholders as a whole. Accordingly, the Board unanimously recommends that Shareholders vote in
favour of the Resolutions to be proposed at the Extraordinary General Meeting.
The Directors intend to vote in favour of the Resolutions at the Extraordinary General Meeting in
respect of their beneficial holdings of Ordinary Shares which, in aggregate amount to 75,000 Ordinary
Shares representing approximately 0.2 per cent. of the Company’s issued share capital.
The Directors do not intend to elect to convert any of their beneficial holdings into Realisation Shares.
The Directors make no recommendation to Shareholders as to whether or not they should elect for any
Realisation Shares. Whether or not Shareholders decide to elect for any Realisation Shares will depend,
amongst other factors, on their view of the Company’s prospects and their own individual
circumstances, including their own tax position.
Yours faithfully
Gordon Lawson
Chairman
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PART III
Dr Marc Faber – Chairman (Director of Indochina Capital Corporation and chairman of Vietnam
Growth Fund Limited, a fund managed by Dragon Capital)
Dr. Faber, aged 63, is a well-known economist, author, and investment advisor, and is most often noted
for his “contrarian” investment approach. Dr. Faber is associated with a large number of funds and
institutions around the World including the Iconoclastic International Fund, Baring Chrysalis Fund,
Overlook Partners’ Fund, and the Income Partners’ Global Strategy Fund. Dr. Faber publishes a
widely read monthly newsletter “The Gloom Boom & Doom Report” and he is the author of several
books, including “Tomorrow’s Gold” which was a 2002 bestseller.
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serving on the boards of funds managed by the Dragon Capital group, and of VietFund Management
Company and a number of their investee companies, he has been active in the origination of investment
opportunities for investment management clients of the Dragon Capital group companies.
Dominic Scriven, O.B.E. (Co-founder and director of Dragon Capital Group Limited)
Dominic Scriven, aged 45, graduated in 1985 from Exeter University with a combined honours degree
in law and sociology. Of his 22 years in investment, 20 years have been spent in Asia, principally Hong
Kong and Vietnam. He has worked for, among others, M&G Investment Management, Sun Hung Kai
and Co (publicly listed in Hong Kong), and Citicorp Investment Bank. Prior to moving to Vietnam, he
was actively involved in fund management, corporate finance, and securities trading in many of Asia’s
developing capital markets. He enrolled at Hanoi University in 1992, following which he co-founded
Dragon Capital in 1994. A fluent Vietnamese speaker, he sits on the boards of numerous
non-Vietnamese companies, including Dragon Capital, its subsidiaries and funds managed by them, as
well as on the boards of a number of Vietnamese companies, including two joint stock banks and three
other companies listed on the Vietnam Stock Exchange. He was awarded an O.B.E. (Order of the
British Empire) in 2006.
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PART IV
As at 30 June 2009, the net asset value of the Company amounted to US$243.3 million (US$5.33 per
Ordinary Share) including approximately US$139.1 million of equities and US$104.2 million of fixed
income, cash and others as follows:
Equities
Private Equity Sector $ % of NAV
AA Corporation Industrial 2,356,420 1.0%
BIM Seafood Corporation Agricultural 1,303,522 0.5%
ITC Corporation Transportation 9,216,865 3.8%
MCGL Limited Consumer Products 2,830,465 1.2%
Mobile Solution Services Telecom/Technology 3,171,570 1.3%
Viet Fashion Consumer Products 5,279,738 2.2%
My Xuyen Financial Institutions 2,983,310 1.2%
–––––––––––––– –––––––––
Subtotal 27,141,890 11.2%
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The portfolio analysis has been extracted without adjustment from the unaudited management
accounts of the Company as at 30 June 2009 and takes no account of any income, expenses or change
in the value of investments since that date.
The Investment Manager took advantage of the rally and improved liquidity to divest its corporate and
government bonds, to selectively reduce some of its listed holdings and to convert the sale proceeds to
US Dollars. At the end of June 2009 the Investment Manager re-valued the Company’s private equity
holdings resulting (in local currency terms) in four write-ups and two write-downs with one holding
kept at its 31 December 2008 valuation. Meanwhile, two of the Company’s largest OTC positions, that
is, Bao Viet Holdings and Vietcombank, listed on the Ho Chi Minh Stock Exchange in June 2009. As
a result, the portfolio composition substantially changed. As a percentage of the portfolio, private
equity and OTC holdings reduced from 29.2 per cent. as at 31 March 2009 to 15.5 per cent. as at
27 July 2009 whilst listed securities increased from 21.7 per cent. as at 31 March 2009 to 38.0 per cent.
as at 27 July 2009. Cash, fixed income and others decreased from 49.1 per cent. as at 31 March 2009 to
46.5 per cent. as at 27 July 2009 with US Dollar cash holdings increasing from 37.9 per cent. of cash,
fixed income and others as at 31 March 2009 to 97.0 per cent. as at 27 July 2009. At that date, the
Company’s cash balances amounted to approximately US$113 million, almost all of which were US
Dollar denominated.
Since 30 June 2009, government bonds held by the Company have been fully divested by the Investment
Manager and most of the cash holdings are now in US Dollars, with US Dollar denominated holdings
comprising approximately US$109.7 million as of 27 July 2009. Further, a number of listed positions
have been reduced as well. The VN Index has traded up from 448.3 as at 30 June 2009 to 469.7 as at
27 July 2009.
Save as disclosed above, there has been no material change to the Company’s portfolio since 30 June
2009 and no change in the Company’s overall investment strategy.
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Dragon Capital has informed the Board that, in the opinion of Dragon Capital, the global financial
crisis has led to a slowing in foreign direct investment, foreign portfolio investment, and slowing export
growth. Compared to the rest of Asia and other emerging markets, however, the impact is less severe
because of a relatively lower level of financial sector development. For example, Dragon Capital
estimates that only 18 per cent. of Vietnamese people use banking services.
Vietnam’s competitive advantages, in particular its demographics and a flexible low-cost workforce,
should put the country in a good position to outperform when the recovery occurs. The government
enacted a fast response stimulus program in the first quarter of 2009 focused on boosting corporate
lending and social programmes, most of which was deployed by the end of first half of 2009.
Consumption and sales remain relatively strong due to the orientation of the economy to small
businesses and farmers.
The fiscal stimulus focuses on supporting the economy while continued reforms are expected to be a
key driver of growth. The government continues to look for reform of the state sector. For example,
the government promulgated Decree 9 which sets boundaries on state investment and consolidated
state ownership at the State Capital Investment Corporation. Shifting ownership to a single entity is
part of a strategy to simplify equitisation (privatisation) and should provide new supply to the public
equity market.
Dragon Capital believes the debt market in Vietnam will continue to develop. However, the government
retains a sizable fiscal surplus (from undisbursed government finance) and is not beholden to debt
markets. Dragon Capital sees a low threat of a surge in new supply. Dragon Capital believes growth
can be expected in the corporate bond market.
The credit markets continue to improve from recent liberalisation of retail interest rates and hints at
the same for commercial lending. The government intends to promulgate a new Law on Financial
Institutions and a charter for the central bank in 2010. Drafts for both are currently in circulation for
comments from the private and foreign business community.
The Board has agreed that the Investment Manager and, if the recommended Portfolio Split is
implemented, ICV Management should continue carefully to monitor events and developments at
government, trade and company level, with the plan to tailor the investment decisions concerning the
Continuation Portfolio to developments as they unfold.
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PART V
Qualifying Shareholders wishing to elect to have some or all of their Ordinary Shares converted into
Realisation Shares should read the information below. Different procedures apply depending on
whether the Ordinary Shares are held in certificated form or whether Depository Interests are held (in
uncertificated form) representing Ordinary Shares.
Shareholders who do not wish any of their Ordinary Shares to convert into Realisation Shares should not
complete a Form of Election, or in the case of Depository Interest Holders should not issue instructions
in CREST, as applicable.
Depository Interest Holders who wish to elect to convert some or all of the Ordinary Shares represented
by such Depository Interests into Realisation Shares should make their election by sending (or procure
the sending of) a TTE Instruction in CREST, as further described below, to transfer the number of
Depository Interests representing such Ordinary Shares to an escrow balance, specifying Capita
Registrars in its capacity as a CREST receiving agent (under its participant ID referred to below) as the
escrow agent, as soon as possible and in any event so that the transfer to escrow settles not later than the
time and date referred to below. If you are a CREST sponsored member, you should refer to your
CREST sponsor before taking any action. Your CREST sponsor will be able to confirm details of your
participant ID and the member account ID under which your Depository Interests are held. In addition,
only your CREST sponsor will be able to send the TTE Instruction to Euroclear in relation to the
Depository Interests. Depository Interest Holders are also referred to the CREST Manual published by
Euroclear. Depository Interest Holders do not have to complete or return a Form of Election.
Depository Interest Holders who elect for the recommended Portfolio Split (if it is implemented)
should be aware that any of their Ordinary Shares that are converted into Realisation Shares will be
registered in their own name and not in the name of Capita IRG Trustees Limited. Realisation Shares
will only be capable of being held in certificated form and will not be admitted to CREST.
● the intended settlement date for the transfer to escrow, which should be as soon as possible and in
any event no later than 1.00 p.m. on 1 September 2009;
● contact name and telephone number inserted at the beginning of the shared note field; and
● input with standard delivery instruction priority of 80.
Depository Interest Holders who have not issued valid instructions in CREST by 1.00 p.m. on
1 September 2009 will retain their Depository Interests representing the underlying Ordinary Shares.
If the recommended Portfolio Split is not implemented, the Escrow Agent shall give instructions to
transfer all Depository Interests in respect of which a TTE Instruction or TTE Instructions has or have
been effected in accordance with the procedures described above (such Depository Interests being the
“Relevant Depository Interests”) to the original available balance of the relevant Depository Interest
Holder. Similarly, if the number of Relevant Depository Interests is scaled back as a result of elections
to convert to Realisation Shares exceeding 55 per cent. (as described in paragraph 2.2 of Section A of
Part VI), the Escrow Agent shall transfer any excess Depository Interests back to the original available
balance of the relevant Depository Interest Holder.
Depository Interest Holders should note that, if they hold both Depository Interests and Ordinary
Shares in certificated form and wish some or all of the Depository Interests and some or all of the
Ordinary Shares held in certificated form to convert into Realisation Shares, a TTE Instruction should
be sent in respect of the Depository Interests and a Form of Election should be completed in respect
of the Ordinary Shares held in certificated form. If a Depository Interest Holder holds Depository
Interests in a number of different member account IDs, they must send a TTE Instruction in respect
of each member account ID.
Elections to convert Ordinary Shares held in certificated form into Realisation Shares may only be
made on the Form of Election and may only be made by the Qualifying Shareholder named on it or
by a person entitled by virtue of a bona fide market claim in relation to a purchase of Ordinary Shares
through the market prior to the Record Date. If you require a new Form of Election (as a result of a
bona fide market claim) you should contact Capita Registrars at Corporate Actions, The Registry,
34 Beckenham Road, Beckenham, Kent BR3 4TU.
Shareholders who have lost their share certificate(s) and/or other document(s) of title should write to
Capita Registrars, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU, United Kingdom
requesting a letter of indemnity in respect of the lost share certificate(s) which, when completed in
accordance with the instructions given, should be returned to the Registrars so as to be received by no
later than 1.00 p.m. on 1 September 2009.
Despatch of share certificates for Realisation Shares and cheques in relation to the first payment to
Realisation Shareholders
It is expected that share certificates for Realisation Shares (if the recommended Portfolio Split is
implemented) will be despatched on or about 10 September 2009.
It is expected that cheques in respect of the first cash payment to Realisation Shareholders (if the
recommended Portfolio Split is implemented) will be despatched on or about 10 September 2009. All
cheques will be in US dollars.
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PART VI
SECTION A
1. Condition
1.1 Implementation of the recommended Portfolio Split is conditional upon the passing of the
Special Resolution (which requires that at least 75 per cent. of the votes validly cast on the
resolution are cast in favour) to be proposed at the Extraordinary General Meeting not later than
30 September 2009.
1.2 Notwithstanding the passing of the Special Resolution referred to in paragraph 1.1 above, if the
holders of more than 65 per cent. of the Ordinary Shares elect to convert, the recommended
Portfolio Split will not be implemented, and the Company will instigate an orderly realisation of
its assets with a view to a distribution of the net proceeds of the disposal to Shareholders to be
followed by the Company’s liquidation and dissolution.
2.2 In the event that elections to convert Ordinary Shares to Realisation Shares exceed, in aggregate,
55 per cent. but do not exceed 65 per cent. of the Ordinary Shares, the elections will be scaled back
pro rata until the total is 55 per cent. of the Ordinary Shares.
4. Creation of the Continuation Portfolio and the Realisation Portfolio, initial apportionment of assets
and liabilities and conversion of Ordinary Shares into Realisation Shares
4.1 On Implementation, Ordinary Shares will be converted into Realisation Shares to the extent
necessary to satisfy the elections of Shareholders validly made in connection with the
recommended Portfolio Split.
4.2 The Directors shall then calculate the initial value of the Realisation Portfolio, which shall be
equal to the initial Net Asset Value per Realisation Share (calculated pursuant to paragraph 3
above) times the number of Realisation Shares in issue.
4.3 The Directors shall then apportion the assets, liabilities and commitments of the Company
between two separate pools, being the Continuation Portfolio and the Realisation Portfolio, which
shall contain the assets, liabilities and commitments attributable to the Ordinary Shares and the
Realisation Shares respectively on the following basis:
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(i) any cash or short term deposits held by the Company in excess of $4.5 million will be
allocated to the Realisation Portfolio;
(ii) to the extent that the value of assets allocated to the Realisation Portfolio pursuant to (i) is
less than the initial value of the Realisation Portfolio, the bonds held by the Company will
be allocated to the Realisation Portfolio on a pro rata basis;
(iii) to the extent that assets allocated to the Realisation Portfolio under (i) and (ii) are less than
the initial value of the Realisation Portfolio the listed investments held by the Company will
be allocated to the Realisation Portfolio on a pro rata basis;
(iv) investments whose listing has been suspended and any other assets which the Directors in
their absolute discretion consider it would be inappropriate to transfer to the Realisation
Portfolio (for example stocks subject to corporate action preventing their rapid realisation)
will not be allocated to the Realisation Portfolio; and
(v) assets referred to in (iv) and all other assets and all liabilities of the Company shall be
allocated to the Continuation Portfolio.
For the purposes of the apportionment, the respective assets, liabilities and commitments shall be
valued in accordance with the normal accounting policies and practices of the Company.
4.4 On Implementation, all costs and expenses of the Company incurred in connection with the
recommended Portfolio Split and other proposals to facilitate the sale of Shares other than
through sales in the secondary market (as described in this document) shall be allocated as
liabilities of the Company.
5. Management of assets, treatment of assets and liabilities of the Company and accounting as between
the Continuation Portfolio and the Realisation Portfolio
5.1 With effect from Implementation, the assets comprised in each of the Continuation Portfolio and
the Realisation Portfolio shall be managed separately, as follows:
(a) the Continuation Portfolio shall be managed under the same investment policy as applies to
the Company at the date of this document (as the same may be amended from time to time);
and
(b) the Realisation Portfolio will be managed so that assets allocated to it are realised and the
proceeds used (after paying the liabilities and the costs and expenses attributable to the
Realisation Portfolio) to fund cash payments to holders of Realisation Shares in as timely,
tax efficient and cost effective manner as circumstances permit. Following the first cash
payment, which is expected to be made on or about 10 September 2009, and in the absence
of unforeseen circumstances, the Company plans to make further cash distributions to
Realisation Shareholders on a monthly basis provided the US dollar cash balance in the
Realisation Portfolio exceeds US$1 million or represents the balance of the Realisation
Portfolio and the solvency test specified under BVI law is satisfied.
5.2 With effect from Implementation, the investments and other assets of the Continuation Portfolio
and Realisation Portfolio shall be held and managed separately, or shall otherwise be
distinguishable from each other. In addition, the Directors shall procure that the Company’s
books of account, accounting and other records and bank accounts, and those of any nominees
of the Company, shall be operated and prepared so that the assets and liabilities attributable to
the Continuation Portfolio and the Realisation Portfolio respectively can be separately identified.
The Directors may establish and operate separate revenue accounts and capital reserves in respect
of the Continuation Portfolio and the Realisation Portfolio and may allocate the revenue account
and capital reserves of the Company between the Continuation Portfolio and the Realisation
Portfolio in such proportion as they in their absolute discretion see fit.
5.3 Any increase or diminution in the value of the investments or other assets of the Continuation
Portfolio or the Realisation Portfolio shall be applied solely to the Continuation Portfolio or the
Realisation Portfolio respectively. All income arising in respect of the assets comprised in the
Continuation Portfolio or the Realisation Portfolio, and all shares, securities, property and/or
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other assets derived from such assets, shall form part of the Continuation Portfolio or Realisation
Portfolio respectively.
5.4 The Directors will discharge the costs, expenses and liabilities which they consider fairly and
reasonably to be attributable to the Continuation Shares out of the assets of the Continuation
Portfolio and will discharge the costs, expenses and liabilities which they consider to be fairly
attributable to the Realisation Shares out of the Realisation Portfolio.
5.5 Subject to paragraph 4.4 of this Part VI, costs, expenses and liabilities of the Company which are
not directly attributable to any class of Share shall be attributed to and discharged out of the
assets of the Continuation Portfolio unless the Directors, in their absolute discretion, decide that
another attribution of a cost, expense or liability is fairer to the Ordinary Shareholders and to the
Realisation Shareholders, in each case taken as a whole.
5.6 The costs, expenses and liabilities attributable to the Continuation Portfolio or Realisation
Portfolio shall be apportioned between the relevant revenue account and capital reserve in
accordance with the accounting policies of the Company from time to time.
5.7 If any question shall arise as to whether any investment, cash or other asset or any cost, expense
or liability of the Company should be attributed to the Continuation Portfolio or the Realisation
Portfolio, the Directors (having consulted with the auditors) shall decide on the matter and that
decision shall be final and binding on the Company and its members.
5.8 The Directors may, having consulted with the auditors, adjust the attribution of any investment,
cash or other asset of the Company between the Continuation Portfolio or the Realisation
Portfolio to compensate for or reflect the contribution of each to the overall tax position of the
Company.
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SECTION B
1. As to dividends:
The holders of the Realisation Shares will be entitled to be paid dividends only out of the assets
of the Realisation Portfolio.
2. As to winding-up:
2.1 On the winding-up of the Company, after paying all the debts and satisfying all the liabilities
attributable to the Realisation Portfolio, the holders of the Realisation Shares shall be entitled to
receive by way of capital any surplus assets of the Realisation Portfolio in proportion to their
holdings. In the event that the Continuation Portfolio has insufficient funds or assets to meet all
the debts and liabilities attributable to the Continuation Portfolio, any such shortfall shall be paid
out of any surplus assets attributable to the Realisation Portfolio.
2.2 If, in the course of the winding-up of the Company, an amount of a debt or liability which is
attributable to the Realisation Portfolio is met in whole or in part from assets attributable to the
Realisation Portfolio then assets of the Continuation Portfolio of a value (as conclusively
determined by the Directors) equivalent to such amount shall (on such debt or liability being met)
become attributable to the Realisation Portfolio.
3. As to voting:
3.1 Subject to paragraph 3.2 below, for so long as Realisation Shares remain in existence, the
Company shall not without the prior sanction of an special resolution passed at a separate general
meeting of the holders of Realisation Shares convened and held in accordance with the provisions
of the Articles concerning the convening and holding of general meetings, mutatis mutandis:
(i) create or issue any further shares or securities, or rights to subscribe for or convert or
exchange any securities into shares, in the Company where such shares or securities carry an
entitlement or would on issue or conversion or exchange carry an entitlement to share in the
assets attributable to the Realisation Portfolio; or
(ii) pass a resolution to reduce the capital or share premium account of the Company
attributable to the Realisation Portfolio other than one or more resolutions authorising the
Directors to purchase or to redeem Realisation Shares using assets attributable to the
Realisation Portfolio where the Realisation Shares are to be purchased or redeemed at a price
which is made available to all Realisation Shareholders in respect of the same proportion
(ignoring fractions of Realisation Shares) of their holding as at the date that the relevant
offer to purchase or to redeem is made; or
(iii) make any material change in the investment policy attributable to the Realisation Portfolio;
or
(iv) make any material change to the investment management arrangements relating to the
Realisation Portfolio; or
(v) increase the borrowing limit stated in the Articles or permit such limit to be exceeded; or
(vi) pass any resolution to vary, modify or abrogate any of the special rights or privileges
attached to the Realisation Shares; or
(vii) pass any resolution which authorises the Directors to pay a dividend or make any other
distribution out of the capital reserves of the Company attributable to the Realisation
Portfolio, save for any redemption or purchase of Realisation Shares effected in accordance
with paragraph (ii) above.
3.2 The Realisation Shares shall carry the right to appoint a single director to the Board in the event
that Eitan Milgram or any person appointed pursuant to this paragraph 3.2 ceases for whatever
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reason to be a director at a time when the Net Asset Value of the Realisation Portfolio is equal to
or greater than $1 million.
3.3 The holders of 10 per cent. or more of the Realisation Shares in issue shall have the right to
convene a separate general meeting of the holders of Realisation Shares in accordance with the
provisions of the Articles concerning the convening and holding of general meetings, mutatis
mutandis.
3.4 The Directors have undertaken to establish a committee of the Board consisting of Eitan Milgram
(or any successor appointed pursuant to paragraph 3.2) to deal with all matters that concern only
the interests of Realisation Shareholders and/or the Realisation Portfolio. The Directors, other
than Eitan Milgram, have also undertaken to vote in favour of any resolution of the Board
confirming the solvency of the Company that is proposed in connection with a proposed
distribution to Realisation Shareholders provided that (i) the Company is solvent and (ii) this
could not result in any material adverse effect for the Ordinary Shareholders or the Company or
be a breach of the fiduciary duty that each owes to the Company. The Board has been advised
that, had the Portfolio Split been implemented on 30 June 2009, there would have been no
impediment to a distribution of all the net realised proceeds of the Realisation Portfolio to the
Realisation Shareholders (and thus there would have been no material adverse effect on the
Company or the Ordinary Shareholders).
3.5 Notwithstanding paragraph 3.1 above, no sanction of the holders of Realisation Shares shall be
required in respect of any of the matters referred to in paragraphs 3.1(i), (ii), (iii), (v) or (vii)
inclusive, if at the time such approval would otherwise require to be sought, the Net Asset Value
of the Realisation Portfolio is less than or equal to US$500,000.
3.6 Except as set out in this paragraph 3 or as required by applicable law, the Realisation Shareholders
shall have no right to attend or to vote at any general meeting of the Company.
3.7 Realisation Shares issued to US Shareholders should bear the following restrictive legend:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), OR APPLICABLE STATE SECURITIES LAWS AND MAY BE OFFERED, SOLD,
ASSIGNED, PLEDGED, HYPOTHECATED, TRANSFERRED OR OTHERWISE
DISPOSED OF (EACH, A “TRANSFER”) ONLY IF SUCH SECURITIES ARE
REGISTERED UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE
SECURITIES LAWS OR IF SUCH TRANSFER IS MADE PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT AND SUCH
STATE SECURITIES LAWS AFTER PROVIDING AN OPINION OF COUNSEL TO SUCH
EFFECT IN FORM REASONABLY SATISFACTORY TO INDOCHINA CAPITAL
VIETNAM HOLDINGS LIMITED.
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PART VII
TAXATION
The following is a summary of certain tax matters that should be considered by investors. Investors are
advised, however, to consult their own professional tax advisers about the tax consequences to them of
the acquisition, ownership and disposal of Shares in the Company.
The summary below is based on advice the Company has received with regard to current law and
practice and is necessarily general in nature. Moreover, while the summary below is based on laws in
effect as at the date of this document, such laws are subject to change.
A. THE COMPANY
1. Vietnam
The Vietnam tax rules are characterised by uncertainties and by a lack of interpretative guidance. Both
the substantive provisions of Vietnamese tax laws and the interpretation and application of such
provisions by the Vietnamese tax authorities may be subject to more rapid and unpredictable change,
both prospectively and retrospectively, than in a jurisdiction with more developed capital markets.
A number of key tax and other reform measures impacting the tax status of taxpayers have been
implemented in whole or in part, a number of other key reforms have been deferred and the status of
some key reforms remains unclear at this stage. For instance, the recently introduced Laws on
Corporate Income Tax, Personal Income Tax, Value Added Tax and Tax Administrative Management
have provided many changes in the tax implications and compliance requirements with effect from
1 January 2009 and continue to be supplemented and clarified as issues arise of the interpretation
and/or implementation of the same. These changes will likely affect the tax implications regarding
dividends and capital gains with respect to foreign investors in the Vietnamese market.
Therefore, there are inconsistencies and gaps in laws and regulations. The administration of laws and
regulations by government agencies may be subject to considerable discretion, and in many areas, the
legal framework is vague, contradictory and subject to interpretation. In particular, the interpretation
and application of such provisions will in practice rest substantially with the local tax inspectors.
The above may affect the tax status of the Company and of all parties related to the Company in terms
of value of investments, tax obligations and administrative requirements, ability to declare dividends,
profit remittance and therefore could have a material adverse effect on the business, investments and
results of operations.
Under the tax regulations, the Company is likely to be classified as a foreign investment fund
established under the laws of a foreign country and not physically present in Vietnam. The Company’s
presence in Vietnam would only be via its investments which are not of themselves indicative of
permanent establishment. The permanent establishment status may vary depending on changes in the
Company operation structure or the tax regulations. However, the Company and the Investment
Manager (which, for these purposes, shall be ICV Management in the case where the recommended
Portfolio Split is recommended and the new investment arrangements approved) intend to conduct
their affairs so that the Company is not deemed to have a permanent establishment in Vietnam. The
Company intends that the Company will be classified as a “non-resident” for Vietnamese tax purposes.
Therefore, the investment of the Company in securities trading activities in Vietnam shall not be
subject to VAT.
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The assignee will be responsible for withholding, declaring and paying the above CIT on behalf of the
assignor within 10 days from the date the competent authorities approve the assignment or from the
sale contract date in cases where the approvals from the competent authorities are not required.
Foreign organisations who do not satisfy all conditions of (i) having permanent establishment in
Vietnam, (ii) having a business operation in Vietnam for a period of more than 183 days and (iii) being
an organization that applies Vietnamese Accounting Standard, shall be subject to FCT based on a
deemed taxation method.
According to the new FCT regulations, securities transfer activities shall be subject to FCT at
0.1 per cent. of the value of the sale transaction (except for tax-free bonds). No relief is allowed for
transaction costs, and no allowance is taken for the cost of investments (i.e. the existence of actual
profits is irrelevant).
The Vietnamese contracting parties will be responsible for withholding, declaring and paying the FCT
on behalf of the foreign organisations within 20 days from the sale contract date.
It is not clear how the deemed 0.1 per cent. tax regime provided under the FCT regulations interact
with the 25 per cent. capital assignment tax for sale of securities provided in the CIT regulations. The
regulations are silent on whether the foreign investors are allowed to opt to apply and register to fall
within either one of the deemed 0.1 per cent. tax regime or the 25 per cent. capital assignment tax with
the tax authorities.
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Interest income (other than from bonds) paid to the Fund will be subject to a 10 per cent. withholding
tax under the FCT regulations.
3. United States
The Company does not intend to invest in securities of companies established in the United States or
to conduct any business through a US office or other fixed place of business in the United States. does
not expect to be engaged in a trade or business within the United States or to be subject to US federal
income tax.
4. United Kingdom
The Directors intend that the affairs of the Company should be managed and conducted so that it does
not become resident in the UK for UK taxation purposes. Accordingly, and provided (as intended) that
the Company does not carry on a trade in the UK through a permanent establishment, the Company
will not be subject to UK income tax or corporation tax on its profits other than on any UK source
income.
B. SHAREHOLDERS
1. Vietnam
The Company has been advised there should be no liability to Vietnamese taxation in respect of any
holding of Shares unless the Shares are held by a tax resident of Vietnam.
3. United States
General
The following general discussion summarizes the material US federal income tax consequences of (i) a
Shareholder’s electing or not electing to convert Ordinary Shares into Realisation Shares and (ii) the
acquisition, ownership and disposition of Ordinary Shares and/or Realisation Shares by a US holder
(as defined below). This discussion is based on current provisions of the Code, current and proposed
Treasury regulations promulgated thereunder, and administrative and judicial decisions as of the date
hereof, all of which are subject to change, possibly on a retroactive basis, which could affect the
continuing validity of this summary.
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For purposes of this discussion, a ‘‘US holder’’ is a beneficial owner of Ordinary Shares and/or
Realisation Shares that is, for US federal income tax purposes:
● an individual who is a citizen or resident of the United States;
● a corporation (or other entity taxed as a corporation) created or organized in or under the laws
of the United States, any state of the United States or the District of Columbia;
● an estate whose income is includible in gross income for US federal income tax purposes
regardless of its source; or
● a trust if (i) a court within the US is able to exercise primary supervision over the administration
of the trust and one or more ‘‘United States persons’’ (within the meaning of the Internal Revenue
Code of 1986, as amended (the “Code”)) have the authority to control all substantial decisions of
the trust, or (ii) it has a valid election in effect under applicable Treasury regulations to be treated
as a ‘‘United States person’’.
If a partnership (or other entity classified as a partnership for US federal income tax purposes) is the
beneficial owner of Ordinary Shares and/or Realisation Shares, the US federal income tax treatment
of a partner in the partnership will generally depend on the status of the partner and the activities of
the partnership. Persons holding Ordinary Shares and/or Realisation Shares through a partnership
should consult their own tax advisers regarding the US tax consequences of converting Ordinary
Shares into Realisation Shares and of holding Ordinary Shares and/or Realisation Shares.
This summary does not purport to be a comprehensive description of all of the tax considerations that
may be relevant to each person’s decision as to whether to elect to convert Ordinary Shares into
Realisation Shares. This discussion does not address all aspects of US federal income taxation that may
be relevant to any particular US holder based on such holder’s individual circumstances. In particular,
this discussion considers only US holders that will own Ordinary Shares and/or Realisation Shares as
capital assets and does not address the potential application of the alternative minimum tax or the US
federal income tax consequences to US holders that are subject to special treatment, including:
● broker-dealers;
● insurance companies;
● taxpayers who have elected mark-to-market accounting;
● tax-exempt organisations;
● regulated investment companies;
● financial institutions or ‘‘financial services entities’’;
● taxpayers who holds Ordinary Shares and/or Realisation Shares as part of a straddle, hedge,
conversion transaction or other integrated transaction;
● certain expatriates or former long-term residents of the United States;
● holders owning directly, indirectly or by attribution at least 10 per cent. of the Company’s voting
power; and
● taxpayers whose functional currency is not the US dollar.
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This discussion does not address any aspect of US federal gift or estate tax, or state, local or non-US
tax laws. Prospective investors are urged to consult their own tax advisers regarding the specific federal,
state, foreign and other tax consequences to them, in light of their own particular circumstances, of
their converting or not converting Ordinary Shares into Realisation Shares and the ownership and
disposition of the Ordinary Shares and/or Realisation Shares and the effect of potential changes in
applicable laws.
US Holders
Treatment of Shareholders who convert Ordinary Shares into Realisation Shares
There is substantial uncertainty as to whether the Realisation Shares would qualify as stock of the
Company for U.S. federal income tax purposes. Whether the Realisation Shares qualify as stock of the
Company for U.S. federal income tax purposes could significantly affect the US federal income tax
consequences to a Shareholder who converts Ordinary Shares into Realisation Shares.
If the Realisation Shares qualify as stock of the Company for U.S. federal income tax purposes, then
the conversion of Ordinary Shares into Realisation Shares would qualify as a recapitalization for U.S.
federal income tax purposes pursuant to Section 368(a)(1)(E) of the Code. If the conversion is a
recapitalization, (i) the Shareholders will generally not recognize any gain or loss on the conversion of
Ordinary Shares into Realisation Shares and (ii) the Company will not recognize gain or loss as a result
of the Portfolio Split and the conversion of Ordinary Shares into Realisation Shares.
If the Realisation Shares do not qualify as stock of the Company for U.S. federal income tax purposes,
the Company may be treated as having redeemed Ordinary Shares with the assets of the Realisation
Portfolio, in which case, (i) the Company would be deemed to recognize gain to the extent that the fair
market value of any asset the Realisation Portfolio exceeds the Company’s tax basis in such asset
(“Company Gain”) and a (ii) holder of Ordinary Shares who converted them into Realisation Shares
would be treated as having received a distribution from the Company in an amount equal to the fair
market of the Realisation Shares received (“Distribution Amount”). Except as discussed in the next
sentence below, Shareholders who convert all of their Ordinary Shares into Realisation Shares would
likely be treated as having disposed of their Ordinary Shares for an amount equal to the Distribution
Amount and would generally be subject to the tax consequences as discussed in “Taxation of
disposition of Ordinary Shares” and “Passive foreign investment company,” below. Notwithstanding
the above, certain Shareholders who elect to convert only a portion of their Ordinary Shares into
Realisation Shares may instead be treated as having received a distribution from the Company that will
be taxed as described below in “Taxation of Distributions,” and “Passive foreign investment company,”
unless the redemption satisfies certain tests set forth in Section 302(b) of the Internal Revenue Code.
In addition, Shareholders who made QEF elections with respect to their Ordinary Shares (as discussed
in “Passive foreign investment company,” below), including Shareholders who do not covert their
Ordinary Shares into Realization Shares, may be required to recognize their pro rata share of the
Company Gain. AS THERE IS NO DIRECT AUTHORITY ADDRESSING WHETHER THE
REALISATION SHARES WOULD QUALIFY AS STOCK OF THE ISSUER, US HOLDERS
ARE URGED TO CONSULT THEIR OWN TAX ADVISERS REGARDING THE POSSIBILITY
THAT THE REALIZATION SHARES WILL NOT BE TREATED AS STOCK OF THE ISSUER
INCLUDING POSSIBLE OTHER RECHARACTERIZATIONS SUCH AS THAT THE
REALIZATION SHARES ARE STOCK OF A CONSTRUCTIVE CORPORATION FOR US TAX
PURPOSES AND THE RESULTING IMPLICATIONS UNDER THE PASSIVE FOREIGN
INVESTMENT COMPANY RULES.
Taxation of Distributions
Subject to the discussion of the PFIC rules below and except as provided below with respect to
distributions paid to holders of Realisation Shares (see “Special rules that may apply to Distributions
on Realisation Shares”), a US holder will be required to include in gross income as ordinary income
the amount of any distribution paid on Ordinary Shares (including any Distribution Amount deemed
received as a result of converting Ordinary Shares into Realisation Shares) or on Realisation Shares, (if
such shares are treated as stock of the Company), to the extent the distribution is paid out of the
Company’s current or accumulated earnings and profits as determined for US federal income tax
purposes. Distributions in excess of such earnings and profits will be applied against and will reduce
the US holder’s basis in the Ordinary Shares or Realisation Shares, as applicable, and, to the extent in
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excess of such basis, will be treated as gain from the sale or exchange of such shares. In the case of a
US holder that is a corporation, a dividend from a non-US corporation will generally be taxable at
regular corporate rates of up to 35 per cent. and generally will not qualify for a dividends-received
deduction. In the case of non-corporate US holders, dividends are generally subject to tax at ordinary
income rates of up to 35 per cent. and generally will not qualify for the special reduced rate applicable
to qualified dividend income.
Dividends paid in a non-US currency to a US holder will be includible in the income of a US holder
in a US dollar amount calculated by reference to the exchange rate on the day the distribution is
actually or constructively received. A US holder that receives a non-US currency distribution will have
a tax basis in the amount so received equal to the US dollar value of such amount on the day actually
or constructively received. A US Holder that receives a non-US currency distribution and converts the
non-US currency into US dollars on the date of receipt will realize no foreign currency gain or loss. If
the US holder converts the non-US currency to US dollars on a date subsequent to receipt, such US
holder will have foreign exchange gain or loss measured by the difference between the US dollar value
of the non-US currency on the date of receipt and such value on the date of conversion, which will
generally be US source ordinary income or loss. US holders generally have the option of claiming the
amount of any non-US income taxes withheld at source either as a deduction from gross income or as
a dollar-for-dollar credit against their US federal income tax liability. Individuals who do not claim
itemized deductions, but instead utilize the standard deduction, may not claim a deduction for the
amount of the non-US income taxes withheld on distributions paid on the Ordinary Shares or
Realisation Shares, as applicable, but such amount may be claimed as a credit against the individual’s
US federal income tax liability. The amount of foreign income taxes which may be claimed as a credit
in any year is subject to complex limitations and restrictions, which must be determined on an
individual basis by each shareholder. These limitations include, among others, rules which limit foreign
tax credits allowable with respect to specific classes of income to the US federal income taxes otherwise
payable with respect to each such class of income. The total amount of allowable foreign tax credits in
any year cannot exceed the regular US tax liability for the year attributable to foreign source taxable
income. Dividends paid by the Company will generally be foreign source passive income for US foreign
tax credit purposes. A US holder will be denied a foreign tax credit with respect to non-US income tax
withheld from dividends received on the Ordinary Shares or Realisation Shares, as applicable to the
extent such US holder has not held the Ordinary Shares or Realisation Shares, as applicable for at least
16 days of the 31-day period beginning 15 days before the ex-dividend date or to the extent such US
holder is under an obligation to make related payments with respect to substantially similar or related
property. Any days during which a US holder has substantially diminished its risk of loss on the
Ordinary Shares and/or Realisation Shares are not counted toward meeting the 16-day holding period
required by the statute.
If the Realisation Shares are not treated as stock of the Company then there is no direct authority as
to how holders of Realisation Shares will be taxed. Thus, it is possible that holders of Realisation
Shares will be treated as holding a direct interest in the assets of the Realisation Portfolio and as such
will recognize any income, gain or loss recognized on the Realisation Portfolio regardless of whether
any amounts are distributed and will not be taxed on any pro rata distributions to the holders of
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Realisation Shares. In such a case, for purposes of determining the amount of income, gain or loss
recognized with respect to transactions involving the Realisation Portfolio, a holder of Realisation
Shares should have a tax basis in his share of Realisation Portfolio’s assets equal to his share of fair
market value of such assets at the time of the conversion into Realisation Shares.
Passive income generally includes dividends, interest, rents, royalties, and gains from the disposition of
passive assets. Passive income also includes the excess of gains over losses from some commodities
transactions. Net gains from commodities transactions will not be included in the definition of passive
income if they are active business gains or losses from the sale of commodities, but only if substantially
all of a corporation’s commodities are stock in trade or inventory, depreciable or real property used in
trade or business, or supplies used in the ordinary course of the trade or business of a corporation. Net
gains from commodities transactions will also not be included in the definition of passive income if
they arise out of commodity hedging transactions entered into in the ordinary course of a
corporation’s trade or business. Because the Company neither expects to have a direct or indirect
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current active business nor a significant ownership in the companies in which it invests the Company
expects to be treated as a PFIC for US federal income tax purposes for the foreseeable future. If the
Company is a PFIC, each US holder, upon certain excess distributions by the Company and upon
disposition of the Ordinary Shares and/or Realisation Shares (if such Realisation Shares are treated as
stock of the Company) at a gain, would be liable to pay tax at the highest then prevailing income tax
rate on ordinary income plus interest on the tax, as if the distribution or gain had been recognised
rateably over the holder’s holding period for such Ordinary Shares and/or Realisation Shares. A US
holder will have an excess distribution to the extent that distributions on such Ordinary Shares and/or
Realisation Shares during a taxable year exceed 125 per cent. of the average amount received during
the three preceding taxable years (or, if shorter, the US holder’s holding period), A US holder may
realise gain on such Ordinary Shares and/or Realisation Shares not only through sale or other direct
disposition, but also by pledging the Ordinary Shares and/or Realisation Shares as security for a loan,
gifting such Ordinary Shares and/or Realisation Shares or entering into certain indirect and
constructive disposition transactions.
A US holder of Ordinary Shares and/or Realisation Shares (if such Realisation Shares are treated as
stock of the Company) may be able to avoid some of the tax consequences of the Company being
treated as a PFIC by electing to treat the Company as QEF. If a US holder has made a QEF election
covering all taxable years during which the holder holds such Ordinary Shares and/or Realisation
Shares and in which a PFIC, distributions and gains will not be taxed as described above, nor will
denial of a basis step-up at death described above apply. Instead, a US holder that makes a QEF
election is required for each taxable year to include in income the holder’s pro rata share of the
ordinary earnings of the QEF as ordinary income and a pro rata share of the net capital gain of the
QEF as long-term capital gain, regardless of whether such earnings or gain have in fact been
distributed. Undistributed income is subject to a separate election to defer payment of taxes. If
deferred, the taxes will be subject to an interest charge. In order to comply with the requirements of a
QEF election, a US holder must receive certain information from the Company, which will only
provide such information to US holders who are qualified purchasers. Therefore, a US holder of
Ordinary Shares and/or Realisation Shares that is not a qualified purchaser will not be able to avoid
some of the tax consequences just described by electing to treat the Company as a QEF because the
Company does not intend to provide the information that such a holder would need to make such an
election.
The QEF election is made on a shareholder-by-shareholder basis and can be revoked only with the
consent of the IRS. A shareholder makes a QEF election by attaching a completed IRS Form 8621,
including the information provided in the PFIC annual information statement, to a timely filed US
federal income tax return and by filing a copy of the form with the IRS. The Company intends to
provide such information as the IRS may require in order to enable US holders who are qualified
purchasers under the Investment Company Act to make the QEF election. Even if a shareholder in a
PFIC does not make a QEF election, if such shareholder is a US holder, such shareholder must
annually file a completed Form 8621 with the shareholder’s tax return and with the IRS. Where a US
investor has elected the application of the QEF rules to its PFIC shares, and the excess distribution
rules do not apply to such Ordinary Shares and/or Realisation Shares (because of timely election), any
gain realised on the appreciation of such Ordinary Shares and/or Realisation Shares will be taxable as
capital gain (if the Ordinary Shares and/or Realisation Shares are a capital asset in the hands of the
investor) and no interest charge will be imposed. Since US shareholders of a QEF are currently taxed
on their pro rata share of the fund’s earnings and profits, when such earnings and profits are later
distributed, the distribution is not taxed as a dividend. The basis of a US shareholder’s Ordinary Shares
and/or Realisation Shares in a QEF is increased by amounts that are included in income, and decreased
by amounts distributed but not taxed as dividends, under the above rules.
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If Ordinary Shares became ‘‘regularly traded’’ on a ‘‘qualified exchange or other market,’’ as provided
in applicable Treasury regulations, a US holder of Ordinary Shares may elect to mark the Ordinary
Shares to market annually, recognising as ordinary income or loss each year an amount equal to the
difference between the shareholder’s adjusted tax basis in such Ordinary Shares and their fair market
value. Losses would be allowed only to the extent of net mark-to-market gain previously included by
the US holder under the election in previous taxable years. As with the QEF election, a US holder who
makes a mark-to-market election would not be subject to the general PFIC regime and the denial of
basis step-up at death described above.
If the Company has a non-US subsidiary that is classified as a PFIC, US holders of Ordinary Shares
and/or Realisation Shares generally would be deemed to own, and also would be subject to the PFIC
rules with respect to, their indirect ownership interests in that lower-tier PFIC. If the Company is a
PFIC and a US holder of Ordinary Shares and/or Realisation Shares does not make a QEF election in
respect of a lower-tier PFIC, the US holder could incur liability for the deferred tax and interest charge
described above if either (1) the Company receives a distribution from, or dispose of all or part of its
interest in, the lower-tier PFIC or (2) the US holder disposes of all or part of its Ordinary Shares
and/or Realisation Shares. Upon the written request of any US holder who is a Qualified Purchaser,
the Company will endeavour to cause any lower-tier PFIC it controls or that has otherwise agreed in
connection with an investment by the Company, to provide to such US holder the information that may
be required to make a QEF election with respect to the lower-tier PFIC. A mark-to-market election
under the PFIC rules with respect to Ordinary Shares and/or Realisation Shares would not apply to a
lower-tier PFIC, and a US holder would not be able to make such a mark-to-market election in respect
of its indirect ownership interest in that lower-tier PFIC. Consequently, US holders of Ordinary Shares
could be subject to the PFIC rules with respect to income of the lower-tier PFIC the value of which
already had been taken into account indirectly via mark-to market adjustments. Similarly, if a US
holder made a mark-to-market election under the PFIC rules in respect of Ordinary Shares and made
a QEF election in respect of a lower-tier PFIC, that US holder could be subject to current taxation in
respect of income from the lower-tier PFIC the value of which already had been taken into account
indirectly via mark-to-market adjustments. US holders are urged to consult their own tax advisers
regarding the issues raised by lower-tier PFICs. The rules dealing with PFICs and with the QEF and
mark-to-market elections are very complex and are affected by various factors in addition to those
described above, including the Company’s ownership of any non-US subsidiaries. As a result, US
holders of Ordinary Shares and/or Realisation Shares are strongly encouraged to consult their tax
advisers about the PFIC rules in connection with their purchasing, holding or disposing of Ordinary
Shares and/or Realisation Shares, whether a QEF election is available or desirable to the US holder,
how to make such election and what US tax compliance and reporting requirements such US holder
may have as a result of its investment in the Company.
4. United Kingdom
The information set out below relates to certain aspects of UK taxation applicable to Shareholders who
are resident, or ordinarily resident, in the UK for tax purposes (and who, if individuals, are also domiciled
in the UK) and who hold Ordinary Shares as an investment (and not as securities to be realised in the
course of a trade or otherwise as trading assets) and as beneficial owners. The information is based on
existing law and current HMRC practice and is, therefore, subject to change at any time, possibly with
retrospective effect. The information is given by way of general summary only and may not apply to
certain Shareholders, such as dealers in securities, insurance companies and collective investment schemes
or Shareholders who are exempt from taxation. Such persons may be subject to special rules. This
information does not constitute legal or tax advice to any Shareholders. If you are in any doubt about your
tax position, or if you may be subject to tax in a jurisdiction other than the UK, you should consult your
professional adviser.
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Shareholders who elect to have some or all of their Ordinary Shares converted into Realisation Shares
should not be treated as having made any disposal for the purposes of UK taxation of chargeable gains.
Instead, the Realisation Shares they receive will be treated, for those purposes, as the same asset as the
Ordinary Shares they held prior to the Conversion and, accordingly, Shareholders will be regarded as
having acquired the Realisation Shares at the same time and for the same aggregate capital gains
acquisition cost as the corresponding holding of Ordinary Shares originally acquired.
This tax treatment is subject to the application of the provisions currently contained in Chapter V of
Part XVII of the UK Income and Corporation Taxes Act 1988 concerning the taxation of investment
in offshore funds (the “Existing Offshore Funds Rules”) and the status of the Company under those
provisions. The Company is not currently an “offshore fund” and, accordingly, the Existing Offshore
Funds Rules have no application. However, Shareholders should be aware that the UK Government
has announced that it proposes to replace the Existing Offshore Funds Rules with a new regime (the
“New Offshore Funds Rules”) from 1 December 2009. The Company will become, in respect solely of
the arrangements in respect of the Realisation Shares, an “offshore fund” for the purposes of the New
Offshore Fund Rules.
Draft regulations published by the UK Government set out various requirements and procedures with
which an “offshore fund” must comply in order to enter into, and remain within, the “reporting funds
regime”. The principal such requirement is that the fund makes available to each of its investors, for
each of the Company’s accounting periods, a formal notification of the investor’s pro rata share of the
“reportable income” earned by that fund within the accounting period concerned.
The “reportable income” of an offshore fund means, broadly, the total income as shown in the fund’s
accounts, provided that those accounts have been prepared in accordance with an appropriate
accounting standard, but excluding the fund’s capital gains. In certain circumstances, the fund may be
required to add specified amounts to its accounts income in computing its total “reportable income”.
An investor who is within the scope of UK income taxation in respect of his participation in the
offshore fund is then liable to UK income tax or (as the case may be) UK corporation tax on the excess
(if any) of the amount of reportable income notified to such investor by the fund in respect of the
relevant accounting period over the distributions of income (if any) made to the investor by the fund
in respect of that accounting period.
The Board will decide at an appropriate time whether it will be in the interests of the Company and the
Shareholders for the arrangements in respect of the Realisation Shares to seek to qualify, in any of the
Company’s future accounting periods, as a “reporting fund” under the proposed new legislation.
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Grandfathering
There is to be “grandfathering” for interests acquired before 1 December 2009 (or by virtue of a written
contract entered into and which has become unconditional before 30 April 2009 and not been varied
since) which are not “material interests” in an “offshore fund” under the current rules. Grandfathering
will apply for holders of Realisation Shares who acquire Realisation Shares by way of the conversion of
their Ordinary Shares which were acquired before 1 December 2009 (or by virtue of a written contract
entered into and which has become unconditional before 30 April 2009). Grandfathering will not apply
to holders of Realisation Shares who acquire Realisation Shares by way of the conversion of their
Ordinary Shares or otherwise on or after 1 December 2009 (or other than by virtue of a written contract
entered into and which has become unconditional before 30 April 2009 and not been varied since).
Transactions in Securities
The attention of investors resident and domiciled in the UK is drawn to the provisions of Chapter I of
Part XVII of the Taxes Act (in the case of companies) and Chapter 1 of Part 13 of the Income Tax Act
2007 of the UK (in the case of individuals and other non-corporate persons), under which HMRC may
seek to cancel tax advantages from certain transactions in securities. Whilst the Directors do not believe
those provisions should apply to Shareholders, no clearances under those provisions have been sought
or obtained.
Dividends
Individual Shareholders tax resident in the UK
On the basis that the Company is not an “offshore fund” (but see above), an individual Shareholder
who is resident in the UK for tax purposes, who is a “minority shareholder” for the purposes of section
397A of the Income Tax (Trading and Other Income) Act 2005 (that is, broadly, a person whose
shareholding is less than 10 per cent. of the Company’s issued share capital) and who receives a
dividend from the Company (including a dividend funded by the net proceeds of the Realisation
Portfolio) will be entitled to a tax credit which may be set off against his total income tax liability on
the dividend. The tax credit will be equal to 10 per cent. of the aggregate of the dividend and the tax
credit (the “gross dividend”), which is also equal to one ninth of the amount of the cash dividend
received.
The gross dividend is treated as the top slice of the individual’s income. A UK resident individual
Shareholder who is liable to income tax at a rate not exceeding the basic rate will be subject to income
tax on the dividend at the rate of 10 per cent. of the gross dividend so that the tax credit will satisfy in
full such Shareholder’s liability to income tax on the dividend. If a UK resident individual Shareholder
is liable to income tax at the higher rate, he will be subject to income tax on the gross dividend at
32.5 per cent. but will be able to set the tax credit off against part of this liability. The effect of that set
off of the tax credit is that such a Shareholder will have to account for additional tax equal to
22.5 per cent. of the gross dividend (which is also equal to 25 per cent. of the cash dividend received),
to the extent that the gross dividend falls above the threshold for higher rate income tax.
The provisions of the Finance Act 2009 have extended eligibility for the tax credit described above to
UK resident individuals in receipt of dividends from non-UK resident companies where the individual
holds a 10 per cent. or greater shareholding in the company and that company is an “offshore fund” as
defined under the Existing Offshore Fund Rules.
Therefore, individual Shareholders acquiring a 10 per cent. or greater holding of Realisation Shares by
way of a conversion of Ordinary Shares or otherwise on or after 1 December 2009 (or other than by
virtue of a written contract entered into and which has become unconditional before 30 April 2009 and
not been varied since) may be entitled to the tax credit described above in respect of dividends received
from the Company.
Shareholders should also be aware that under the provisions of the Finance Act 2009, the UK
Government announced proposals to introduce, with effect from 6 April 2010, a new income tax rate
of 50 per cent. which will apply to taxable non-savings and savings income in excess of £150,000. If
these proposals take effect, there will be an increase in the rate of tax on gross dividends, where the
£150,000 threshold is exceeded, to 42.5 per cent.
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As explained above, when the New Offshore Fund Rules come into force, and if the Directors decide
that the Company should seek to qualify as a “reporting fund” and so enter the “reporting funds
regime” as regards the arrangements in respect of the Realisation Shares, an individual Shareholder
will, thereafter, be liable to UK income tax on his or her pro rata share of the income earned by the
Company from the Realisation Portfolio in each of its accounting periods, so that the individual
Shareholder’s liability to taxation in respect of his or her holding of Realisation Shares will no longer
be restricted to such distributions actually made by the Company to that Shareholder.
Shareholders within the charge to corporation tax should be aware that the Finance Act 2009 includes
provisions for dividends paid by the Company on or after 1 July 2009 to such Shareholders to, in
certain circumstances, be exempt from UK corporation tax. Shareholders which are within the charge
to corporation tax are advised to consult their independent professional tax adviser in relation to the
implications of this legislation.
Transfers of Realisation Shares will not be liable to stamp duty, unless the instrument of transfer is
executed within the UK or, wherever executed, relates to any matter or thing done or to be done within
the UK. In such a case, the relevant transfer document will, in general, be liable to UK ad valorem
stamp duty at the rate of 0.5 per cent. of the consideration paid (rounded up, if necessary, to the
nearest multiple of £5) unless the amount or value of the consideration for the sale is £1,000 or less and
the instrument is certified at £1,000.
By virtue of the Company being incorporated outside the UK and maintaining no register of the
Shares in the UK, an agreement to transfer Realisation Shares will not be liable to stamp duty reserve
tax.
The above statements are intended as a general guide to the current UK stamp duty and stamp duty
reserve tax position. Certain categories of person, including market makers, brokers, dealers and
persons connected with depository arrangements and clearance services, are not liable to stamp duty
or stamp duty reserve tax or may be liable at a higher rate or may, although not primarily liable for tax,
be required to notify and account for it under the Stamp Duty Reserve Tax Regulations 1986.
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PART VIII
GENERAL INFORMATION
1. Directors’ interests
As at 30 July 2009 (the latest practicable date prior to the publication of this document), the number
of Ordinary Shares held directly or indirectly by, or through associated holdings of, each Director was
as follows:
No. of Ordinary Shares
Gordon Lawson (Chairman) 75,000
Eric Brock* 1,500,000
Francis Finlay 0
Hugues Lamotte 0
Eitan Milgram** 11,034,687
*Held through accounts controlled by Clough Capital Partners, LP, of which Mr Brock is a partner and portfolio manager.
** Held through Weiss Capital LLC, of which Mr Milgram is Executive Vice-President and beneficially owned by Brookdale
International Partners LP and Brookdale Global Opportunity Fund.
No Director has any interest in any transaction which is of an unusual nature, contains unusual
conditions or is significant to the business of the Company and which was effected by the Company
during the current or immediately preceding financial year or during any earlier financial year and
which remains in any respect outstanding or unperformed.
2. Major shareholders
As at 30 July 2009 (the latest practicable date prior to the publication of this document), the Company
had received notification pursuant to Disclosure and Transparency Rule 5.1.2 that the following
persons had an interest of 5 per cent. or more in the voting rights of the Company:
Percentage
No. of of issued
Ordinary share
Shares capital
Weiss Capital LLC** 11,034,687 24.18
Millenium Management* 4,145,374 9.08
Metage Capital Ltd 2,500,000 5.48
* Beneficially owned by International Core Strategies (Europe) S.a.r.l.
** Beneficially owned by Brookdale International Partners LP and Brookdale Global Opportunity Fund.
3. Irrevocable undertakings
The Company has received the following irrevocable undertakings to vote in favour of the Special
Resolution.
Percentage
No. of of issued
Ordinary share
Shares capital
Weiss Capital LLC 11,034,687 24.18
Metage Capital Ltd 2,500,000 5.48
Clough Capital Partners, LP 1,500,000 3.29
Dragon Capital, when providing fund management services to ICV Management, will not recommend
or instruct investment of the Continuation Portfolio in securities issued by a company whose principal
business is in the IFC Exclusion List. Dragon Capital will also not invest in companies whose principal
business involves any of the following:
● production or activities involving harmful or exploitative forms of forced labour2/harmful child
labour3;
● commercial logging operations for use in primary tropical moist forest;
● production or trade in wood or other forestry products other than from sustainably managed
forests,
nor, in relation to trade finance projects, production or activities involving harmful or exploitative
forms of forced labour2/harmful child labour3.
Notes:
1. This does not apply to companies who are not substantially involved in these activities. “Not substantially involved”
means that the activity concerned is ancillary to the Company’s primary operations.
2 Forced labour means all work or service, not voluntarily performed, that is extracted from an individual under threat of
force or penalty.
3 Harmful child labour means the employment of children that is economically exploitive, or is likely to be hazardous to,
or to interfere with, the child's education, or to be harmful to the child's health, or physical, mental, spiritual, moral, or
social development,
5. Expenses
The Company has incurred costs and expenses in connection with the recommended Portfolio Split and
new investment management arrangements. Such advisory, legal and other third party costs and
expenses (including those associated with other proposals to facilitate the sale of Shares other than
through sales in the secondary market) are estimated to amount to approximately US$0.7 million.
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DEFINITIONS
The following definitions apply throughout this document unless the context requires otherwise:
“Board” or “Directors” the board of directors of the Company and Director means any
one of them
“Business Day” any day other than a Saturday, Sunday or public holiday in
England and Wales
“Disclosure and Transparency the disclosure and transparency rules of the UK Listing
Rules” Authority
“Extraordinary General Meeting” the extraordinary general meeting of the Company convened for
10.00 a.m. on 3 September 2009, notice of which is set out at the
end of this document, or any adjournment thereof
“Form of Direction” the form of direction for use by Depository Interest Holders in
connection with the Extraordinary General Meeting
“Form of Election” the form of election for use by shareholders who hold Ordinary
Shares in certificated form in connection with the Portfolio Split
“Form of Proxy” the form of proxy for use by shareholders who hold Ordinary
Shares in certificated form in connection with the Extraordinary
General Meeting
“IFC Exclusion List” the list of types of projects which IFC is not prepared to finance
as issued by the IFC, details of which are set out in paragraph 4
of Part VIII of this document
“Joint Venture Agreement” the agreement for the establishment of ICV Management
between Dragon Capital, the Investment Manager and
Indochina Capital Corporation dated 15 April 2009
“Net Asset Value” the aggregate value of all assets less all liabilities of the Company
or, where the context requires, the relevant Portfolio
“Net Asset Value per Share” or the Net Asset Value divided by the number of relevant Shares
“NAV per Share” then in issue
“Official List” the Official List of the UK Listing Authority (the Financial
Services Authority acting in its capacity as the competent
authority for the purposes of Part VI of FSMA)
“Ordinary Share” an ordinary share of US$0.01 in the capital of the Company or,
where the context requires, a Depository Interest
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“United States” or “US” the United States of America, its territories and possessions, any
state of the United States and the District of Columbia
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INDOCHINA CAPITAL
VIETNAM HOLDINGS LIMITED
(incorporated in the British Virgin Islands with registered number 1011258)
NOTICE IS HEREBY GIVEN that an extraordinary general meeting of Indochina Capital Vietnam
Holdings Limited (the “Company”) will be held at One Bunhill Row, London EC1Y 8YY on
3 September 2009 at 10.00 a.m. for the purpose of considering and, if thought fit, passing the following
resolutions, the first two to be proposed as ordinary resolutions and the third as a special resolution:
Ordinary Resolutions
1. THAT the appointment of Mr. Eric Brock to the Board of Directors be approved.
2. THAT the appointment of Mr. Eitan Milgram to the Board of Directors be approved.
Special Resolution
3. THAT:
(A) subject to the provisions of paragraph (D) below, such number of issued ordinary shares of
US$0.01 each in the capital of the Company as is necessary to give effect to elections validly
made by the holders of the existing ordinary shares in accordance with the terms of the
circular to shareholders dated 31 July 2009 (the “Circular”) be converted into Realisation
Shares (as designated and having the rights set out in the memorandum and articles of
association to be adopted pursuant to paragraph (C) below);
(B) subject to the provisions of paragraph (D) below, the proposed changes to the management
of the portfolio of the Company described in the Circular be approved;
(C) subject to the provisions of paragraph (D) below, the new memorandum and articles of
association produced to the meeting and initialled by the Chairman for the purposes of
identification be adopted in substitution for and to the exclusion of the existing
memorandum and articles of association of the Company; and
(D) if shareholder elections referred to in paragraph (A) of this resolution above are made in
respect of more than 65 per cent. of the existing issued ordinary shares of US$0.01 each in
the capital of the Company, the changes in (A), (B) and (C) above shall not be implemented
and the investment policy of the Company will become to carry out an orderly realisation of
the assets with the management agreement amended as described in the Circular and with a
view to the distribution of the net proceeds to shareholders at such time and in such amount
as the directors, in their absolute discretion, consider to be appropriate.
Yours faithfully
Gordon Lawson
Chairman
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Notes:
(i) A vote in favour of resolution 1 or 2, each of which is being proposed as an ordinary resolution means you support the
appointment of Mr. Eric Brock or Mr. Eitan Milgram respectively; an ordinary resolution is passed only if at least
50 per cent. or more of the votes cast on the resolution are cast in favour.
(ii) A vote of resolution 3, which is being proposed as a special resolution in favour means you support implementation of
the recommended Portfolio Split; a vote against means you do not support implementation, which will take place only if
75 per cent. or more of the votes cast on the special resolution are cast in favour.
(iii) Any member (including a body corporate) entitled to attend and vote at the meeting may appoint not more than two
proxies to attend, speak and vote instead of him. If more than one proxy is so appointed, the appointment shall specify
the number and class of shares in respect of which each such proxy is so appointed. A proxy need not be a member of
the Company.
(iv) The instrument appointing a proxy which is enclosed with this notice and the power of attorney or other authority, if
any, under which it is signed on behalf of the appointer, or a certified copy of such power or authority, must be lodged
with Capita Registrars, Proxy Department, The Registry, 34 Beckenham Road, Beckenham, Kent BR3 4TU, United
Kingdom not less than 48 hours before the time (London time) fixed for holding the meeting or any adjourned meeting
thereof (as the case may be). In case of queries, please contact the helpline number 0871 664 0300 (UK) or
+44 20 8639 3399 (overseas). Calls cost 10 pence per minute (including VAT) plus the applicable provider’s network
extras. Calls to the helpline from outside the United Kingdom will be charged at applicable international rates.
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